52 thoughts on “CHART OF THE DAY – WAIT FOR THE SWING

  1. yogigyani

    All cycle theory related guess are failing.. Doest that point to any fundamental shift in global metal market?

      1. Gary Post author

        Well the gold cycle has evolved into a longer duration for several years now. The last 3 DCL’s into intermediate bottoms all lasted over 40 days. So technically this cycle is just doing what most daily cycles do as they move down into a final intermediate cycle low. Nothing out of the ordinary at this point, other than the fact that with the dollar at new highs gold isn’t even close to making now lows.

    1. Gary Post author

      I haven’t seen much evidence of manipulation during this intermediate decline, maybe a couple of big contract dumps but nothing that would say to me that the banks are trying to reestablish the bear market.

      For the most part this just looks like gold is struggling as the dollar is moving into its intermediate cycle top.

      Like I said above, even though the dollar is at new highs, gold isn’t even close to making a lower low. It’s resisting the dollar advance.

  2. goldilocks

    Who’s turn is it to call a bottom today? (just for entertainment…respecting Gary’s suggestion concerning weekly chart). WHERE IS THE FAT LADY duckie?

  3. duckwhorocks1

    Went long GDX.
    Kinda.
    Sold the GDX 20 strike puts for December for 68 cents each.
    If GDX stays over $20 at December 16th expiration, I make 3.5% in 12 trading days.
    If it goes below $20, I have an effective buy at $19.32 which is pretty good, I think.

  4. Gary Post author

    So far my warning about stocks is turning out to be correct. Anyone who exited has locked in some nice gains and can now sit on the sidelines and see how this plays out.

    It won’t take much for the NDX to trigger a failed intermediate cycle.

  5. Steffmeister

    Plan for 2017:

    Buy GOLD 🙂

    Sell Common Stock !

    An Italiano NO will set Gold on fire bye bye EU!

  6. Alexandru Popovici

    the Scorch has started to show its fire – small flames, though…yet.
    Gold should bottom any moment now with SM falling.
    An undercut in GDX should be put first.

    Those reading my posts know that I was waiting for a bull trap in stock market and it did come yesterday.
    I was tweeting that I would add to my shorts only after that bull trap.
    And here we are.

    1. tulip

      Alex, thanks for being clear..
      much of the time I cannot decipher your posts.
      The scorch, the tsunami being a FALL….

  7. Steffmeister

    JNUG giving the decline in Gold the finger !

    JNUG is 3x leveraged and is small company shares, so it is highly sensitive to price chances, and moves really quickly when gold/silver price changes. Yet over the last two weeks , it has been astoundingly sticky- I’ve charted it’s relationship to the price of gold quite closely (seeking entry points, by estimating what price it might be if gold hung up on expected spots of resistance on the chart) and by all measures, it should be trading down around 4.5-5.5$ right now especially after the last week’s price action, yet today it hangs in there at 6.60ish. It’s about the same price it was when gold was trading at 1220!! When gold drops 50 bucks and a highly sensitive ETF like JNUG shrugs it off, I think that may mean something…

    1. jonsyl

      same reason steff, i finally decided to get in on gold. Still have to be careful in here however as if gold suddenly moves down to the 1150 level and jnug catches up and surpasses those previous lows then there is no end in sight for gold. For now however worth waiting and watching. The real key remains the dollar, if it doesn’t have a impulsive move down then gold is not worth the effort longer term.

  8. tater123

    UUP was in the green 0.5% or so yesterday and gold creamed. Today UPP down a 0.3% yet gold in the red. WEAK!

    At least there is some call buying popping up in GLD

  9. chrisG

    SM depends. Bipolar market. If u long steel, oil , u may hay. You long tech, u bleed. U long silver, ok. Gold die. Anyway Gary suck at telling people gold was going up, cycle bottom several days ago, said oil likely will go down. Its opposite, and opposite big time.

    But Gary is good at calling Semis top. Semis crashed big today. Good warning.

    1. Spanky

      yes it does, There might also be what could be interpreted as a bullish expanding wedge developing.

  10. Spanky

    Duck, thanks for your thoughts re: yen and gold/commodities.

    I somewhat disagree with your blog post. There clearly is not a constant ratio in place between yen and commodities since the late 1990s, but there is a clear directional relationship. (I do think gold tends to follow the magnitude of moves in yen much more closely than the rest of the commodities complex.)

    Again, this is merely a directional relationship in place since the late 1990s, and a general one at that. The commodity boom overlapped with a bull market in the yen, and those bull markets more or less simultaneously petered out in 2011. Because of the generality of the relationship, I don’t think you can day trade based on the directional relationship. Rather, to me it sets the overall tone for commodities and *especially* gold.

    With that backdrop, I again return to the BoJ’s recent policy pronouncement. What makes it different and very notable is that it is open ended *and* it seemingly generates a positive feedback loop (i.e., it is intrinsicially hyperinflationary in term of quantity theory of money). Specifically, the BoJ will print yen until 2% inflation is generated, the problem being a falling yen leads (generally) to lower commodity prices (input costs)–this sets up the positive feedback loop.

    I know people have kicked around the terms hyperinflation and currency collapse with respect to Japan for 40 years, but to me this latest policy literally creates a bottomless pit for yen relative to USD. The only thing that might reverse this long term is if the US decides (or is forced) to print more. Moreover, these freshly printed (borrowed) yen are being plowed into US assets as part of the carry trade, driving up stocks globally, but especially in the US.

    Assuming the global economy is a closed system, so long as yen is flowing more freely than USD, US stocks will generally be the prime beneficiary of this liquidity IMO–i.e. they are the escape valve/rubber balloon for this liquidity.

    This all ends, when and if the Federal Reserve is ever forced to start printing more than the BoJ. But it is hard to envision a scenario under which that would happen right now. The banks are TBTF (thus no liquidity crisis ever again) and CBs can seemingly generate bond rallies at will by mere jawboning–thus it is hard to see the Fed being forced to print to contain bond yields. And it is clear the BoJ, Fed and ECB are coordinating monetary policy to keep the lid on/modulate everything.

    Accordingly, I think the stage has more than been set for a relentless climb higher in US equities. It will take a real revolution in one the major developed nations to stop the current course, IMO, and I don’t see that happening until things get very very bad for the common man in one of those countries (Germany being the most important country in the ECB).

    If anyone has any thoughts or arguments about the above thesis, I would like to hear it. And keep in mind, in the near term, of course the yen can and will get a short covering bounce at some point that may even last for months, this reversing the action we have seen since July to some extent.

  11. terrywg

    Gold is a buy at this price….

    We’re getting some good positive divergences and sentiment indicators are showing readings similar to when it bottomed in jan. Every trader and his mom is seeing the H&S pattern form in gold and shouting that it’s going sub 1100. Seen this so many times in the currency markets… imo when the H&S fails we are going to see fireworks. History doesn’t repeat itself it merely rhymes.

    In terms of fundamentals I think there is overexuberance in the dollar and US SM, everyone is acting as if trump is going to be a wildly successful president. The first major risk i see? Trade wars.

    On the EW front, quite a few gold stocks look like are now proceeding on a wave 5 up (ABX for example).

    This isn’t about calling a bottom… it’s about weighing the upside vs downside potential and making an educated guess; which is the best that we as traders can do. Of course, risk and leverage management still apply. In 6 loco spot gold at 1165, will scale in if i see a swing past 1182. Stops set at 1125.

    1. Spanky

      Agreed. The problem is when you get policy pronouncements like what came out of the BoJ in 2013. The yen crashed lower and lower and lower. No natural market behaves like that, but currency markets are not natural markets because supply is literally infinite. The technicals on the yen between 2012 and late 2014 are surreal.

      So what I am trying to say is, in the very near term, $gold could bounce significantly. But a 2013 style hammering is a possible scenario, expecially after some sideways to up action. The monthly chart is most telling in that respect. Gold has blown through the very very important 20 month MA (more or less the same level as the 100 WMA). As long as gold is below that MA, professionals will be inclined to short rallies and one natural path of least resistance is for gold to make its way down to the lower monthly bollinger band, which is well below $1100. Below that is gold’s 200 month moving average at about $900.

      I am the biggest proponent of gold you will find, but I am not going to deny that it is a very realistic possibility that we see gold move to that lower BB (if it does happen it could happen very very quickly) and then on to the rising 200 month MA over some ensuing period of time, perhaps months or even years.

  12. Spanky

    The one overrriding bullish fact about gold and the miners for me is the imminent golden cross on the weekly charts and the flat to slightly up 100 WMA for each. $HUI is basically sitting right on the 100 WMA.

    It is hard for me to imagine why the miners and gold would have gone through all the trouble to get those long term moving averages aligned so bullishly. The only explanation for me at the moment is that they really are in new bull markets, and they will soon recapture their rising 50 WMAs.

    That is my hope….

    1. Spanky

      Interestingly the best period of for the miners was when gold was actually gently falling vs oil (but both were rising in absolute terms) back in the 2000s.

      I think you are right about gold and oil finding some sort of longer termish equilibrium price. At that point you will likely have them gently trending in the same direction. The question is where is that next equilibrium point.

  13. yasen

    Problem with buying gold today is that we have NFP on Friday. I think we can safely “assume” that it will beat due to seasonality and will pop the dollar. Tomorrow looks like a better opportunity, but then we have the referendum vote on Sunday. Who knows what what does for gold.

  14. Spanky

    based on the gdx:gld weekly chart, I think the miners are going to make a new low in the next couple of weeks. I base this on the large black candle put in on the week of Nov. 21st.

    Such black candles almost 100% guarantee a lower closing price on a subsequent candle.

    I think the gdx:gld ratio will probably tag the 100 WMA as gdx makes its low.

  15. Alexandru Popovici

    on Gold: VERY BEARISH intraday harmonic formation developing !

    on Stocks: stocks’ bear is shrugging solid buying on weakness yesterday and today – that’s a typical omen of a sustained fall 🙂

    1. Alexandru Popovici

      Brian & Michelle: here you have gains of NASDQ extending over 2 weeks getting wiped out in just one day and a half.
      And it is just the beginning 🙂

    2. yasen

      Good point as the BOW for the SPY and IWM were noteworthy. I am a holder of puts in both (220 SPY / 132 IWM) with Jan 20 expiration. However, NFP is the elephant in the room.

  16. Spanky

    Can someone tell me why this time is any different than 2012-2015 for yen, USD, gold and equities?

    I am all ears.

  17. ras

    Here are a few factors to think about: 1. gold’s rsi is at OS level typical of some kind of low. 2. It takes $60 bounce to reach 20 ma. It takes $80 bounce to reach 50 ma. It takes $100 bounce to reach 200 ma. We could have a bounce at least to 20 ma to relieve the OS condition. Time will tell.

  18. Spanky

    The more I look at it, the setups in $gold, commodities (GCC), bond yields ($TNX) and the stock market look almost identical to what transpired in late 2012-2013. You even had a sizeable suckers’ rally in $gold in late 2012 just prior to the waterfall decline into 2013. I mean it is almost eery.

  19. duckwhorocks1

    I hear you Fat Lady…I hear you loud and clear.

    More Indirect longs
    Sold SLW Dec 18 strike puts for 81 cents each.

  20. Spanky

    I bought back the silver miners I sold yesterday. Got more shares as a result.

    What the hell. It’s just money.

    1. Spanky

      True, but sometimes things like 2012-13 unfold, and it just gets darker and darker. And then darker, and then a little darker, and even darker. And then is stays dark for like a year,

  21. Spanky

    We did pierce below the 61.8% retrace for $gold (around $1170). It’s not a big deal as long as it is recovered quickly. And at least for today, we have recovered that level.

  22. Strike

    Yes, the 1180 H&S support and 1170 fib looked to be vaporized, but now is the real test after the recovery as you point out. That’s why I’m more comfortable with weekly charts at potential bottoms. Smooths out (or masks?) panic.

    Lotsa stuff going forward, like fed meeting rate rise and discussion. But I almost cannot believe its not fully discounted by now.

  23. Alexandru Popovici

    yes, Bekind, you are right! Close my lips on gold 🙂

    Even if the Italian referendum is most likely to be rejected and my short SPX trade is more likely to produce further profits next week, I will go 100% cash today – I personally find it best to be on the sidelines when such momentous events occur.
    EURUSD produced a new top, close to 1.07 today, on day 5 – it can easily roll sub 1.04 on a NO-victory.

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