88 thoughts on “CHART OF THE DAY

  1. gary Post author

    Once gold forms the cycle bottom then how it comes out of that bottom will tell us whether the bear is over. If gold rallies up to new highs above 1191 then we will have confirmation the bear market is over.

    1. AlexP

      for that, Gary, gold bulls need sub-200k-monthly employed in Employment Sit on Friday or on early December in order to ensure a quick YCH in USD and left-translation of its yearly cycle.
      and that fundamental weakness is almost ensured, it’s just a matter of when: this Friday or on Dec04.

      1. JT

        Agree AlexP.
        Barring something wildly unforeseen, NFP on Friday is D-Day for Gold.
        October and November traditionally, have the largest seasonal adjustments downward.

        One can hope…

        -JT

        1. David

          If it comes in STRONG, there’s going to be A LOT of people stuck holding the Gold Long positions.

  2. David

    thanks, Gary. weekly chart still show MA 10 cross over MA20. I agree with your analysis that gold is in bull market on early stage. next rally should be on $20. will see.

  3. MuffinTop

    Most Traders, including those just starting out and those that do this for a living – and [ahem] suck at it – don’t yet fully understand the meaning of ‘climbing the wall of worry’. Do you get it now folks?!

    Please do, because this is probably one of the most important lessons you’ll need to learn if you want your account to survive AND bank the big bucks – The psychology of things ๐Ÿ™‚

    1. Bill in Tokyo

      I’ve decided that I’ll never learn.

      So I’ve hired a monkey to trade for me. He throws darts, and I buy/sell based on that.

      So far I’m break even. Which is better than when I was using just my own brain.

      1. MuffinTop

        I know I’m preaching a bit.. I just hate to see people lose money when they should be making money following a simple yet effective strategy. I realize that takes time…

        Bill – Monkey or no monkey.. if you’re breaking even that means you’re on the right track.

        1. Bill in Tokyo

          Now my monkey is wearing my watch, and he has ME throwing the darts now, while he makes the trades. ๐Ÿ˜‰

  4. David Silver

    Mr. Savage is absoultely correct here IMO, it’s the same old song and dance again and again. Of course one could’ve just held and not worry of gyrations or add during his dips.

  5. Jay

    If that trendline gets successfully broken to the downside, then all bets are off, and Gold would then be retesting the 52-week low, and GDX retesting the all-time low. Don’t get married to a thesis (that the bear is over) if the evidence should prove otherwise.

  6. Jay

    …also, a rising trendline from the 52 week low would also have to be broken to the downside as well,,,,but, if that happens, look out below!

  7. Mark

    Maybe the biggest wall of warry here is represented by the COT report ,that is EXTREMELY bearish for the gold bulls.
    Not to say the endless list of analysts that have turn bearish over the last week.
    It’s NOT easy at all to stay calm and cold in this environment.

    1. MuffinTop

      I totally get what you’re saying Mark but remember the SM back in 2009? It bottomed and turned around on us while everyone was calling for lower lows – It’s psychology 101!

      And look, I don’t know what your investment outlook is [short term/long term] but even if the trend line in Gold breaks, that’s ok.. and you wanna know why?! The Miners are currently trading at a roughly 90% discount from their top; that’s f*cking huge and the risk/reward ratio is un-parallel.. which means I don’t mind taking a small loss here and there because when this market decide to turn around for good, if it hasn’t already, then the gains will ‘eclipse’ your small losses by a mile! That’s what people should be focusing on, in my humble opinion..

      1. Mark

        I’m VERY aware that Miners have lost about 90% from the top in 2011 since I’m one of the poor idiots who did not sold at that top.
        So my” investment outlook” is …..survive ๐Ÿ™

        1. MuffinTop

          May I recommend a ‘Trailing Stop-Loss’ next time? Takes the emotion out of things and works for me.

          And you could [although unpopular] also do a ‘Dollar Cost Averaging’ if you’re looking to take some of the pressure off. I’ve done it in the past when I was too scared to cut my losses and thankfully it worked out but only because I knew the Fundamentals were slowly turning around in my favour.. which I believe is also the case right now.

          Hang tight or loose.. up to you ๐Ÿ™‚

          1. Jay

            Trailing stops work great, until your stop gets hit and then the stock or ETF bounces and rallys nicely afterward, without you on board. Then you’ll want to get back in and get stopped out again, and so on, and so on…. Death by 1000 cuts. ๐Ÿ™‚

    2. Bill

      Perfect, so everyone is sitting on one side of the boat you say… couldn’t be a more perfect setup. Remember this is all about making money and what a perfect time to smoke the shorts or the one sided listing boat if you will ?

      1. David Silver

        I’m thinking Gold $1133 since she’s under the 50dma should be the tale of the tape. Let’s see if overseas trading will take it to fruition or not.

  8. William

    It is good to know that the masses have turned bearish / cold turkey due to last week’s COT report…however, i suppose COT will always show you a bearish report once gold price has rallied hard enough during those bull years?

    Bear in mind that the “commercial” hedgers have a fundamental reason to hedge I.e to short in this case since they would want to lock-in their forward selling price as gold has rallied significantly…and this will go on and on regardless if we are in a bull or bear market!

    Gary, could you recall those instances when during the bull run prior to 2011 where we have ultra bearish COT reports and yet the correction in gold price was shallow and short lived?

    1. William

      Also, COT seems like a backward looking mechanism to me if we assume that everyone can make money by just glancing at this report that is not even reported in real time…

    2. gary Post author

      The commercials reached a maximum bearish stance in late 2009. Gold proceeded to rally another 200 points before the intermediate cycle topped.

      1. mike trike

        The COT works everytime during a bear market. If the market has swithched to a bull market then the Commercials will have to cover their shorts into a rising price which will light a fire under the precious metals. There is no guarantee that silver and gold will tank due to the bearish COT reports, yet one should hedge their positions just in case.

      1. Mark

        Unfortunately this is probably what is goin to happen,so my PM shares will take another dive.
        This is an endless bear market.

        1. Bill

          Some people feel the same way about treasury an endless bull market, that too will end in tears eventually .

    1. William

      Is 1,136 as close as we could get to versus fibo. 68.2% at 1,125? We shall see. However, note that it is always GOOD to see the bAshing during Asian trading hours instead of the U.S!

  9. Hong Bang

    Some one just trigger the Stop in the early morning Asia.

    We are day 20, 21 in the daily cycle. Bottom fishing soon.

    Thanks

    1. Tim

      Avi had this to say thursday,
      “may be starting its final run to lower lows. Breaking below the 1.382 extension down at 14.84 should seal the deal, 9 region will be struck as the low, unless we are dealing with an ending diagonal, which still leaves the door open for the 11 region low.”

  10. William

    Surprise surprise!!! NCM is in the green despite gold’s bashing…I would expect miners to lead again here!

  11. William

    Nikki 225 is falling out of its weekly uptrend support channel since 2012 after getting back in last week…what a good test there but failing as of now!

  12. Trond

    William, silver Cot Sept 17th 2010 (when silver around 20$, just when startin ‘going vertical’)
    –Commercials Long: 29764 Short. 94,825 Net: -65000
    Last Tuesday:
    –Commercials Long: 41,050 Short 110,423 Net: -69000

    In Sept-Oct 2010, the commercials were squeezed and had to cover higher, contributing to the rally
    As Mike Trike mentioned, this happens only in bull markets. So the problem is to detemine if bull now is the case, (maybe bear lasts another year or possibly not..).
    As Mark suggested, maybe these pesistent bearish COT’s a new bull’s Wall of Worry, who know.
    Gary being a pro climber, the perfect choice to escalate it ๐Ÿ™‚ ๐Ÿ™‚

  13. William

    And, guess what, we had gold’s 60min’s chart just completed its fibo.61.8% correction from Oct’s low to peak range, with 2 individual hourly hammers since 7am…I hope it wouldn’t rally so fast during the Asian hours…

  14. Trond

    As visible here, Commercial silver COT’s were consistently high till including Oct 1st 2010 (i.e reported on Oct 1st, the actual snapshot is from Tuesday 3 days before). On Oct 8th (-3 days) they starts to drop, Comm’s are giving up during the rally. But unless a new bull has started, odds are for the opposite to happen now..
    Btw historical Cot’s way back one usually have to pay for, but not there:

    http://news.silverseek.com/COT/

  15. Trond

    William it’s true those long tails, ‘dojis’ on the usd chart candles shows lack of conviction, indecision but that’s because the Fed has kept everyone guessing. I don’t think a raise will really come, after a streak of bad data until December, low commodity prices etc.
    Fed as a watchdog have to sound hawkish, though, but they can find a face saving way to change mind if everybody begs and petition them not to do it, they may sit on their elevated throne inside the economic ‘Politbureau’ and ‘in infinite compassion let their heart be moved’ by all the calls from below – & everyone will love them for that.
    Then they’ll also be hedged since they can say. ‘We do this reluctantly ,so if it goes wrong and hyperinflation ensues, it’s really not our fault’ ๐Ÿ™‚

    If so, usd’ break out of the consolidation will be a head fake

  16. William

    Ok, folks, there is a positive RSI divergence on the 60mins chart…yes, 60mins chart, it sounds very short-term, so, we shall see…

  17. robert

    Gary,

    Explain why you think gold couldn’t exceed this cycle’s high on the next daily cycle, and still then form new lows? You think 4 daily cycles are too much for a left-translated intermediate cycle?

    1. gary Post author

      Another higher high would generate a strongly right translated intermediate cycle. Right translated cycles don’t usually make lower lows.

  18. zkotpen

    William — I trust you know you’ll be waking up before 4 a.m. for the market close now ๐Ÿ™‚

  19. Bud fox

    Gary said

    “And there is the new high in silver. Folks the bear market is over. You have to quit thinking in terms of a bear market now and start trading this with bull market strategies.”

    Gary said

    “Once gold forms the cycle bottom then how it comes out of that bottom will tell us whether the bear is over”

    I guess the analysis depends on what day it is.

    1. MuffinTop

      Nope – It’s called being ‘nimble’ cuz ain’t no one got a crystal ball and mama Market likes to F*ck with our brain, you know what I’m saying Bubba?

    2. gary Post author

      I’m still of the opinion that the bear is over and gold will soon follow silvers lead to a higher high.

  20. William

    IMO, the 60mins chart has an immediate hurdle at 1,163. Taking down this level should see current reversal to follow-through…Else, nothing has changed.

  21. ted glum

    I don’t see anything to get excited about on the charts. Gold has had several relief rallies since 2011. I guess if you look at a yearly or quarterly chart it looks quite strong, look at a five yearly chart, it looks like a bull trap. June, 2013, december 2013, October 2014…. Everytime, the bulls got excited and claimed the end of the bear market. Approach with caution, be open to the both possibilities, bullish and bearish.

  22. William

    Markit Eurozone Oct’s manufacturing PMI slightly better than expected…should be supportive of Euro, i.e. bearish USD. But, tonight we have Markit U.S manufacturing PMI & ISM manufacturing…

    Stay tuned.

  23. AlexP

    USD frontline has moved up from 96.6 on Friday to some 96.75.
    A convincing close below this level would signal the beginning of the daily cycle decline in USD.
    The positive correlation USD-SPX is still here very strong and already very very old, since Oct22, i.e. 7th day.

    Bulls have rejected again the bears at the new frontline this morning but the fight can conclude either way –> higher probability for the bulls from my viewpoint but … taking a position is too risky in either direction, it is best to stay in cash and wait for “safe”-sailing (i.e., a very high-probability direction)

  24. Hong Bang

    Alex,

    For indicator Keltner Channel, I see in stokchart.com the serie 20:2:0:10. What do you used. Last time you told me that you used the 25:….

    Please clerify for me.

    Thanks in advance

    1. AlexP

      usually 25 day-cycle, 1.0xATR of last-10day-EMA, i.e. 25, 1.0, 10

      on the other hand, after QE-killing by FED 1y ago (I personally do NOT think we a new QE has begun), USD daily cycles have tended to run shorter, so that now, I think , a 20-day average cycle is more effective.
      thus the current parameters I employ are: 20, 1, 10.
      But they can change at any time ….

      PS: I think it is wrong calling that A NEW QE PROGRAM HAS JUST BEGUN. It is VERY WRONG.
      Rather, the current situation looks rather like the post-OCt1987 crash when FED halted further rate hikes and that helped stocks market move higher quickly (and from this reason, SPX closed higher on a y-o-y basis during 1987, despite the massive Oct-crash)
      WE ARE NOT IN A NEW QE PROGRAM! It is just that FED has thrown insights into its foregoing rate hikes.

    1. AlexP

      this makes excellent time for non-trending, range-bound traders.
      any position for a trend follower until Friday, after Empl Sit, is madness from my point of view –> few traders really understand EMOTIONALLY (arithmetically is obvious but far away from enough) that 0% return is larger than any MINUS X% return (with X a real number larger than zero ๐Ÿ™‚ )

  25. AlexP

    …William, on the other hand, this type of environment is positive: it shows the first stage of what I depicted on Saturday: chaos and fear where institutions develop shakeouts to accumulate.

    Therefore, for me, it is a joy to see such a market-setup because it confirms me my expectations are on the right track.
    The second phase would be to see some sort of emotions escalation –> the turmoil starts as earning reports get published and retailers’ fears as to Empl.Sit. kick in.
    At that moment institutions will get in gear to start their shakeouts maneuvers on late Wednesday through Thursday –> AT THAT MOMENT THE “RIGHT”/”APPROPRIATE” EMOTIONAL VACUUM WILL EMERGE WHICH SIGNALS EXTREMLY SHRUDE AND WEALTHY TRADERS THAT TIME HAS COME TO START HUNTING AND RIPPING THE MARKET VIA SHAKEOUTS.

  26. Stefan

    On the Gold Bear/Bull topic

    How many of you traders use Fibonacci? Is it any good, does it work?

    Gary what’s your opinion about Mr F, is it useful?

    1. gary Post author

      Sometimes Fib levels are good for spotting cycle bottoms. They caught the recent DCL in oil at the 62% Fib retracement.

      1. Stefan

        Ok so Fibonacci works, if you use it vertically why not use it horizontally? Fib is very much present horizontally in the goldchart.

  27. Simo83

    Hedge funds and money management should concentrate their efforts on a single play: leave the bubblish stock markets at their destiny: in fact they systematically underperformed the benkmarks or lose money and put their attention to one single sector: yes, precious metals. So they will have enough energy to drive prices to level well above current valuations, that are too low compared to stock and bond markets.

  28. MuffinTop

    Gold could also momentarily tag the rising trend line channel [bottom of July 20th/Oct 2nd] at 1120 and bounce back up from there. I would be more concern – in the short term that is – if Gold breaks channel support, then I would expect a retest of the lows under 1100.

  29. ted

    Market bears are over thinking it. If you are not long stocks, you MUST have your head examined. Period.

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