As we enter the first week of April, gold prices are falling into a strong support level at $1180. Even if gold is not turning bullish, short-term cycle structures and other technical signals are now suggesting gold should move higher and exceed last week's high of $1219 before turning down again. Silver is also at a support level at $16.50 and appears poised to turn up now. For this reason I am going to enter a long position in silver today. (We are already long in gold.) There is a possibility of these prices moving lower into the end of the week or into early next week, but even if they do they would still be buy spots (unless gold drops below $1140 and silver below $15.30). Since we entered our gold long position early in the day (before the price surge) on March 18, we can maintain our stop loss for gold at $1140 (close to our buy spot). For silver, however, I am going to set a stop loss for this trade around $16.00 (not $15.30), which is about 3% away from the current buy price and will minimize our loss if prices turn south. We have an odd situation right now with directional momentum in the precious metals charts. Silver charts are nearly 100% bullish while gold charts are 100% bearish. In general, gold and silver move in tandem (with occasional short-term divergences), so one of them should soon line up with the other, but which one will it be? It is too early to tell, but if these metals rise sharply into the middle or end of next week, I will be looking to sell my long positions and will consider going short. Entering a long position in silver today and still holding my long position in gold.
The first week of April starts tomorrow, and the direction of the broad stock market is still not clear. The next seven trading days will tell us if we are going to get a top to sell short or a market washout towards a bottom that could break below 17,000 in the DOW. If markets continue to rise this week, we will watch for a case of bearish intermarket divergence where one or two (but not all three) of the three major stock indices (DOW, S&P 500 and NASDAQ) make a new yearly high. This would be a strong signal to sell short (or get out, if you are long). Still on the sidelines.