Bullion had its best day in a while, spurred by a dollar that couldn’t stand up to firming oil quotes. Comex April Gold settled at 441.00 after spiking to an intraday high just below our minimum target at 441.60, a hidden pivot. In night trading the futures were moving still higher and had touched 442.00 at press time. This should all but clinch a run-up at least to the next minor pivot, 445.80. The bullish action was corroborated by movement in the XAU, which created a new and robustly bullish impulse leg on its daily chart by surpassing a plainly visible peak made in mid-December. Breadth was impressive too, with mining stocks rallying across-the-board.

We hold profitable positions in several of them, including Bema and Goldcorp, but yesterday’s rally was so strong that even our laggard, Kinross, went solidly in-the-black. The stock was up 38 cents on the day, a strong percentage gain for a $7 stock. Newmont, a bellwether stock and key player in the bullion sector, rose $1.42 to close at 45.91. This wasn’t quite sufficient to get it past a watershed peak at 46.40 recorded in mid-December, but it left NEM in good shape to challenge that high over the next few days. If the stock surpasses it, that would create a powerfully bullish impulse leg on the daily chart. It would also open up a low-risk opportunity for us to open a long position in the stock, since we missed doing so with a bid for June 50 calls when NEM took off nearly a month ago.

Impulse Leg-o-Rama

Overall, the signs are most encouraging – not merely because the rally in precious metals issues has been strong and steady, but because it has pushed many mining-related stocks and indexes above prior peaks on their respective daily charts. This implies that any pullback that ensues is likely to be a bullish correction rather than the start of a short- or intermediate-term bear cycle.