NFTRH subscribers were apprised of the growing risk of a negative reaction in the gold stocks on Friday and again this weekend. This was done first in an update and then in the regular report. The recommended courses of action were ‘take at least partial profits’, hedge or at least ‘do not chase’.  Personally, I chose (b) and hedged. Today I took some profits while still holding the hedge (DUST) in consideration of this chart’s Bearish Engulfing (BE) candle.

Frankly, I am now net short while still holding my top miners. Per the earlier post, NGD was sold as it has already reported earnings, pleased the market and was an obvious profit taking candidate. But the picture is not as simple as gold bears might want to believe.

The cottage industry in gold bearishness is happy to see Mr. Bearish Engulfing although I have watched certain of them try to short this rally all the way up. Maybe this time they’ll get a big score? Well, a daily BE is a short-term thing with its effects basically valid for 1-3 days. What is more bearish is the CoT data and SLV’s sentiment profile, each of which were discussed in #364.

However… (nope, we’re not done with the discussion because there are lots of things in motion now) there is a bullish fundamental underpinning in play for later this month. This was discussed as well in the weekend report.

Man, none of this is easy and the bears who think charts are the only consideration (as fundamentals slowly improve over time) or the perma-bulls who just set and forget their viewpoints (and bias) paying little attention to charts, CoT and sentiment are unwilling to do this complicated and frankly sometimes annoying work.

That’s fine. We are going to nail this thing because we do the work. That will not include any ‘we called the bottom!’ b/s because this is a bear market and when it is either technically over or 100% in line fundamentally, we will make a call. It will be late because it will have already been called about 10,000 times elsewhere over the last 3 years.

Back on the here and now, a reaction of some sort was likely. But there are targets higher for this rally that could come about in late October or early November. Let’s see how it shakes out and avoid automatic thinking.