Everyone knows inflation is on the rise and, with the latest year-over-year inflation numbers up 7%, investors are finally getting the picture that market growth has challenges ahead. Now they are searching for the next areas to trade given the market's unfolding dilemma, with rates looking to increase and a possible rangebound market. Having said that, interest has grown in precious metals, bringing the potential for a huge move this year if the momentum continues.
Looking at the chart of Silver (SLV), we can see sporadic price action going back through 2021. However, the most recent low at $19.80 shows a double bottom pattern. This can be viewed as the main support area SLV needs to hold going forward. With that said, SLV is now looking to clear its 50-day moving average at $21.47. While it has cleared above this major moving average in the past, the narrative for inflation has changed, which is why SLV is finding new buying interest.
Gold (GLD) has also gone through a period of sideways trading action and is now looking to hold over its 50- and 200-DMA. Even with interest rate hikes coming through the year, the Fed admitted that inflation was moving at a faster pace than they had originally expected. Therefore, if GLD and SLV can clear and continue to hold over the 50-DMA, this will show that precious metals need to be watched for trade entries.
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ETF Summary
- S&P 500 (SPY): 456.60 support.
- Russell 2000 (IWM): 208.76 support.
- Dow (DIA): 365.44 support.
- Nasdaq (QQQ): 369.44 support.
- KRE (Regional Banks): 75.76 support.
- SMH (Semiconductors): Doji day. Watch to hold over the 50-DMA at 303.57.
- IYT (Transportation): 268.43 support. Could not close over the 50-DMA at 271.91.
- IBB (Biotechnology): 138.33 support.
- XRT (Retail): 82.94 low to hold.
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
