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Today, if it follows the intermediate cycle turns from 2016, would be the pinpoint location of the ICL. Roughly 135 CD’s. Easy enough to calculate, not to mention 3 weeks of choppy drift lower probably did enough sentiment damage to create another one of these WTF rallies that like to appear out of ICL’s.
I will note that a few of the breadth indicators I look at (in particular S&P 500 stocks above/below 50day MA) never came close to approaching the extremes of Feb16, Jun16, Oct/Nov16. That is what makes it a bit more difficult to say that this will have that same snapback, parabolic lift out of an ICL that we saw last year.
You are probably right Gary, (saying that markets will turn back up this week). I was just looking at the RSI and Stoch’s on the DOW and we are almost ready to end the declines. Also, and this is interesting, the DOW is just sitting on top of its 50 day simple moving average and likely ready to pop higher as soon as tomorrow. Unless the unthinkable happens and we crash below it. Who the hell really knows what the Gods of the market might actually do in the real world. But all things being equal we should see markets start to recover and gold fall back beginning sometime Tuesday. And that should close the divergence between miners and gold that has been a feature of the metals market these past days.
So there you go, it never hurts to consult a technical chart.
So if this is all we get then that’s just a modest 3% decline. Hardly worth worrying about. But it could grow given a little more time. Corrections are a process more than an event and almost all corrections begin with rising volatility so just because we bounce back does not mean this is over by a long shot. We may just need a pause to get recharged for the next leg down is all. I am most curious to see if we do get that test of the Nikkei at 20,000 before this current decline continues. I have not ruled out that what we saw up to now is just a precursor to a larger event.
I need to see if we get some follow through tomorrow. If so then I’d say scenario #1 is now in play and the larger ICL will be pushed out to late April or early May after one more higher high, probably with divergences on the weekly charts.
One more higher high on the indices sounds good to me. And it makes sense too. As an aside I just noticed that Barrick Golds chart has just come up from below and touched on its 50 month MA this past week so it will be interesting to see if price gets repelled fairly soon as I am expecting. The largest miners often give better insights into what the institutional and large fund money is thinking where gold stocks are concerned. Mostly because those buyers are the ones who ultimately move the markets on a trending basis. There are a half dozen I follow for smart-money sentiment and they can sometimes offer better insight than the indexes themselves.
Gary,
The first scenario has a problem.
The rise is too steep to take place in so short of a time period and in the current climate; so it would have to extend much more in time.
If so, a double top would be more likely.
Well let’s assume a left translated cycle. So a top on day 15-20. You don’t think the market could make it to 2450 in 3-4 weeks? That’s only a little over 100 points. I think we could retest 2400 in the first week.
Of course if we get scenario #2 then we are going way past 2450. If #2 plays out then you can look for Dow 23,000 at the very least over the next 3-4 months.
There should be a fight jumping over the daily and weekly averages. This could take some time.
In my view the path of least resistance is further down.
Note that today’s SPY volume has notoriously weak. This may say the PPT has few supporters.
USD broke support, EURO and YEN broke resistance.
Tomorrow stands to be a very interesting day.
Remember bottoms often occur as an undercut or tops as a failed breakout in our modern markets.
Most traders sell oversold conditions and buy overbought. It’s why most traders don’t make any money. They do the opposite of what they should do.
I’m obviously happy with my short UVXY choice this morning. I’m sticking with it until stopped out or recover my losses for being long. It’s of course tempting to take that 13% gain. But look how they put the boot on its neck pushing down choking it out.
Consequently I believe that’s what gives the Indexes wings.
I have been constantly in XIV or UVXY or both to cover the past 6 years. I’m now enjoying learning the art of navigation of JNUG and JDST.
The so called Kamikaze stock’s 🙂
isavage,
It would be nice if you can sum up your experience playing mainly XIV and UVXY.
I am also a believer of focusing on one which is JNUG.
One learns the way it behaves and feels comfortable in its environment. Changing security is like entering a new house.
Please tell us any insights you have.
One issue with UVXY is the low volume. Getting in or out costs more.
GDX needs a close above 24 dollars to refresh the bullishness on that chart. An inability to exceed that level on a close this week means price will remain trapped below its upper rail resistance line and it should be sold at any good opportunity, not bought. Personally I am going short metals and miners again today unless something unusual happens as there is a good trade to ride down for the next while.
GDXJ on the other hand looks capped by its 50 DMA and should similarly be a short trade. The pattern is anything but bullish, money flows are topping and volume is declining. This one also gets treated as a sell too although it may have a few more days sideways life in it yet.
Ped,
I generally concur with your assessment on gold & GDX. This is the same overall outlook we’ve been discussing since late February, and again in mid-March. Maybe we’ve been off by a few days or a few dollars one way or the other, but this is the same overall pattern we’ve been discussing.
The one area where I have some “curiosity” is your make or break scenario on the bear market trend line in gold. Funny, I recall you wondering if people bother to click on your links — I click on most of them. This trend line required some effort — I actually had to draw it on the chart 😉
I began with my long term chart, then fine tuned it in to the daily chart, using two points (which define a line): The September, 2011 peak and the October, 2012 peak. Gives current trend line at just under 1280 and slowly decreasing. Gold has also popped its head above it a few times along the way, since last year. On the long term chart, it’s a few wicks that have poked above, no candle bodies.
My curiosity centers around that trend line as being of cycle degree. Just as a daily cycle rally will break the declining trend line of daily degree, so should the cycle degree rally break the declining trend line of cycle degree (likewise for intermediate, yearly/primary degrees, etc.).
Thus, I tend to believe the trend line will eventually break, to confirm the cycle degree rally begun in gold in December, 2015, NOT confirm (or deny) any bull market at a higher degree.
Bulls and bears have both struck me as largely indifferent, since the 2016 low. No surprise there.
Once again, I’ve suspected this cycle degree rally to be a multi-year triangle since mid-2016, though I have been on the lookout for it ever since the 2015 lows. Way too much volatility on a long term basis for gold’s appetite. That needs to shrivel up before the next cycle move down to complete the supercycle degree bear market — late 2020’s or so?? 2032? Something like that.
Even though I believe that bear market trend line will break, it ain’t gonna be easy.
As I stated in late February, it’s quite possible that the intermediate decline in gold could be a triangle as well. Not quite so sure about miners. Gary could be correct to expect a stop run in GDX — while the 2016 low in gold looked right to me, I thought GDX would make it down to the 16’s area.
Sorry but I don’t know what you mean by “cycle degree”. You might have to run that by me in normal English. About the charting method I use…I almost always draw my peaks using candles. Secondly, I almost exclusively use futures gold charts, not spot. Hope that helps.