Mining stocks have been rallying alongside the broader equity markets as the bulls are frollicking in the pastures of increased liquidity being provided to the European banks courtesty of the recapitalization plans being discussed in that corner of the globe. That has taken away fears of bank failures tied to deteriorating balance sheets over in Europe and by inference, any hit to the banks here in the US. The result is "GAME ON" for the hedge funds once again as in they come into a variety of markets once again.
That had led to both a wave of short covering in the mining shares as well as fresh buying in some issues that has taken the index nearly 70 points off the recent spike low made earlier this month. However, shares have basically moved lower since the opening period of trade today as chartists are seeing a zone of formidable resistance against which some of either booking profits from fresh longs or are using as a strategic entry point for fresh shorts. That zone is a combination of of horizontal resistance associated with the swing high made back in May of this year as well as the most significant of the Fibonacci retracement levels, the 50% level which happens to come in very near the 560 level.
If the bulls want to take prices higher, they are going to have to buy in sufficient size across the sector to drive the index through 560 for a minimum. If they hesitate here, the index runs a good chance of retreating and moving back down towards 520 once again.
If the bulls show some mettle and charge higher, then 577-580 comes into play. A close of the index through this level would set up another run at 600-605.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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