Rok-n-Dan's Market and Sector Analysis with Fidelity Select Sector Funds

Dan Caldwell

8/13/16: Have been getting a lot of emails re: gold/silver mining. The sector is overbought and has made significant gains, and a ST correction would be healthy, but the sector is coming off of a 3 yr. very oversold market condition, and is now experiencing a strong snap-back rally. Can it go higher? My technical analysis suggests 10-15% more before a correction, but markets can remain overbought (Gold Miners Bullish % Index, p.3) and oversold for extended periods, so buying PUT insurance may be prudent. On the plus side my FED INFLATION/DEFLATION chart (bottom, p.3) indicates since Brexit that the economy is becoming very deflationary, suggesting the FED is likely to be highly accommodative, good for gold and silver. Also, it took longer than expected, but 35% of mining expense is the cost of fuel, that's been dropping, and those costs saving move straight to the miner's bottom line. Third, gold is rising in terms of foreign currencies, and is experiencing a bullish breakout in Chinese, Indian, Russian, British, Euro currencies, etc.(p.4). 4th, multiple overhead resistance barriers have been penetrated on strong volumes, so the rally could definitely extend further.

00000 Shanghai Stock Exchange Composite Index (EOD) ($SSEC)

0000a1 XAU Index to Price of Gold Ratio ($XAU:$SILVER)

0000a1a Gold & Silver Index - Philadelphia/Gold - Continuous Contract (EOD) ($XAU:$GOLD)

a01 NYSE Summation Index (Ratio Adjusted) ($nysi)

a01a NASDAQ Summation Index (Ratio Adjusted) ($nasi)

a02 S&P 500 to Volatility Index ($spx:$vix)

a03 Russell 2000 Small Cap Index ($RUT)

a03 Russell 2000 Small Cap Index/Russell 1000 Index ($rut:$rui)

Added 2/10/06. When small caps start to lag larger cap stocks it usually signals a market correction. When the small caps start to lead large caps then buy with gusto!

a06 Copper Futures - COMEX ($copper)

3/20/08 It's interesting to note that LME copper inventories are falling to record lows as we enter the strongest demand period leading up to the summer months, even as copper prices retreat (source Kitco Base Metals. com) and copper prices remain in backwardization (source Metalprices. com), typically a bullish indicator. Could it be that we're seeing a 'takedown' in commodity prices to allow big money, like Calpers, to buy in at lower prices?

AAb Gold - Continuous Contract (EOD) ($gold)

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