COILS & THROWBACKS

We have a potential coil forming on the gold chart. As I’ve mentioned before about 70% of the time the initial thrust out of a coil tends to be a false move soon followed by a more powerful and durable move in the opposite direction. If that holds true then it would be preferable for gold to break out of the coil to the downside.

Today will be the 24th day of this daily cycle. The cycle can last up to 30 days and not be out of the ordinary, so it is possible that the daily cycle didn’t bottom on Aug. 24th. I was expecting a push to $1240 before a pullback. We were a bit short of that target on Aug. 18th, but have now tagged it.

If the stock market continues to drop into the Friday jobs number we could see gold drop into another corrective move this week.

Last week silver broke out of a triangle consolidation. It’s not unusual to see a throwback to test the upper trend line.

If gold does have another move down into the latter part of the timing band we can probably expect silver to drop back down to at least the $18.70ish level and test the triangle breakout.

There are also two gaps on the GLD and SLV chart that are begging to be filled before continuing higher.

If the coil breaks down watch gold for a swing low this week as a sign of the bottom.

67 thoughts on “COILS & THROWBACKS

  1. Anonymous

    I also hope hose gaps get filled. Putting the other half of my equity into GLD and SLV at $118.20 and $18.10 or so if they trade there.

  2. Christel

    Gold looked more like a triangle to me, and now it has broken out of that triangle to the upside.
    1244$

  3. Anonymous

    Continuation up in gold and silver. The market taught (almost) everybody to buy on dips and take profits as soon as they could lately.

    Now (as markets do) it will run mercilously (pretty much) in the largest up move to date.

    Of course…if you are waiting to buy and get in, as SOON as you do, it will correct πŸ™‚

    –TZguy

  4. Gary

    Just as soon as I think we might fill the gaps it does this πŸ™‚

    Now you see why Old Turkey is the only way to invest in this market.

  5. Anonymous

    I really don’t call what happened to gold the last few days a ‘coil’, but I guess I could sorta see it. Pretty small.

    –TZguy

  6. Gary

    TZ,
    I would tend to agree. I was expecting it to last another day or maybe two before possibly breaking down to fill the gaps. Now it looks like it’s just going to get busy testing the old highs.

  7. Onlooker

    That seems kind of short (3 days) for a really “reliable” coil formation, no?

    Also, it would seem to me that gaps in the PM ETFs should be much less significant than stock market gaps as they (PMs) are traded so heavily (as a total percentage of the market) in the futures market, which runs 24 hrs. The ETFs just have to catch up to the running action in the worldwide market.

  8. Anonymous

    GARY:

    You talk often about gaps being filled in GLD,SLV. I disagree with you.

    Gold and silver trade 24hrs and are a WORLD market. If you look at a true 24hr chart you will see there are essentially almost NEVER gaps.

    You, however, are using a special security (GLD,SLV) that trades ONLY during a limited time of that 24hr window. As such it gets many gaps. And…if you look back in history you will see clearly that those gaps FREQUENTLY do not close.

    BECAUSE…they never existed in the first place. They were only a figment of a security that trades PART of the time.

    Old GLD and SLV charts are FULL of gaps that never filled on the way up cause the move happened overnight.

    –TZguy

  9. Anonymous

    Gary,

    Well, despite my semi-dejected, semi-emotional statement this morning about the market mercilously going up now, I point out (with battle scars), that things never move in a straight line.

    As soon as you think something wont’ stop (and buy) it immediately corrects.

    In the past, despite even strong C moves, gold and silver have (and will again) have sharp (but quick) pullbacks.

    So will it be again.
    –TZguy

  10. Anonymous

    Gaps close usually in REGULAR securities because REGULAR securities are usually based and tied to whatever country/time-zone (guy!) that they trade it.

    So the majority of the players are all on the same chart and same time and same technicals. A 24hr security doesn’t work like that.

    For example, look at VWDRY. This is VESTAS the wind turbine company. It trades primarily in europe and this is the pink sheet. It is full of gaps (not cause it’s a pink sheet) but because the main trading has already happened by time US opens. If you look at a EU chart you will see few if any gaps. The US chart simply ‘pops’ up to wherever hte EU chart ended and holds mostly flat.

    Hence…a lot of gaps.

    Same with gold and gld/slv

    –TZguy

  11. Anonymous

    GLD has an additional issue even tied to the US which would seem to negate my gap comments.

    Comex gold opens the main trading floor at 8:30, yet GLD doesn’t start trading (and thus painting the chart) till 9:30. So gold can (and DID today…perfect example) move up (CONTINUOUSLY, with NO gaps) starting with the Comex opening.

    But now that GLD opens an hour later and simply ‘catches up’ you have…boom…a gap.

    It’s false. A result of these issues.

    –TZguy

  12. Anonymous

    PS: It is also better to trade the futures because of this same issue. You get the 24hr window and don’t have to deal (mostly) with gaps.

    With GLD you might go large and then get hammered on a gap (either way) when you have to wait till 9:30 to get in or out (although there is some pre/post market).

    DISCLAIMER: i’m not recommending futures (or anything else) to anybody. Danger. Danger.

    –TZguy

  13. Anonymous

    And GLD isn’t a gap up today if you count my fake spike high so clearly visible on your chart gary πŸ™‚

    –TZguy

  14. Anonymous

    Gary,

    Can you explain why you added AGQ for the extra 20% margin instead of a silver miner or even a royalty play such as SLW? I would think the miners would outperform even a 2X ETF if silver goes significantly higher. I have AGQ as my only silver play (other than my main position of GDXJ which has about 20% silver miners and physical silver) but I’m wondering if I should have put the money into one of the miners instead.

    Thanks,

    Steven

  15. Gary

    I tend to believe AGQ and SLW will probably do about the same.

    One consideration is no company specific risk with AGQ. There is some minor risk with SLW and plenty of risk with any of the true miners.

  16. Anonymous

    TZ Guy:

    You are exactly right about those gaps. They exist because gold and silver are trading round-the-clock, and GLD and SLV have to immediately adjust at 9:30a ET. In fact, gap fills… on all charts… are for the most part coincidental behavior. I can point to gaps on numerous charts that never filled or didn’t “fill” until 5-6 YEARS later when the market crashed. The only thing gaps really fill is time we could spend analyzing something more useful πŸ˜›

  17. Anonymous

    Gold doing its usual, surprising to the upside, and leaving the chasers in the dust. If we can close above 1265 for the week, 1300 should be a lock thereafter.

    Aaron.

  18. Anonymous

    Hey Gary

    so what do you expect to happen now that we did not decline and fill the gap? a test of 1265 before a pullback?

    fyi

  19. Nick

    Gary: Big SOS day today…looks like bottom after jobs number Friday…nothing like 950 maybe, but perhaps 1010-1020.

  20. Anonymous

    the interesting part of this move is the USD. Its in a small triangle consolidation, and depending on how it breaks out, could make for an interesting week. A move below 82.62$ would be a breakdown me guess.

  21. Anonymous

    Nick:

    unlikely. That is too obvious. What could happen instead is that we coil again down here today through Thurs. and then put in a monster up day on a good jobs number Friday. Everyone is expecting a bad number friday.

  22. KevinB

    For those interested in Demark indicators, Prof Depew at minyanville.com has shown there is an up momentum target for Gold currently at 1267.25, Silver 19.78. Doesn’t mean it can’t go down between here and there, but the buying exhaustion (resistance) levels are up there. Silver also had a weekly qualified break of an up level this past week which means it should be strongly trending up for at least the next few months. Corresponds with Gary’s holding of AGQ.

  23. Anonymous

    Depew’s magic exhaustion/target numbers are at the previous highs. Who would have thought? Where can I sign up? (no offense to person posting)

    –TZguy

  24. Rosabarba

    Well, a lot of anonymous posters have been warning that stocks and gold are going to get crushed, usually after/while they’re getting crushed.

    Since you’re all anonymous, how will we know “who” not to tell he didn’t warn the board if/when stocks and gold crash?

    Separate yourself from the herd, man. Give yourself a name and give us some rationale for your views.

  25. Anonymous

    Nobody who has much money talks like you do regarding markets. It’s a simple fact professional type people know.

    There are a couple of reasons:

    -nobody can make money (or keep it for long) by betting on the statements that you keep making. They are all or nothing with no justification or discussion of a backup if wrong.

    -If you had some finer detail of thought that you could pass along instead of saying “the next roll is gonna be RED!” then it would show you really have some sort of strategy and likely skill. You are just coming out as a skid row gambler.

    -Finally, if you had any real money or ‘professionalness’ you would actually want to attach a name (even if fake) to your statements so that you would build up some CREDIBILITY over time when your projections come out true.

    That you don’t even want to attach a name shows that you yourself (with little money) know the true nature of what you are doing.

    Is this the best use of your time that you have? Honestly?

  26. Anonymous

    previous message was to ANONYMOUS:
    > I mean it, stocks and gold are about to get hammered. Don’t say I didn’t warn you.

  27. Anonymous

    This market is toast. I AGREE with the previous anon poster that PMs and miners will lead the dive. Once the start correcting, the S&P will tank. 950 is a coming.

  28. Anonymous

    Toast. 950. Got it. Today, yesterday, and all the other days you’ve been posting the same dire warning.

    Message received. Take it as read. Don’t neglect all the other blogs and boards who could use this sort of in-depth analysis. I’m sure nobody else has noticed how weak the market has been since the spring. Best of luck.

  29. Anonymous

    Anon 9:59

    Apparently a lot of people can’t see how weak the market has been. These same bulls in denial keep thinking “swing lows”, “BOW”, and other technical jargon will ultimately signal a bottom to help their plight.

    Short and proud of it. Put your faith in Obama and get short. There is no reason to buy stocks. None, zip, zero, zilch.

  30. Anonymous

    You already said that, and I’m not just referring to the last 3 comments, but every other time you visit as well. πŸ™‚

  31. Daniel

    Anon 9:59–
    Liquidity will cause the market to go up. Liquidity provided by an organization that has an endless supply. (Federal Reserve)

  32. DG

    The S&P is going to 126.2 by October 32nd, and it’s all Obama’s fault (I always invest based on who the President is. That’s how I have lost—er—made all my money) And he was born on Venus so he shouldn’t even be President. Oh, and he’s a Zoroastrian.

    Some people post because the have emotional; problems and it’s a way to vent their emotions without recriminations by staying anonymous. Better than having road rage (though they may have that as well, I suppose.) Thanks, though, to all the posters who add actual content to the site.

  33. Anonymous

    bulls are running out of time. The market needs a big washout. There just simply isn’t a reason to buy stocks.

  34. Anonymous

    Figured out why TK has 250+ positions. It is so he can brag about his best performing short each day. I mean, gosh, he’s bound to have one that is down every day.

  35. Anonymous

    Great. Now we have the mental TK stalking (pennyless) anon poster as well. Probably same person.

  36. Anonymous

    I would suggest it is QUITE dangerous to buy anything gold and silver in this zone.

    Yes, the bull will continue to 1400-1600 minimum on this wave, imo.

    But a nasty correction is likely due.

    -TZguy

  37. Gary

    TZ,
    You are talking yourself out of riding this wave because your heavy leverage is preventing you from entering.

    There is nothing dangerous what-so-ever entering here as long as one isn’t leveraged. It is only day 5 of this daily cycle. There’s probably 10-15 days left for this to rally and I doubt we will get much of a pullback until gold tests the highs.

  38. Anonymous

    Well, I’m not the fella that made the TK comment above, but I can understand why some here give updates of ole Wrong Way TK.

    First, if you’ve been at TK’s site 2years or more, you’ve witnessed Timmah shoot down Gary’s analysis on many occasions only to lose like he has lately. Second, some here used to think Timbo was telling the truth and actually making money, so were inclined to get on the same side as him (always short). Nothing tells the truth like one’s results, so once you realize the staggering losses TK incurs, you’re happy to salvage what’s left. It isn’t right for TK to allude to being profitable when he’s anything but, and I’ll comment anytime I see something ridiculous if I choose.

    Perhaps you haven’t learned yet, anon.

  39. DG

    TZ: I have to agree with Gary about acting soon. I think using occasional leverage is fine if you are disciplined, but why not buy just some GDXJ or something now? If you buy just some and it immediately drops a few percent, so what? If it doesn’t drop at least you have some. There’s a middle ground between going 150% long and 0% long. Buy some and hope you are wrong so you can buy more at a lower price. YOu yourself said that by the time you buy it it’ll drop. You can defeat that by buying “too soon.” Just buy a small enough amount that if it drops 5% it’ll only be minimally annoying.

  40. Gary

    I would probably avoid acting on that. It’s just too late in the daily cycle to press the short side. At this point one should be looking to find a long side entry not press bets on the short side.

    Well that is if one can’t resist getting tangled up in this mess.

  41. Anonymous

    Wait for the 5 p.m. update. There’s a lot of after-hours buying today that might alter the final SoS. Also keep in mind the current number is about 2/3s of what the SoS figure what midday.

  42. Wes

    Trying to find SoS numbers from a security that is up less than 1 point is nonsense. How can you be sure the selling wasn’t on weakness (which is normal) when the S&P was negative and just looks like selling on strength because the S&P turned positive ?

    Witchcraft.

  43. Anonymous

    Thanks Gary and DG. Remember, i’ve got a large core; I’m in. I’m just not in with the *additional* forces.

    Let’s see this pans out and give me a bit more time. I think I’ll be ok.

    –TZguy

  44. Keys

    Gary,

    As per your feedback.

    I would keep with the short-term warnings. It displays your understanding of the bull. You may want to repeatedly continue to scold us that this is not tradable advice. But I doubt your observations in short-term activity will affect any of us either way. Until you get burned by trading in a bull market, you simply won’t understand old turkey. Burned defined as not making nearly as much as you could have. People naturally get bored and will want to trade.

    However a stronger emphasis on longer-term events may be desirable. I am already geared that way(so I have a bias), but I appreciate the short-term stuff too. Perhaps a shift in weighting to more long-term, opposed to short-term. But not to exclude short-term.

    You are right about many trying to fine-tune the bull. My point is that they will do that anyways.

    My thoughts.

  45. DG

    TZ: Ah, I had not appreciated you had a large core. Me too. In that case waiting and trying to time the next short term bottom is an art and less of a financial necessity. I do not intend to miss this bull, but I also play around with the “extra” stuff. I had mistakenly thought you were virtually out.

  46. Anonymous

    DG: from the sound I play things much like you. Substantial positions with defined and small stops. If right, I let them ride. If not, I just reset and take the next play. No more than a few until usually you get in.

    GARY: I’d prefer you continue calling cycles and movements to the smallest detail you are capable. Don’t scale it up. From my part I request that because as a recent subscriber I would like to learn as best possible.

    -TZguy

  47. Anonymous

    Yea, G-Man, keep things as is. Some of us are attempting to mount this bulls and need all the help we can get.

    I’m pissed I dismounted this beast. Had 3750 shares of SLW at 16 jjust to name one position. Sold it for break freaking even!!!!!!!! Was stalking my favs slw,ego,anv all summer but never pulled the trigger and watched it run away! Brutal lesson…i was totally gun shy after my experience going all in in January.

    Anyway, those three stocks have rocked since July…wish I was on board forcthe fun. πŸ™

  48. jl

    Hi Gary,

    One of the key things you look at in your reports in the USD. As the USD makes its way to the 3 yr cycle low, PMs will make their way up.

    But even if the dollar strengthens against the yen (Japanese stimulus), Yuan (possibile stimulus) or Euro (debt default), PMs will still go higher.

    So is the the dollar really that critical in analysing the movementt of gold?

    As long as we have debasement or problems with *any* of the other major currencies, PMs will go higher.

  49. Gary

    Yes at this point gold has decoupled from the dollar. It will go up whether or not the dollar is falling. But a collapsing dollar will likely drive this C-wave into the largest C-wave we’ve seen yet.

  50. jl

    Thanks Gary.

    I am almost fully (85%) vested in PMs now.

    Looking to deploy what remains of my cash by the end of the week then go Old Turkey.

    But I still look forward to your short term analysis so please don’t take that away πŸ™‚

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