66 thoughts on “CHARTS OF THE DAY

  1. AlexP

    It depends only on USX; a standalone analysis on gold is useless.
    thus the prefered scenario can occur only in the lower probability event that USX does NOT go above 100 tomorrow but rather continues its daily decline into mid next week.

    as for the medium term….with USX so early in its yearly cycle (started on AUG25) and also on a strong rise, it is unlikely anymor that this YC will be left-translated so that USX will go higher into spring –> there will also be the 3-year-cycle high and not only the YCH.
    therefore, gold still has room to go down until mid winter at least -> though I expect gold to bottom before USX reaches its 3YCH in spring.

    1. AlexP

      …besides, one of the prefered articles for buying here in Eastern Europe for the Black Friday have been gold bars because “gold is so cheap now”.
      now we are in a globalized world and if retailers’ attidute here happens to be also else where in the world then … buying-the-dip is still strong –> gold still has room to do psychological demage to retailers’ minds before bottoming

  2. Mark

    Of course I hope that you will be right in the end ๐Ÿ™‚
    The whole idea that this is a major correction in a long term bull market as that of the seventies leaves me a bit skeptical because the 60/70’s bull market was much shorter in time (as well the major correction from the end of ’74 to mid ’76).
    If we take a look at the bull market that started at he end of the ’60s we have a three waves bull market with he A wave that made a top at about $200,then a B correction that bottomed at about $100 and the final C wave just over $800.
    In the bull market that started in 2000/2001 we have a very similar structure with the A wave that topped at $1000 then the correction B wave that bottomed just below $700 and the final infamous C wave with the top near $2000.
    The only alternative could be that this is a bull market twice as long in duration.
    In this case we should have another 5 years of the remaining bull market.
    What we desperately needs now is THE BOTTOM.
    Only after this FINAL bottom we will be able to understand better how the future will shape .

  3. David Silver

    Still think my original theory displays credence after Friday’s session in gold and one must revert to it:
    Gold is in a redundant cyclical 8 month downturn and has 7 more grueling months to go.
    Target 956.20 mid June 2016.
    1025.25 logocally seems too high of my original bottom calculation given the current situation of logistics.
    Obviously mild peaks along the way but no where near our recent October highs hence her redundant cyclical 3 month top.
    Call me crazy but after recently stumbling upon the Doc’s sentiment, I think my call may very well have some validity.

  4. Bud fox

    Wow, we’re back to A B C D waves again?
    Those only apply in bull markets. This my friend is a bear market after an unprecedented 10 year bull run. Declines like this need many months if not years to base and consolidate before the next up leg.

    The good news which you didn’t mention is the COT numbers have improved.
    That should be good for a bounce to keep the hope alive for the gold bugs.

    http://www.finviz.com/futures_charts.ashx?t=GC&p=w1

    1. Gary Post author

      Yes the COT is suggesting another rally is impending.

      I would argue this is only a cyclical bear within a secular bull. No different than 2008, only much larger. Of course considering the magnitude of the rally out of the 08 bottom this cyclical bear probably had to be larger. By the time the long term bull is over even this correction will look like a minor blip just like the 08 drop.

      1. Tushar

        Cot looks to be suggesting at least 1160. I will look for a little lower commercial shorts still on coming Friday as it’s lagging generally.

    1. Gary Post author

      I don’t know why the system keeps blocking you. Maybe you posted a bunch of links before. That will cause the system to block an IP address as it assumes it’s spam.

  5. David Silver

    Next gold intermediate bottom Jan 2016 i.e. 1025.25 which makes total sense now.
    Then next intermediate top mid March 2016 i.e. 1146.42.
    Then intermediate/final bottom mid Jun 2016 i.e. 956.20.
    All figures are derived from my theoretical timing bands.

    1. Gary Post author

      I change when the market changes. Otherwise one risks getting run over ๐Ÿ™‚

      Perfect example. Until the ECB meeting on Oct. 22 the dollar was rolling over and making lower lows and lower highs. The new intermediate cycle was very weak. That all changed after Draghi started talking more QE. At that point the currencies reversed and I had to give up on the weak dollar scenario. That also killed the scenario where the CRB formed it’s final 3 YCL in August. Now I’m expecting the 3 YCL either very late this year or in the spring of next year.

      The fundamentals changed on Oct. 22 so I had to change my expectations along with them.

      1. David Silver

        Amen to that brother, one has to watch the market daily like a hawk and be ready to change one’s stance. Besides there’s always a bull market taking place.

      2. MuffinTop

        Gary, I don’t know why people keep criticizing you for being nimble. The Market is constantly changing and presenting us with different opportunities — Adapt or die — that’s how the game is played! What’s wrong with these people?!

        Grow up you whinny little babies and be grateful that someone is actually spoon feeding you information that’s worth listening to. And if you’re gonna criticize but can’t be bothered to bring a valid argument to the table then for the love of God grab yourself a beer and sit your ass down, Fox news is up next, Lol!

        Muffin drops the mic and walks out ๐Ÿ™‚

  6. Mark

    Gary,
    some food for thought…….
    At the beginning of the ’68-’80s bull market gold was at $35.
    In 1980 it topped at $870 and commenced a long secular bear market that bottomed at $250.
    Now……what I would like to evidence is that gold bottomed in 2000 higher than at the end of the first A wave of the ’68-’80s bull (about $200)
    So IF we are in a secular bear we should not close below $1000 if we want to estabilish a connection with the ’68-’80s bull.
    But it took 20 long years to gold in order to go down from the top at $870 to the bottom at $250….nowadays we would only be into the fourth year of this hypotetical secular bear.
    So…either we are in something completely and catastrophically new for PM or we are not in a secular bear market as you are convinced.
    In short …..in year 2000 gold bottomed about 700% higher ($250) than at the bottom of the ’68-’80s bull market ($35).
    Probably (hopefully) this count could help the side of the ones who think that this is NOT a secular bear market.

    1. Gary Post author

      I just don’t think we can have a secular bear market in gold until the fundamentals change. That means we have to get to the end game of all this insane money printing. Aka, a cascading currency crisis. Once that has run it’s course then the gold bull will be over.

      1. Tushar

        A good idea rather is to develop a solid working analytical model for predicting or forecasting $usd move for a month to several years. That will save some frustration out of money printing fed game.

    1. victor

      see Gary…, something changed in your blog security settings, and I didn’t post any links before, should not considered as “spamming” or so. but I have constant message “your post awaiting moderation”…

  7. AlexP

    all right: USX hit 100 –> USD IS IN A PROVEN BUBBLE!
    Once started, after the long consolidation period of April-Oct, and only at the very beginning of DC number 2, we can safely ride the parabola to come into spring when the yearly cycle decline should start.
    LONG USD AND SHORT GOLD ARE THE SAFEST TRADES ON WALL STRET NOW!

    I’ll buy UUP and DZZ today at the opening.

  8. Hong Bang

    Yes Alex, it’s just tooooo easy money if you are right.

    I’m in the sideline waiting Usd to peak.

    Thanks

    1. AlexP

      you’ll have to wait a long time to see USD peaking, Hong ๐Ÿ™‚
      this is the trick: it is not easy money because retailers are NOW fearful to go long USD or short gold …they will just sit on the sidelines …and sit…and sit until… most of them go nervous about the USD bull, newspapers will start pounding their minds with the strong USD bull, lose patience and eventually start buying themselves too except that …. when they do so, I (an not only I) will sell the USD to them ;;)

  9. AlexP

    USX just produced a powerful intraday bullish harmonic, bullish data supporting the beginning of the bubble is mounting quickly

  10. David Silver

    Selling out of long crude (duh) @ open
    Going short crude @ open
    Selling FB for proceeds @ open
    Holding darkhorses WTW and ANGI
    Medium term play for all (hold till junctures are reached/no daytrading).

    1. AlexP

      yeap, David, stocks are riskier by each day.
      yet I would love to see stocks going higher this week and XLY breaking higher while producing bearish divergence because this up-move would exhaust stocks even further.

      Now we are like on OCT23 when SPX stood at 2077 it was likely to have room to go higher but that 2077-notch was unsustainable and liable to be broken, as it actually occurred one week ago when DCL came at 2019.

      ICL in stocks in early JAN is inevitable.

  11. Gary Post author

    I would argue that stocks are the safest play right now until year end. Stocks have the full protection of central bank printing presses backing them. The holiday shopping season is too important to the global economy to take chances with. So central banks will support the stock markets for the next month.

    The dollar on the other hand is strteched way too far above it’s long term mean to produce any significant follow through on a breakout to new highs. It might get to 101 but would then fall right back into the consolidation zone between 92 and 100. One of the mistakes many traders make is to assume that a big powerful move, either up or down, will be repeated after a correction or consolidation. They are never repeated.

    If you miss the initial move then you need to look eleswhere for the next big trade idea because lightning never strikes twice in the same place. If the dollar is going to 110 or 120 it’s going to take at least 2-4 years to get there.

    And one would have to be crazy to short gold this late in a daily cycle. (it’s down 24 out of 28 days.) You risk getting caught in a violent counter trend rally, or worse you could get caught at an ICL. You’ve already missed the move. Piling in now with the COT becoming extremely bullish is very risky and it’s unlikely there is much downside left at this point. At this point shorting should only be done as a day trade because the bottom could occur at any time.

      1. Gary Post author

        Nope no confirmation of a new cycle yet.

        No break of the cycle trend line. No close above the 10 DMA. And no tag of the upper Bollinger band yet.

  12. AlexP

    There is a very funny trick Lady Market plays to beginners/retailers at the onset of EACH BUBBLE: the asset-in-bubble seems so overbought to them that …AAAALL, just all retailers, say to themselves with great confidence: “everybody is long this asset. I am smart and a contrarian, so I will just sit in cash. Oh, I’m so good, how come that the other do not see it and buy it at such overbought levels ?!!”

    Except that, when the poor beginner thinks like that, he falls in the herd of all world’s retailers who simply … THINK THE SAME ๐Ÿ™‚
    Thus, the retailer is not a contrarian but a gregarious sheep ๐Ÿ™‚ ๐Ÿ™‚ and the real contrarian, profit-making, low-risk, high reward-risk-ratio decision is: BUYING INTO THAT STRENGTH AND FURTHER SELLING INTO CLIMAX BUYING AS PARABOLLA FORMS AND BULLISH DATA FLOCK MASSMEDIA!

  13. AlexP

    Herman, just I told Johan here several weeks ago, please allow me to disagree.
    It is not deflation that causes USD to grow as it was the case, though, in the beginning of 2009, but the beginning of a new inflationary era: we are in the Spring of new Kondratieff Cycle !

    Now, …you may be arguing “Alex, that’s nonsense, because gold cannot be falling in an inflationary period”.
    My answer to you is that: gold discounted the ushering of the Kondratieff Spring at the beginning of the end of the last Kondratieff Winter, i.e. early in 2009, when it commenced growing from below 700 to 1925 in Sept 2011 while we still ARE WELL ABOVE 700 !!!
    So gold has signaled and is still signaling the mildly inflationary period we are entering WHILE STAYING ABOVE 700 –> BONDS HAVE RECENTLY STARTED TRENDING LOWER, THEY’VE STARTED THE SECULAR BEAR MARKET–> interest rates to grow as inflation to gradually grow.

    the recent fall of gold and commodities is inversely linked to the growing strength of USD animated by larger inflation expections

  14. Johan

    Hey Alex,

    what you say makes a lot of sense, I share your basic views;

    Up; USD
    Down; Commodities (incl gold/silver)

    What is key here is that the rising USD causes deflation on a grand scale, and so commodities have further to fall. And they can fall a lot more.

    With regard to stocks I think they are going down near-term but will rise a lot in the longer-term (once money flows from bonds). However if we do break-out to new highs here maybe the start of the strong up move is already, a break-out to new highs here would look real bullish on the charts. Also feel bonds will be going down in the longer-term (rising interest rates).

    I don’t feel as much conviction with stocks and bonds yet, however I still believe in the old relationship that when bonds go down stocks go up, so we will see how that works out.

    1. AlexP

      Hey, good afternoon here in Europe, Johan! ๐Ÿ™‚
      Correct, Johan, I consent with you on all aspects except –> NO deflationary expectations ๐Ÿ™‚ just disinflation in some parts of the world (EU + China).
      Gold and commodities complex will grow big as Kondratieff spring will move forward into the next years; short-term they are now only lagging/following USD’s bull.

  15. Herman

    Hi Alex, I largely agree with your view, but first I expect a (short-lived but very scary) deflationary bust, followed by more QE and inflation (courtesy to contrarianadvisor). Bearish sentiment towards gold will likely become much more bearish. What we see now, may very well be the early beginning of this bust.

    1. Herman

      CA expects the price of gold to fall towards 500/oz somewhere next year (likely first half). Then, after weeding out the last bulls, gold will start the next leg up.

      1. AlexP

        no, no way, Herman! GOLD WILL NOT FALL BELOW 800 !!! It will keep above 700 at all costs.
        Gold is to fall for a couple of months or so but it wont be below 800. I am confident!
        The truth is in the middle: no harsh bearishness from now on, no bullishness either ๐Ÿ™‚
        Just keep the middle way ๐Ÿ™‚ … ’cause all we are is…feathers in the wind

  16. Johan

    Hi Herman,

    if Armstrong is right – rumour I heard is that he said that DXY would reach 165 – it would be a different world for commodity prices for sure…

  17. Herman

    Armstrong appears to have a lot of experience, as does CA. I found his view quite shocking at first, but also well-argued . A different world indeed, but it will likely not last very long. However, as mr. Savage pointed out earlier, it will be very difficult to survive a shock of that proportions when you are positioned on the long side of gold/commodities.

  18. AlexP

    good to see that USX and stocks have switched to negative correlation as of today; that’s in line with my medium-term expectations (up USD vs down SPX to ICL of some 1950 in January).

  19. Dan

    CA also thinks the thirty year US treasury yield will go to 1% in the deflationary bust. It’s interesting because the other guys like Mike Maloney and Armstrong think bonds will crash in a deflation panic.

    1. Herman

      I find CA’s opinion more convincing. He is a long-term gold bull, but appears very realistic about price development and timing. Sell’s nothing. Warns people not to waste too much energy on short-term noise, but focus on longer term and ride those trends. Highly rational. Interestingly, I came across his name on this blog ๐Ÿ˜‰ after reading mr. Savage’s last summer series on the coming shake-out in gold and the miners.

  20. Dan

    Oil is whipping around violently this morning, not a sign of a bottom but of further capitulation on the way. Forget the double bottom on silver too. Just wait until China starts selling off big again.

    The only way I’m playing this is long UUP though, DWTI and DSLV are just too volatile.

    1. Herman

      I think the Saudis are too late, short-term they have destroyed their own market. They have been fuelling the negative trend, now it will feed on itself.

  21. Gary Post author

    Sentiment on gold is already down to 17% bulls. That is in the lowest sentiment readings of the last 40 years. No intermediate cycle breakdown for the last 3 years has dropped more that $50 below the previous ICL. Why? Because sentiment is too bearish to support a big breakdown now that the bear market is clear to everyone. Yet traders are still looking for a huge collapse to $800. We already got the big collapse in 2013. It corresponded to the recognition phase of the bear market. It’s not going to happen again. The rest of this bear market will continue to be a slow grind lower just like it’s been for the last 3 years.

    If gold is going to $800 it’s going to take another 3 years to get there. I doubt gold is going to $800 though because gold is already in the timing band for the 8 year cycle low.

    1. Herman

      mr. Savage, in my opinion the discussion is not about the point-of-recognition (indeed already a long time behind us), but about the onset and severity of the wash-out phase.

  22. Davidh

    Gary
    Are you now saying you don’t think there will be a bounce but rather a slow grind until some news changes direction?
    Thanks
    David

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