Because most analysts still refuse to recognize the artificial nature of gold’s bear market, they aren’t going to navigate the bottoming pattern correctly. The pendulum is going to swing wildly back and forth for a while during the bottoming process until price calms down and resumes the natural bull market trend in earnest.
$HUI (Gold Bugs Index)
I said one doesn’t need to chase the rally during the second leg, any gains would not be sustainable and would be given back.
At the low yesterday miners had already given back 62% of the second leg gains, and we are not done with the Intermediate Cycle Low yet. The final Intermediate Cycle Low isn’t due until late June or early July. This is why it wasn’t critical to chase the second leg, one was going to get a second shot at it anyway.
Unfortunately I suspect too many traders listened to the pie in the sky nonsense that passes as analysis and bought at the top and are now suffering a 10% draw down that they didn’t need to weather, and it’s going to get worse before the Intermediate Cycle Low is finished.
It’s time for a short term bounce, but don’t be fooled, the intermediate degree correction isn’t done yet. Gold has to generate at least one failed and left translated daily cycle before the intermediate cycle low is complete.
Time to hedge metals positions. Here’s why:
So far gold has done exactly as I predicted. The minute the dollar bottomed, gold topped. I think this is a good time for Old Turkeys to place a hedge on their metals positions.
Gold needs to break the daily cycle uptrend line to confirm the daily cycle decline has begun. It should do that this week as the Euro starts to accelerate down into its own daily cycle low.
I don’t expect a top in the dollar / bottom in the Euro until after the Brexit vote. So look for gold to finish its intermediate decline around that time.
Silver is not in a bull flag like some are suggesting is developing in gold. It appears to be leading the metals down into an intermediate degree correction.
NO BEAR MARKET. $SPX (S&P 500 Large Cap Index)
If you try hard enough you can always find a set of moving averages that will confirm your bias. The 50/100 week exponential moving average cross has never generated a false signal in 36 years. It’s confirming what I’ve been saying all along. No bear market.
I think there is a good chance yesterday’s FOMC minutes were the trigger for the stock market’s daily cycle to bottom.