Because most analysts still refuse to recognize the artificial nature of gold’s bear market, they aren’t going to navigate the bottoming pattern correctly. The pendulum is going to swing wildly back and forth for a while during the bottoming process until price calms down and resumes the natural bull market trend in earnest.
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Great wrap up on gold market multi-year history.
Question: What gold price approximately would you say corresponds to the 200 day MA on HUI of around 140-145?
Here is an interesting COT analysis that shows most small speculators are on the sidelines as almost all Guru’s are bearish. It would seem the participation in this rally has had a rather low participation rate. Can the “Herd” be right?
In contrast, pull up virtually any Miner chart, on the weekly, and take a look at the OBV indicator. This indicator alone shows me that Smart Money is accumulating.
Lastly, here is another COT report from this week that sheds some light on what the Commercials are up to:
” * While speculative bulls were dropping their gold contracts, larger commercial traders were buying up gold long contracts at the fastest rate in the report’s history.
* While we have been bearish on gold for the past few weeks, we now think it is a good time for investors to start re-establishing gold positions.”
Actually the sector that has the most bearish sentiment is in the stock market. The ROBO ratio after a week when stocks are only a couple percent from the all-time highs is at insanely bearish levels. This has the potential to drive a huge move higher once stocks breakout to new highs.
Gold on the other hand has shown a slight improvement in the COT. The Blees rating has risen modestly from 0 to 24. It took a 60 point drop to generate a pretty small change in the Blees rating.
I want to see it reach 80+ before I try to call a final YCL.
Gary, That is interesting regarding your sentiment readings as I also subscribe to Sentiment Trader and incorporate it into my work. His report from Thursday shows Stocks and Bonds at High Risk short term. He shows dumb money confidence moving up towards excessive optimism near .6 and smart money moving lower towards excessive pessimism near .3
He has Gold moving down to medium risk based on the correction through Thursday. Still waiting for his weekend report.
The intermediate term optix is at 64%. pretty much neutral.
Now go back and look at the Intermediate term optix as we came out of the last 7 YCL in 2009. It reached an extreme of 85%. But more importantly notice how long sentiment remained extreme.
The ROBO ratio is a much better timing tool for spoting intermediate tops. They just don’t tend to occur until the dumb money retail traders start to flood into the market.
There’s just never been an intermediate cycle that has ever topped with the little guys this bearish.
Gary makes some great point in his video but the 2009 Fractal of Gold’s move out of the late 2008 low shows that ICLs can be rather mild. Here is my take on the current Gold Intermediate Cycle along with a posts from Mark at GoldTent.
Mark’s Posts (this guy is good and first suggested in Dec 2015 that the “worm had turned”
“Much depends on the USD on how the next month or two plays out.”
Everyone is watching the dollar.. so the fight is over?..
To ensure both sides get fair play, here is the Gold Bear case, presented by Perma Bear, Parabolic Chuck in his post “The Mother of all Bull Traps.” 😉
nice work Gary.. very clear
LikesMoney sees a new Daily Cycle in Stocks and is bullish. Ciovacco turning more bullish here as well but still has some concerns based on 120 years of market history.
Crazy man, Oscar, is still bearish longer term and sees the rally into Friday as a classic “Holiday Reversal” and expects a move back down starting as soon as next week.
Me, I on the sidelines now to see how the early part of the week goes. 😉
Sorry, here is the Ciovacco weekly video.
Instead of following all these guys and getting it wrong week after week why don’t you just follow the SMT? 🙂
They are all pure technical traders and as I’ve pointed out you can’t spot these turns with technicals alone. It’s why these kind of analysts are always on the wrong side of the boat at cycle bottoms and tops.
Gary, Thanks for the offer. 😉
As I mentioned, I like to take in many differing viewpoints to test my own analysis, which is blend of skills including Cycles. I value the viewpoints that you offer in your video and blog valuable even though our cycle analysis sometimes differs.
Your stock market outlook appears to be more compelling and I will take long positions once we take out the April highs on the SPX, perhaps next week Only the DOW has done this so far but the SPX and NYA are a much broader indexes and I want to see a higher IC High first.
Besides, who says I’m getting it wrong week after week? My blended TA approach, thus far, has worked extremely well over the past year. I also played SPX bounce out of the Feb Low but exited a bit early perhaps in early April when my trend line broke.
Until the SPX actually makes a higher high than Nov 2015, all I have seen is lower IC highs and lower IC Lows so a left translated cycle in stocks is still a possibility here, IMO.
I’m going to caution that if you wait for a breakout you will likely be buying at a cycle top.
This is another reason retail traders rarely make money. They have to wait for the emotional confirmation of a breakout before they can buy. But in modern markets breakouts rarely lead to sustained rallies. More often than not breakouts are the point that smart money is selling to retail traders that are buying.
Modern markets most of the time tend to stair step up, so breakouts usually don’t go very far before a correction knocks the market back down a couple of steps.
To make money in modern markets you need to trade like a smart money commercial trader. By that I mean you need to buy at bottoms, and sell into breakouts. You need to trade with a regression strategy, not a breakout strategy.
The way to do that is with cycles analysis and sentiment. But keep in mind that both are evolving as we move through a period unlike any other in history. Never before has every central bank in the world printed money at the current rates and with interest rates at 0 or negative. This is causing cycles and sentiment levels to stretch and become more extreme before turns occur. Then throw in an occasional market intervention, and you have an incredibly difficult environment to trade in, and one that is virtually impossible to win with only some charting software and a few indicators.
I’ve followed you for over 5 years now. And I can’t help but wonder why you got rid of the original introductory paragraph for the SMT Website? The one that referred to Gold as being on the precipice of starting the mother of all bull markets – unlike anything we’ve ever seen. It was very insightful I thought.
I don’t remember that???
But I do think gold has bottomed and likely starting a new cyclical bull market.
I do remember. It was a very profound statement. It was the main reason I chose to follow you. “Gold Bull Market unlike any bull market any of us has ever seen before.”
It was on your sites main page along with the pictures of you on each side climbing a rock wall – before the studio pic on the left and right the gold/silver bars and coins on the right.
I hear crickets….Gary only remembers things that make him look like a winner, not a loser for the past 5 years in gold. Yes, the tide has turned now for gold but he lost a lot of money along the way.
Hardly. I caught almost all of the intermediate rallies.
No worries Gary – the truth is with you and so are we.
If you own GDX or GDXJ then sell. You can always buy them back even if they stay higher. If you own individual microcap juniors then buy/sell or hold based on specific company fundamentals. I had miners like Claude Resources and Wesdome that bottomed in 2013 and went up the last 3 years as GDX and HUI went down. That is going to be the case now as well.
Individual miners are where the most money is to be made. GDX/J is for trading and lazy/scared investors. If you bought a broke-assed junior for $.005 and it now trades at $.07 and is still broke and doesn’t have much of a deposit then sell that sucker. If you bought well funded and well managed companies with good deposits then hold them. They don’t necessarily track GDX/J and might get taken out at anytime or release great drill results.
Mark from Goltent:
“The monthly HUI shows my line in the sand. If we don’t bounce and stay above this 200 level on a monthly basis then I am out”
Mark is a very smart guy but I can almost guarantee that he will be out if that is his criteria for selling. If that is his line in the sand then for sure others can see it and will make sure it is taken out.
I would also suggest that his line is a nonsense line. He hasn’t even bothered to draw it through the pivots.
The correct way to place stops is under cycle lows. Anything else and you are just asking for the algos to pick you off.
I’m getting the popcorn ready as June rolls in to listen to Gary talk about the manipulation that caused his call for a highly likely move back to the HUI 200MA go against him hard. He will be saying “see?…manipulation, but at least I was right on oil and LABU”. Yes, oil is going up and so is the SM but you’ve chosen the weakest sector (biotech) to try to ride the SM bull move through June. Folks, you’re wasting your money with this guy. The $USD is starting its next leg down and gold is going higher, with the PM sector being the best way to ride it. Gary dismisses anything that doesn’t cleanly follow a cycle. One dimensional thinking can kill a portfolio.
JetFuel you are sounding like a very angry bitter guy.
He was planning on miners going straight to the moon like many of the other analysts were calling for. Now he’s stuck with a big drawdown because he failed to use any commonsense.
Gold goes up on average 23% in bull markets and corrects on average 13%. At current gold price level we have obviously some more downside to go. A lot of analyst see 1180 or 1190 as support but why not 1130-1150? I feel sorry for the people that bought recently (my last buy in miners was in Feb. 16), and believe they should face reality that 1300$ gold is a big hurdle and statistically this correction is normal. And although Garry is not always correct, I prefer by far his opinions than some amateur chartist on a gold forum.