Market Precariously Perched at Key Level

As the end of the quarter approaches, how do the markets fare? Zooming out, we can see that the S&P 500 is precariously perched on an uptrending resistance line.

While doomsayers have been lining up to predict the market’s demise for months, it has defied all skeptics and continued its march higher. But now it sits once again at a key threshold level.

This is precisely the time to pay attention to see if it can bounce one more time off the support line or whether it finally closes below it, which would almost certainly portend a correction.

So, how should you trade the next few weeks?

Courtesy: eliant_capital

Key Points

• The stock market has returned to a key threshold level, long term support, right on time at the end of the quarter.
• As the market plateaus, precious metals have been on the rise with gold and silver, in particular, breaking higher.
• Silver in particular has a number of key chart patterns all supporting it, and the upside, if realized, could play out over the next few years.

Metals Breaking Out

While the market approaches a support line, precious metals have been moving in precisely the opposite direction.

We see gold and silver breaking out recently and defying the bears, who sit in amazement at the climbing prices at a time when supposedly high interest rates should be pressuring them lower.

Courtesy: eliant_capital

Gold is not the only precious metal that has a very good looking chart, we also see silver on the cusp of perhaps a multi-year bullish run.

Below, you can see that silver not only has broken above its long-term downtrending resistance line, but also has formed a decade long base and has an inverted head and shoulders pattern too.

Will the breakout of all three key patterns signal higher prices? Only a brave bear would bet against the chart now.

If chart analysis were to prove accurate here, silver has substantial upside at this time, perhaps as much as 100%, but it’s not the type of trade that will make money overnight absent a major global conflict.

It may take some years for gold to really realize the gains that lie ahead, so the position most likely is appropriate for a long-term portfolio, even though the short-term breakout appears compelling to traders too.

Even if the markets more generally stall, as a result of a technology slowdown, the prospects for metals going forward should remain good. At the very least, these charts are worth following closely now.