GOLD ETF MOVES FURTHER ABOVE 200-DAY AVERAGE -- SILVER ETF HITS THREE-MONTH HIGH -- DEFINITION OF SANTA CLAUS RALLY

PRECIOUS METALS ADVANCE... My message from December 8 wrote about gold trying to find support near its 200-day moving average.  It also showed silver trying to stabilize as well.   Both precious metals are having a strong day and moving above some short-term resistance levels.  Chart 1 shows the Gold Shares SPDR (GLD) rising more than 1% today to reach the highest level in a month.   It's also trading back above its blue 50-day average and further above its 200-day line.  It still needs to rise above a falling trendline drawn over its August/November highs to turn its trend higher.   But today's action is an encouraging sign.   Silver is doing even better.

SILVER ISHARES MAY BE BREAKING OUT... When precious metals are rising, silver usually leads gold higher.   And it appears to be doing that today.  Chart 2 shows the Silver iShares (SLV) trading above its early November high and reaching the highest level in three months.  If that upside breakout holds, that could be an even stronger sign that the correction in precious metals may be ending.   Gold and silver miners are also having a strong day.

DEFINITION OF SANTA CLAUS RALLY... The Santa Claus rally is generally understood to describe the seasonal tendency for stocks to rise during the month of December and especially as we draw closer to Christmas.   But it has a more precise definition.   According to the Stock Trader's Alamanac which invented the term, the Santa Claus rally usually takes place during the last five trading days of the year through the first two trading days of the new year.   Which suggests that stocks have a good chance of ending the year on a strong note.