59 thoughts on “CHARTS OF THE DAY”

  1. Mark

    My feeling is that we are seeing history in the making.
    There are so many extreme financial political and social situations that you can almost feel it in your hands.
    At the moment 95% of the people are bearish on gold and commodities and bullish on the stock market and the dollar.
    This PM bear market is the worst in history (especially for mining stocks),and also the creation of fiat money is the largest EVER in human history.
    This combination is surreal because the price of gold should rise like a rocket in this environment.
    I don’t know what will happen beacuse we are entering uncharted territories,I only hope God will give me enough strenght to resist further after 4 years of financial destruction ( I own lots of PM mining stocks).

    1. Jorgy

      http://smartmoneytracker.blogspot.com/?m=1

      The fact that Gary’s “new blog” gets 100’s of comments per/post and not 1-10 tells me that sentiment is too damn high for gold to bottom. We haven’t seen extreme pessimism and capitulation in gold and their respective producers. Frankly, more wealth has been lost “picking bottoms” in secular bear or “picking tops” in secular bull markets. The mania phase of the equity market’s blow off top could last 12-24 months, the U.S. Dollar could rally 5 (+/-) years. Stay in cash until sentiment hits an extreme level and play the regression to the mean or snap back for huge % gains in a short period of time and you’ll outperform the market. 🙂

      1. Gary Post author

        Actually sentiment did hit a rare extreme in July with ony 12% bulls.

        The bottom line is that everything was set up for that to be a final bear market bottom but we needed the jobs number Friday to come in poor.

        If that had happened then everything would look very different than it does now. Gold would have rallied viciously back up, probably by 40-50 points and instead of dropping down into an ICL it would be back on it’s way up to confirm a right translated intermediate cycle.

        The trend for the last three months has been towards weak numbers so it was a good bet that the trend would continue. But since it didn’t we now have to look to the next jobs number to confirm a rate hike in Dec.

        Once the Fed starts to raise the dollar will probably top and gold will bottom.

        1. Jorgy

          The setup over the summer was good but the setup in the future will be much, much better since the USD’s next leg higher will continue to pressure commodity prices. Lower prices and demand for commodities will create a cascade of debt defaults and dislocations in $ denominated debt. It’s going to make the debt defaults from the previous cycle look like a picnic.

          The bear will end when capacity is taken off line and producers go bankrupt wiping out equity holders not some technical price, sentiment or arbitrary Fibonacci level. Fundamentals not technicals will deside when enough is enough and the bear ends since the cure to low prices will be low prices. The commodity supercycle ended when Glencore IPOed back in May 2011. The bear market will more than likely end when they file for bankruptcy, not when the FOMC raises rates in December.

          The FED will make a policy mistake that they’ll have to reverse since it will create systemic dislocations in the currency and debt markets. The Bank of Japan did this when they tried to raise rates, but they didn’t manage the world’s reserve currency so the consequences of their error didn’t effect the global economy. Policy makers have made their bed… Now it’s time for them to lay in it! ?

          That said, trading countertrend moves when sentiment is at extremes is an excellent way to make money. Keep doing what you’re doing in/out, stick/move, but stop trying to call “the bottom” since it doesn’t really matter anyway. What matters is your profit and loss which seems to be pointed in the right direction. ?

          http://www.bloomberg.com/news/articles/2011-05-18/glencore-ipo-to-raise-10-billion-as-investors-defy-market-rout

          1. Hong Bang

            Thanks Jorgy, that makes senses. Everyone search for the bottom.

            I totaly agree with you about “more money being lossed by piking TOP & BOTTOM”. We better play by the Trend like Alex advise.

            Thanks Gary for your phenomeno job.

  2. AlexP

    USX is not to touch that line in this DC.
    It will roll over into its DCL before going higher, just as I’ve enlarged upon extensively in a reply to DAVID SILVER to Gary’s prior post (comments are there on gold too).

    1. AlexP

      bloodbath in gold has just begun but it has first to go higher to some 1130 next week or the other before re-rolling over into its last intermediate cycle decline of this bear market.

      1. Gary Post author

        I think I agree . Longs should get a chance to exit sometime in the next 10 days on what should be a very explosive rally out of historic oversold conditions. Then we get one more drop into a final bear market bottom on the Dec. jobs report.

        If the Dec jobs number is strong then the Fed starts to hike in Dec. and once the market becomes convinced the rate hikes are a go, then the gold bear will be over.

        I’ll go over this in depth in tomorrow nights report.

          1. Gary Post author

            I think we are getting very close to the final bear market bottom. It would have come in July but we needed the Friday jobs report to be weak.

            So now the most likely target would be a final bottom a little below 1071 possibly on the Dec. jobs number. That would guarantee a rate hike on Dec. 16. And once the Fed starts the rate hike cycle the gold bear will be over.

            We should get a strong rally sometime next week. It will look very convincing but I’m going to suggest trapped longs use it to get out and then wait for the final yearly cycle low in early Dec. before buying back.

        2. Hong Bang

          Thanks Gary & Alex,

          I think Bottom in the making when everyone believe gold will fall to 900 – 1000.

          Now, many loss money in piking bottom & try to make it back by piking AGAIN bottom.

          PATIENCE is the word learned from Gary & Alex.

          Many thanks

  3. crawford

    while the picture I see suggests a lower market coming, it really boils down to just this…will they let it go? Will the powers that be allow a red market, or are they so lust crazed that they keep the pedal to the metal, and melt us up into December? 

    1. Gary Post author

      Actually the bullish percent charts are a measure of how many stocks are above or below their point and figure charts trend lines. They aren’t a measure of sentiment. they are measuring overbought and oversold levels.

      1. Simo83

        yes, Gary, thanks for the clarification.

        actually bullish percent on gold miners is showing some strenght…but I dislike to use these indicators when I trade a basket or index. it could indicate that there is some room left to the downside despite some resilience from a lot of miners

    1. Simo83

      http://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&st=1978-01-08&en=%28today%29&id=p66983318614
      this is a most comprehensive chart where we can see:
      1980 were the real bubble in gold with price skyrocketing in a small amount of time;
      said that gold experienced some real bullish cycle along the secular bear market, in the actual bear cycle we experienced only some quickly rebounds before new lows.
      gold miners has been battered down so badly that they are trading at value or their assets and reducing production while demand of gold is increasing with price going down…this situation could not be stretched to the extreme, the market need to continue to operate selling the amount necessary to fulfill demand

      1. Gary Post author

        We may have seen the final low in gold stocks. Even if gold makes a lower low the gold stocks may start to diverge.

        1. Simo83

          gold can not been replicate in laboratory nor mined for asteroyds (as some idiots had published in their waste on the web)…so YES, GOVERNMENTS AND BANKS SHOULD NOT ANNIHILATE THE SECTOR, they need it continue to work and be profitable, and at 40 years low It is cheap enough for them to buy…but…

    1. Simo83

      there is so much liquidity in the system that an asset in a bear market could start rising well before some other uncorrelated asset class turning down …but teorically intermarket analysis is right. I do not agree with low rates as a simple statement, gold had rallied even in rising rates environments in the past…

    2. Gary Post author

      The only thing I would disagreee with is that gold and stocks can rally together. They did from 2002 to 2007 and again from 2009-2011.

  7. Simo83

    the mining sector should reduce costs even more because the “fat cows time” are definitely over…management should return HUMBLE, so do workers, so have done investors with their huge losses and no dividends. But this is not the whole question, the industry as a whole MUST cut production in order to support price. What has obteined Goldcorp or other mining companies with increasing production in the last quarter? a collapse in their shares price and a new slide in the price of gold…too easy forcing the mrket to liquidate if there is no significatn physical scarcity against demand, which I want remember, is HUGE from China, India and other nation, overwhelming production….but this is enough, MANAGEMENT should react in an even more drastic way, they must cut production waiting for higher prices.

  8. daneil

    Is gold going below $1000 or where do you think the final bottom is going to be? I hope this ends within a year.

    Would it would be a good idea to back up the truck around 1030? I have been sitting on cash for the last 4 years and I am almost close to giving up…contrarian signal?

    1. Gary Post author

      I think the market has priced that in ages ago. Once the Fed starts to raise rates it will start to weaken the economy and the dollar should start to discount that pretty quickly.

  10. David Silver

    First off thank you Alex and Mr. Savage for your continued analysis.

    I have to disagree here and now:
    US markets will continue higher (Russell in a technical breakout and playing catch up).
    Shanghai is also in a technical breakout uptrend.
    USD going to $107.93 and now in a daily technical breakout and soon weekly thus continuing to pressure commodities to new lows to come.
    No rate hike in December because the FED has our back.

    August 24th was a monumental event across the board.

    I’m short crude and will reenter selected equities of strength come Monday.

    1. David Silver

      To be a great investor one has to watch it DAILY and with that said on Friday’s jobs number spiked the US Dollar and actually altered the overall landscape of ALL assets IMHO……. in fact since October 15th she has changed course and caused havoc EVERYWHERE!
      Metals DOWN.
      Yen DOWN.
      Euro DOWN
      Crude DOWN
      Bonds DOWN

      With that said it also has a correlation in the stock market!
      US Indices UP
      Shanghai UP

      Bottom line:
      Metals AND crude MAY be in jeopardy in breaking NEW lows (one has to watch markets like a hawk and have to alter stances on a DAILY basis).

      As of Friday I am now short crude (in hindsight Thursday was the signal).
      I sold my FB on Friday’s weakness anticipating a lower rebuy to come.

      THIS coming week will fish around for equities of interest on weakness limit orders (FB, JBLU and WTW?)

      I am REALLY bummed because I watched ALL of my hard earned money and work evaporate on my long crude for the past 2 weeks! VERY important to place limit sell stop orders and/or just plain cashing out on record days!

      The FED has an agenda since March 2009 to prop up the US markets (legalized ponzi scheme IMHO)……. some call it QE but I call it the PPT (Plunge Protection Team) i.e. where they literally inject hundreds of million/billions into S&P futures in strategic times of defense.
      Rate hike in December? No……. hence my theory above.
      2008 spooked them.

      1. AlexP

        JBLU used to be one of my favorites for picking too but it did something which erases a stock out of my radar –> it fell too much on OCT 13 (2 times its ATR).
        It may move a little bit higher up to the pivot 27.10 but all in all it is a risky trade –> smart money may have already started to discount the beginning of the inflationary period when the sell-out of airliners started on OCT13.
        NEW SELL-OUTS ON STRENGTH ARE LIKELY TO COME TOO! IT IS VERY RISKY BEING NOW ESPECIALLY IN LOW-COST AIRLINERS !

          1. David Silver

            Forgot lower crude means better margins across the board i.e. reflecting in recent moves in that sector.

  11. AlexP

    On my part: you’re welcome, David! It’s my pleasure.

    USX may go to 107 indeed but it has to visit a DCL below 97.50 first 😉

    ONE IMPORTANT NOTE TO HEED WHICH PROVES THAT THIS IS THE LAST INTERMEDIATE CYCLE OF GOLD’S BEAR MARKET (with a bottom sometime in December) IS THAT 30Y-TREASURIES ARE ALREADY IN FAILED INTERMEDIATE CYCLE IN A FRESH YEARLY CYCLE WHICH IS GOING TO BE EXTREMELY LEFT-TRANSLATED!
    This means that 30y-bonds are early in a yearly cycle decline –> they are to be I it for quite some time until the YCL is hit.

    Commodities, via CRB index, will not correlate positively with 30y-bonds for too long a time because it is un-natural while gold will be the first commodity to ketch the negative correlation with 30y-bonds.

    TLT, the etf which hosts all treasuries over 10y (30y-one included) may find itself in the same situation on Monday if it goes below 118 (and most likely will do so while also putting its DCL).

    So:
    1) 30y-bonds give us a fantastic hint that the bear market in gold is not far away in time, while
    2) the aggressive USD ascent shows us that before that fresh bull we will have a blood-bath in gold and even before that
    3) next week gold has to go to some 1130 as USX finds its DCL below 97.50

  12. William

    David, I would agree with Gary here. However, I personally would and must follow the technical very closely. In fact, prior to the current sell-off, I had ignored the bearish candle-stick set up in GDX weekly chart, my bad there…a real bad here.

    And, let me remind you that my view, his view or anyone’s view won’t matter much at the end of the day as Mr market simply does not care if you and I make or loss big!!!

    Back to gold’s chart, from a pure technical analysis perspective, current move is just testing the previous low made in July/August period. Upon a successful re-test, then, we may see a bottoming of gold here.

    I have a view of how this may pan out but I would rather not saying it here…I think enough have been said of our respective view and it is a critical time to “listen and respect” what Mr Market will say next…

    And, like what I shared in the following article, again I am on the same page with Gary that December rate hike (if it happens), it should spark a new phase of life for precious metals!

    http://www.zealllc.com/2015/gfedrhc.htm

    1. David Silver

      Thank you too William for you time and effort in your post.
      I think the obvious will not come to fruition hence a contrarian stance. Metals continue down below 1072.30 to the next cycle bottom via 1025.25 aka operation capitulation.

      Hey what makes you bullish on crude? Energy looks ripe like stocks I understand.

      1. William

        It was not my view, David, it was a fact. There is a study done (from 1999 to 2015) looking at sectorial performance of the U.S market and Energy sector has consistently be a top performer for Nov – Apr period.

        1. David Silver

          William historically yes the odds are in your favor however we are amidst turbulent and daunting times that should throw a curveball in the mix of things IMO.

  13. mm

    Now EVERYONE including Gary says a rate hike is coming. How many of those new jobs were seasonal?

    Most indicators are not showing anything close to a vibrant economy so I don’t see how the Fed risks a hike.

      1. Jorgy

        The FED fears being stuck on zero when we enter the next recession. Ideally they’ll be at 3.75% before they have to cut rates, but I doubt they’ll ever get rates that high before multiple dislocations in shadow banking and derivative markets explode. The global financial system is so interwoven that “Helicopter Money” will be dropped to offset the debt deflation.

  14. MuffinTop

    Please also keep in mind that we are on the eve of a Political Election and I don’t think the ‘powers that be’ would let the stock market deviate from its current course — a rate hike is unlikely in my opinion.

  15. JaninWales

    My two cents.

    I think they will create a correction / crash in the market now as an excuse not to raise interest rates in December. After that it will be off to the races for conventional stocks and Gary’s 12 to 18 month blow-off in conventionals will take place.

    This would mean the market rising into the US elections and hence, if they are going to have one last interfere, it will be now before the end of the year.

    So I think we will see that correction sometime in November/early December.

  16. William

    Looking at Gold’s daily chart again, looks like October resembles August and November would look like September (i.e another flat month) where December will be calling the shot of directional movement?

  17. William

    If so, time should be spent (for trader) in scalping some gains in equities for the rest of the month!

  18. William

    But then again, there is an obvious shooting star on weekly $NYA, so a down week for this week could be on the card for equities.

  19. chris

    I have looked at charts for more than 10,000 man hours I believed, and there’s a certain tendencies. Similar history doesn’t produce similar chart patterns. EG, 2011, before the market rallied in the fourth quarter, it corrected 50%+ first. This year , no such correction in October, the market just rallied in a V shape.

    Now to gold. 2001 to 2011 is the greatest bull run since 1970s. Then gold rallied to 190, dropped just above 100, then rallied to 800.

    Now divide those numbers by 10. 100 was the nice whole number then. 1000 is the nice whole number now. Previously, it held, my guess this time, its gonna break the 1000 mark, to really scare gold bugs. And if like conspiracy theorists says, that gold is highly manipulated, they will likely do that.

  20. chris

    And do you know how to best pick gold bottom? You let prices rally above 50/ 100 / 200 ema, then on the first deeper pullback, buy on the 50-61.8% retracement correction. A true bottom usually will not see it close below 61.8 for 2 days.

    The rest of the rallies, are just bear market rallies. Too many of them. And if you don’t trade out by taking profits, you will lose a lot.

  23. Trond

    The vultures are circling above gold, so we will probably see a post-battle ‘mopping up operation’ which implies running the stops with heavy selling in thin trading (which we haven’t seen much of so far during this downturn) – in a final leg down..

    The treasury yields looks ready for another ‘launch’ like in 2013, very similar chart pattern to then. In case it will make it more politically difficult for the Fed hike rates, but little consolation for gold, since higher yields means a higher ‘real interest rate’ (yields minus inflation) which is usually bad for gold. A higher yield also makes the dollar more in demand among foreigners (as it is the entry ticket into higher US yields = stronger dollar)

  25. chris

    Rate hike in Dec? I say no. The FED have used up so money money to prop up the August crash. A rate hike is only possible when NASDAQ is comfortably above new highs. So unless NASDAQ really 15-20% in six weeks, rate hike will be delayed to next year

  26. ndmaster

    Gary- with the dollar going up on Fed rate hike speculation? Do you think the dollar doesn’t believe the Fed will raise rates? I ask because you said an actual rate raise will be sniffed out by the dollar and it will go down with a weaker economy.

  28. Braden

    I am long miners via GDX, GDXJ and I will continue to add on dips and sell on rallies with a net long biased through 2016. I am comfortable with drawdown as I believe these levels are historic.

    The psychology on this chat is very typical of getting closer to a bottom. No one was concerned with potential downside in 2012-2013. Now down 90% off highs, people worry whether GDX has bottomed. Well, as an investor, its time. I can wait a year and plan to trade around position for as long as it takes. I believe this will go several hundred percent higher over next several years.

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