The metals are starting to look interesting here. There is even a possibility that a right translated intermediate cycle is forming. If you are a gold bull the weekend report is a must ready this week.

27 thoughts on “CHART OF THE DAY

  1. David

    Gary, thanks for your analysis. Gold ETF has continue 4 days gold inflow, and huge amount buying in thursday and friday. it is a real positive signal. Do you still believe it is a bear market rally, it is not new bull market start….?

    1. gary Post author

      I’m not sure yet. But gold could be setting up to form a right translated intermediate cycle. If that happens then I will officially call the end of the bear market.

  2. gary Post author

    One thing I’ve noticed over the years is that at major trend changes the gurus that rode the recent trend are never the ones that spot the trend reversal. They made their money and got their praise from riding the past trend correctly. It’s emotionally difficult to then reverse course and join the other side. All of one’s followers would then treat them like a traitor.

    So people like Armstrong, Dan Norcini, Rambus and other assorted analysts that have called the bear market very well are not going to be the ones to look to to spot when the longer term trend reverses. You will need a different set of gurus for that. You will need to find an analyst that’s not afraid to go against the conventional thinking. Some one who is looking at the market with a different bias than just assuming that the big trend will continue.

    So let me say again, gold may be set up to form a right translated intermediate cycle. It hasn’t done that since 2012. If it does then the bear will be over and traders still following the bearishly biased analysts are going to get hurt.

  3. gary Post author

    I’ve also noticed that the obvious targets rarely get hit. Everyone is looking at the 1000-1030 zone just like everyone was looking at 2000 4 years ago.

    That makes me think that 1071 may be as close as we get.

  4. David Silver

    Mr. Savage,

    Thank you for that reassurance report. I’ve noticed the $1140 line appears to be a significant historical support/resistance line as well and low and behold she held Friday. Long miners since Thursday and will add Monday on weakness.

    What is your take on Crude here? Why hasn’t it been coinciding with commodities during this latest financial crisis? Been back and forth in energy but lately short.

    1. gary Post author

      Oil is stuck in a consolidation but it seems to be somewhat tethered to the stock market. When stocks drop down into the 7 year cycle low it may drag oil down for one more lower low, but I will guarantee oil isn’t going to $20. Maybe $35.

      That’s the way it always is at major bottoms. All kinds of ridiculous targets start being bandied about as traders get locked into recency bias and assume the trend will continue indefinitely to completely absurd levels.

      I’ll say it again. The gurus that called the bear market correctly aren’t going to be the same gurus that spot the bottom. They are emotionally invested in being right and it becomes almost impossible to switch sides. I’ve seen it over and over at major tops and bottoms. The traders that made a killing on the way up or down then lose it all when the turn comes because they can’t envision any scenario in which the market will turn and take away their money tree.

  5. Dan

    My favorite macro commentator on seekingalpha (who called the drop from $100 to $40 oil last year among many other correct calls), just revised his downside targets on gold to $500 and oil to $10 by the first quarter of 2016. Yikes.

    1. Bob UK

      Who is he – curious to have a read? Do you have a link?

      $10 bucks for oil – that would be an enormous deflationary period to get to that. I think that would be even too much for the Saudis.

      Those Russian troops building up in Syria may decide to take a drive/flight south to Saudi iif oil was getting down near there as even below $30 would put Russia into a huge recession and threaten even Putin’s position.

  6. Jay

    I’m going to put on my tin foil hat and say that Gold still has limited upside because, instead of confiscating gold like they did in the Great Depression, they just manipulate the price of it to the downside. It saves them the trouble of having to break into your house and steal your gold. 🙂

  7. Bill in Tokyo

    The weekly chart sure looks like that, although look at the last candle in 2014 – it looks like $HUI went UP while $GOLD and $SILVER went down.

    So I pulled up a 2 hr chart of the 2 mos prior, and 2 after, Dec 2014, and looked at GDX, GLD and the GDX:GLD ratio, and it’s not that clear, to me anyways.

    Bottom line I bet can all agree on though is, just like the USD is the anti-GLD, but not all the time, we can say that GDX leads GLD, but not all the time.

    So how to trade? For me, it’s all about FORGETTING the ratios, and trade each animal as a single, isolated individual. I trade GDX, independent of GLD or UUP, for example.

    Right now, GDX is going sideways, flipping from buy to sell, to buy signal again. Messy. It’s starting to look like a wedge, and statisically, these break in the direction of the trend, which is down. So to me, odds are GDX will continue to trend DOWN soon.

    But, I don’t care statistics, just price, so if it breaks out of this wedge, I’ll go cautiously in.

      1. Bill in Tokyo

        But, to keep balance, because I don’t use cycles (yet), I don’t have the ability to spot a bottom, whereas Gary can, so I’ll always be 1 cycle behind him. So I’m not saying that cycles isn’t calling this a bottom – I’m just saying that as a trend follower, I don’t see higher lows and higher highs yet.

    1. gary Post author

      How about this false breakdown Generally when a pattern breaks in the expected direction but then reverses it leads to a much stronger move as everyone caught on the wrong side of the market has to switch directions.

    1. David Silver

      William I think you may be on to something. The more I look at $WTIC and USO (not so much in XLE), the more I see a bullish divergence taking shape however she still is wandering in no man’s land so one has to step it up here to either be a hero or zero!

      I may sell out of my energy shorts upon strength and flip gears into longs during weakness come Monday.

      I’m thinking commodities will fly here when the market tanks.

  8. Peter

    Gary, if you look at the area you circled both the miners and gold broke through their 10ma’s at the same time and moved in tandom. I don’t recall a time that the miners were this far behind and it led to a sustained rally in gold. I looked back at the 2008 bottom and the miners were well ahead of the metal moving out of the bottom. It doesn’t make sense to me and that’s why I can’t foresee the type of move you are calling. I’m more aligned with your first line of thinking which was a pop and then drop.

    1. gary Post author

      We’ll see, but I think the miners were shorted heavily to allow big money to enter at the exact bottom on the test of 100 in the HUI. And that is why they are lagging.

  9. Anthonyo

    All assets fell IN TANDEM today: Stocks, oil, gold… Can You say D E F L A T I O N ??

    Harbinger of things to come? As stocks fall, so may all the rest of the usual suspects named above.

    (although PPT defended Dow 16,000 TOOTH & NAIL today but they could not control NASDAQ which fell hard. The Dow is EASIER TO MANIPULATE as it is only 30 stocks to BUY BUY BUY by the PPT.)

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