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.

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

aad US Dollar Index - Monthly (EOD) ($USD)

aad US Dollar Index Weekly

acb $TYX:$TNX- Ratio

acc 30-Year T-Bond Yield ($TYX)

acc 60 min 10 Year $TNX

acd Monthly 30-Year US Bond Price ($USB)

acv - Inflation / 30Y Bond Price Ratio (vipsx:$usb)

AUA Gold Miners Bullish Percent Index ($BPGDM)

aua2 Silver (EOD) / Gold (EOD) Ratio ($silver:$gold)

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