Just. Like. In. 2008!
Credit Suisse just got saved by the Swiss National Bank, but the real damage can’t be undone.
The real damage here is the fact that a really big name in the banking world showed severe problems. This is the next domino piece and yet another – even more important than SVB – indication that it’s 2008 all over again.
The Credit Suisse crisis serves as confirmation that the situation continues to develop just like in 2008, and yesterday’s freefall in the FCX prices serves as a technical confirmation. Let’s take a look at the latter.
It’s been just 5 trading days since we entered the short positions in the FCX and plunged substantially, making those positions very profitable. But from an analytical point of view, it tells us much more.
Zooming out a bit shows us that the price of FCX is behaving just like it did in 2020, during the huge decline.
There was an initial decline and an initial rebound. Now, the decline has accelerated, just like I described it on March 8.
This shows just how big the bearish potential is, but… it’s actually much bigger, as the above is “just” a link to 2020, and the decline in 2008 was even bigger.
The truly remarkable thing about this similarity is that both declines – the current one and the 2008 one – started from similar price levels.
If you look at how fast FCX fell in 2008, it becomes clear that those cases are indeed analogous.
And yes, the downside potential for this stock is truly extraordinary, and profits can – in my opinion – become breathtaking. Of course, in the near term, we can (and are likely to) see periodic corrections.
Now, if the situation is developing just like in 2008, then we can expect something similar to happen in the precious metals market as well.
Let’s see if we indeed have some confirmation that what we saw is what already happened back in 2008.
Gold’s final pre-slide corrective upswing was based on turmoil, uncertainty, and safe-haven buying. It was volatile, it was large, and it was accompanied by huge volume.
The RSI indicator moved a bit below the 70 level.
Back in September and October, 2008, gold even rallied above its 61.8% Fibonacci retracement level.
During that time, the USD Index declined in a relatively sharp manner, and the GDX ETF moved to its previous highs. The stock market moved up and down.
Gold just rallied on huge volume, and it moved somewhat above the 61.8% Fibonacci retracement level.
The RSI is slightly below 70.
Just. Like. In. 2008.
The USD Index is after a sharp corrective downswing.
Just. Like. In. 2008!
The stock market is moving back and forth while confirming the verification of the breakdown below its head-and-shoulders pattern.
That’s actually not like in 2008. It’s even more bearish due to the existence of the verified head-and-shoulders pattern.
And the GDX ETF?
Is it at its previous highs?
That’s exactly where the GDX ETF is – at its December 2022 highs.
Just. Like. In… that’s right, you guessed it - 2008!
Is the history rhyming here?
Most likely, yes.
Does it create a massive opportunity, in my opinion?
Also – YES!
The best part is that the junior mining stocks (GDXJ) are showing weakness relative not just to gold, but also to the GDX, so they are likely to fall even more than the latter.
While GDX moved to its Dec. 2022 high yesterday, the GDXJ topped lower than that, and it ended the day over 1% lower (unlike the GDX, which ended the session unchanged).
The enormous bearish potential of the move, and the gargantuan profit potential of this entire setup remain fully intact.
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Przemyslaw K. Radomski, CFA