WEAK PAYROLL NUMBERS PUSH GLOBAL STOCKS LOWER AND BONDS HIGHER -- IT NOW LOOKS LIKE SUMMER BOUNCE HAS ENDED -- GOLD MINERS INDEX COULD ACHIEVE BULLISH BREAKOUT ON RISING GOLD AND SILVER PRICES
EUROPEAN STOCKS FALL ... This morning's weak employment report is having a negative impact on global stock markets. European stocks are down 3%. Chart 1 shows the German DAX to be the weakest of the three after having achieved a feeble rally over the last month. Chart 2 shows the French CAC Index failing at 3300 resistance. Chart 3 shows the London Times Index (FTSE) falling back below its mid-August peak at 5377. All three charts strongly suggest that the short-term rally in Europe has probably ended. U.S. futures are called to open sharply lower this morning as well. It looks like the U.S. rally has ended as well. Not surprisingly, bond prices are rising as bond yields drop. While economically-sensitive commodities are dropping, safe haven buying is pushing gold and silver prices higher. That should be good for mining stocks.
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Chart 1
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Chart 2
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Chart 3
BOND YIELDS PULL STOCKS LOWER ... Chart 4 shows the 10-Year Treasury Note yield (TNX) dropping close to its summer low. The solid line is the S&P 500. The chart shows that the recent rebound in stocks wasn't confirmed by a rising bond yield. That's another sign that the stock rally has probably run its course and that prices are headed back down.
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Chart 4
GOLD STOCKS NEAR UPSIDE BREAKOUT... With gold and silver prices spiking higher this morning, it should be a good day for mining stocks which could be on the verge of a bullish breakout.. Chart 5 shows the Market Vectors Gold Miners Index (GDX) testing its highs near 64 for the third time. Technical odds for an upside breakout look very good.
