GOLD MINERS ETF NEARS UPSIDE BREAKOUT -- SEMICONDUCTERS LEAD TECH SECTOR LOWER -- FRIDAY'S SELLING SUGGESTS THAT OVERBOUGHT STOCK PULLBACK HAS PROBABY BEGUN

GOLD MINERS ETF NEARS UPSIDE BREAKOUT... With gold surging again today to another seven-year high, gold miners are having an even stronger day percentage-wise.   And are nearing a major upside breakout.  Chart 1 shows the VanEck Gold Miners ETF (GDX) trading 3% higher today and nearing a challenge of its early September peak.  A close above that high would put the GDX at the highest level in more than three years.   An upside breakout is likely with gold leading the way.  The GDX/SPX ratio in the upper box appears to be bottoming as well.   The recent big buying of gold assets is largely due to the plunge in Treasury bond yields which fell today to lowest level since September.   And a flight to safety into Treasury bonds; and defensive stock market sectors like consumer staples, utilities, and REITS.

At the same time, stocks closely tied to the coronavirus like airlines, cruise ships, gaming, and hotels are coming under renewed selling at week's end which suggests that the viral threat to stocks still remains.   Technology has gone from the market's strongest sector to its weakest over the past week.   That makes sense considering that technology stocks are the most overbought market sector; making them the most vulnerable to a market pullback.   Semiconductor stocks heavily influenced by disrupted supply chains in China are leading the tech SPDR lower.

SEMIS LEAD TECH SECTOR LOWER...The daily bars in Chart 2 show the Technology SPDR (XLK) falling hard enough today to slip below its green 20-day moving average.  A close below that first line of defense would raise the possibility of a further drop to its late January low and 50-day average (blue arrow).   And it's falling in heavier trading.  Chart 3 shows the VanEck Vectors Semiconductor ETF (SMH) also dropping in heavier trading and threatening its 50-day average.   That's helping make the Nasdaq Friday's biggest loser as stocks end the week on the downside.  Previous messages have noted that stock indexes looked over-extended on the upside and vulnerable to some profit-taking.  Friday's stock selling suggests that weakness in foreign stocks is starting to spill over into the U.S.