DOLLAR CYCLE

Dollar Cycle
The dollar is possibly completing the right shoulder of a head and shoulders pattern. Overnight price completed a swing high suggesting a decent possibility the daily cycle has topped. Several scenarios for the dollar’s future price movement are discussed, as well as the implications for price performance of gold related investments.

Like our new Facebook page to stay current on all things Smart Money Tracker

148 thoughts on “DOLLAR CYCLE

  1. Barry

    I was able to turn off one of the soundtracks and listen.

    Quite an analytical development! Looks like we will soon get a move up in gold but will have to have more patience before the larger move.

    Gary,
    1. Might this better align with the 10 YR T-Note moving below 123.00 (next leg down)?
    2. How does this affect your triangle consolidation hypothesis?

        1. HomerJ

          Late response, however, after you click on the video to start it in the post above, just click on the YouTube icon that shows along the bottom, towards the right side.

  2. Goild

    Talking about the professionals.
    Well the professionals have worked out for them a very sweet deal.
    Yes, they do trade. But for their bottom line it is not indispensable for them to win trading.
    They make lavish fortunes charging 1/2%-1%-3%-6% to people’s retirement accounts.
    They make money whether the market goes up or down.
    They have worked for them a very sweet deal.

  3. Surf City

    Gary, I can see from your last video on your the Gold Daily Cycle counts why perhaps you have been fooled thinking Gold’s cycles have become so long. Every single one of your Daily Cycles over 40 days in your video was actually two Daily Cycles in my book. Very clear to me anyway.

    In your video you were expecting a DCL was starting based on the wrong Time, IMO. If your counting was correct, why would today be a DCL when day 28 back in late Jan had everything one could be looking for: Trend line break ~check, close below the 10ma ~ check, 38% Fib retrace ~ check, Timing Band at 28 days ~ check. Its all right there on the chart.

    I have Gold on day 13 and likely moving out of a Half Cycle Low of Daily Cycle #2. Why, because Price tested but did not close below the 10ema. Classic HCL behavior.

    Here is an older post from last December where I show my cycle counts to be in the traditional 23-29 day range. Nothing has changed in my book as Time is still very important to be able to spot a DCL.

    https://surfcity.co/2016/12/18/gold-cycle-update-4/

    Speaking of spotting lows, here is a post on Dec 29th, where I nailed the YCL on the dime…

    https://surfcity.co/2016/12/29/gold-ycl-update/

  4. ARends

    Anyone know UVXY? VIX leveraged bear play. This seems like a play that could come in handy soon. Would need good timing though. The rewards will be phenomenal. Then whats is the risk..hahaha

  5. zkotpen

    I concur with Surf…

    In fact, Surf’s & my cycle analyses have been very similar of late, and we use very different methodology.

    Recall about 2-3 months ago I said that Nov 9 was an INTERMEDIATE cycle high.

  6. pacoquin

    jajaja long time I dont read u but… u still fighting the dollar collapsing ??? Yes…. in the short run I agree with the 96.. but that would be all… the prepare for the dollar 118-120 … and Euro the other way …. stubborness is the right word

  7. zkotpen

    So far, what I was looking at for Tuesday actually happened on Wednesday:

    Gold & GDX form zig zags from their respective highs, of the type

    A – triangle B – C.

    The move down in gold from 1244 was 3 waves down, zig zag.

    The move up in gold could very well be an X wave, a form of bull trap just like wave B, “a correction to the correction”.

    Or… something I’ve been thinking since late last week — there is a possibility that gold & GDX have already put in an INTERMEDIATE CYCLE HIGH.

    So if Gary is looking at a triangle of YEARLY cycle degree, I’m looking at triangles both one degree HIGHER (the entire move out of the Dec 2015 low as a multi-year triangle of CYCLE degree); and one degree LOWER (Intermediate degree triangle).

    Or perhaps a double zig zag:

    (1) Wave W from 1244 to 1216 (A-triangle B-C)
    (2) Wave X, fast and furious Wednesday/Thursday
    followed by (3) another zig zag, wave Y, 3 waves down.

    (1) and (2) are likely, and but they can be followed up by lots of corrective patterns:

    -Triangle, as suggested above
    -the second zig zag (W-X-Y, above)
    -some other corrective pattern in a general sideways/down direction, to form a combination.

    People are wondering why silver and GDX are not keeping up with gold’s latest surge from 1216.

    The most likely TECHNICAL explanation is, metals are still in corrective patterns, and they’re not necessarily following the same pattern at each degree.

    The correction is probably occurring at the daily cycle degree, but I’ve also got my eye open — & mind open — to the possibility that the correction may be at INTERMEDIATE degree: Deeper, and/or taking up more time.

    Again, for now, I’m sticking with a daily cycle degree correction continues — but looking for clues that

  8. zkotpen

    (continued)…

    the correction could very well be one degree higher.

    As in, gold forms a right translated daily cycle out of the YCL,

    makes a higher high on the second DC, only to be left translated, forming an ICH.

    Then an intermediate correction down, followed by a second zig zag up, to the YCH, primary wave C of triangle of CYCLE (multi-year) degree.

    Those are the scenarios I’m taking most seriously these days 🙂

  9. zkotpen

    Surf City:

    I’m looking at the link you posted & your December charts. I’m with you on the daily cycles.

    Of course, I’m inferring you agree with me that Nov 9 was the INTERMEDIATE cycle high in gold.

    But that’s just inference.

    Do you agree that Nov 9 was gold’s INTERMEDIATE cycle top?

    Likewise, I’ve already stated, in October, that what you’re calling “TC Low Day 26” was the ICL.

    And your “Now Day 22” — well, we agree, that’s the YCL.

    ERgo, 2 IC’s down, with a pop — IC pop — in between: Nov 9.

    That’s my count on IC’s down into the YCL.

    What say you?

    1. Gary Post author

      Just the intermediate cycle advance. And the triangle scenario isn’t written in stone. That’s just my best guess at this point for how I think the year will play out. It would give the 200 week moving averages some time to flatten and turn up. Then next year would most likely produce the big trending move to test the all time highs.

      But I could be wrong and this intermediate cycle could break out and make a higher high before topping. I think a lot will depend on how deep the intermediate dollar cycle turns out to be.

  10. Goild

    ARends,

    UVXY indeed looks very promising.
    Please keep us updated in your thoughts.
    I will try to follow it.
    I noticed that daily volume is not so weak.
    So one can get in and out easily.

    Tomorrow is pay day and so the SM may close higher and UVXY may depart more from the averages.
    Timing wise it looks that it is time for it to come back to the averages. So tomorrow at close can be a good entry point.

    1. Gary Post author

      I would strongly caution against buying the VIX right now. That kind of trade only works well during intermediate cycle declines.

      The intervention to prop the market up ahead of the Humphrey Hawkins speech has almost certainly stretched the next ICL out to April. It’s going to take another full daily cycle before we get the next ICL.

      The next minor DCL assuming it’s even allowed to happen shouldn’t last long enough to spike the VIX very much. The last daily cycle was halted after only two days. Who’s to say they won’t do it again during the next DCL.

  11. Goild

    There was a spike but not deep enough, so the NUGT order was not served.

    I could not resist the temptation and got on board with UVXY, 200 shares at $20.03.
    My take is that today may be a follow up day from yesterday and UVXY may hit $21.

  12. KHT

    Hi all, I`ve been lurking here for awhile and decided to throw out this little tid bit. I`ve been into PMs the last few years, primarily as a stacker of G/S bullion. I heard many times that although Gold is King Silver leads the charge. Maybe, just maybe silver is ready to drop the hammer.
    (Hope the links work)
    https://90efcf5696fb6d91896e-62c980cafddf9881bf167fdfb702406c.ssl.cf1.rackcdn.com/data/tvc_8febe436ff03d0b3dd7ee4729fd33a0c.png

    https://90efcf5696fb6d91896e-62c980cafddf9881bf167fdfb702406c.ssl.cf1.rackcdn.com/data/tvc_57586636b9d30b500bfa0ae081c3e0f0.png

  13. ARends

    Goild,
    I see the last spread was Bid/Ask: 12.43 / 12.63 NUGT, you 12.55 and premarket is 12.47. Is your strategy that the spread slack overnight and then get in with the bounce up seen with gold? Really interested in your appoach you previously mentioned LO before open. Obviously we know gold is up and nugt should react. I am slighly stuffed with not able to buy premarket.

  14. Goild

    ARends,

    I should say that I am not a systematic trader as Dday or as prudent as Gary.
    I am trying to build more shares in NUGT and it seems to me that after a few weak days gold will have good days. Since yesterday I pocketed $1K then I have a good cushion to add 1K NUGT shares around say $12.5-$12.8. I do not pay too much attention to the premarket spread. My limit order was set to $12.55 as this was the bottom of the premarket. More than every thing I am making a habit to set these 6:00 AM limit orders as one day I can get a quick easy profit.

  15. Strike

    KHT
    Love your dual timeframe chart setups complimented by Ackerman’s fib analysis. To me, this setup promises one of 2 outcomes:
    a) vigorous upmove after breakthrough
    b) big drop after bounce off resistance

    Could go either way, but I favor (a) due to cycles and fundamentals like inflation and fiscal spending.

    1. KHT

      Thanks Strike

      Well I did go ahead and buy 500 [email protected] at the open, I favor your (a) scenario as well and by my cycle count I`m looking at March 6 or there abouts as next DCL. (I am pretty new to cycles)

      Hoping to add more if this all plays out but still comfortable going Old Turkey with this current position with a draw down.

  16. Option Trader

    MIners appear to be breaking out of their multi-day flags. I want to see them stay strong through at least noon to confirm.
    I’m watching BAC today. We’re getting a red morning but if BAC can turn around by the end of the day, that will be a confirmation of a set up on my charts for a multi week bullish move. If BAC stays red today, all bets are off.

  17. Don

    I am all smiles this morning with the PMs moving up nicely but much of the gains are directly the result of today’s downside action in the dollar. I would like to see the PMs move up substantially more than just because of a currency adjustment. When that happens in earnest, we will know we are truly in a new bull market.

  18. Don

    Right now I am far more interested in the stock market. We have seen the same pattern for days now, with the market dipping slightly in the AM only to recover on to new highs. Ant change in that pattern might be a signal that a correction is in play. We have had the minor sell off so let’s see what happens.

    1. Option Trader

      Not sure why you are playing in N.G. Roze. I don’t see one bullish set up on charts.
      In fact, this week it is currently breaking a multi month trend line to the downside.
      We’re far away from anything looking bullish in this sector.

  19. Don

    The rabid left is really going after Trump with everything they’ve got and with the help of the media. If Trump cannot consolidate and firm up his power base, he is in deep trouble and the market will react accordingly. This could get very very ugly.

    1. bill

      Russia Russia Russia all day 24 /7 where was all this noise when the Clinton’s were making secret backroom deals with Russia the last several years?

      Ridiculous and nothing more than your typical distraction.

  20. ras

    uup beginning its down swing in earnest. Nice. Nugt and jnug moving in the right direction after sideways move. Key mas on intra day charts have switched into bullish alignment.

  21. BestOfLuck

    Option Trader, why do you track SIL?

    Might as well track the miner AG. Much higher volume, and volatility.

    If you play option, then isn’t SLV a better choice due to its volume?

    Thanks

  22. Gary Post author

    We’re getting the follow through to the downside I was looking for from the dollar.

    That being the case I would count gold as being on day one of a new daily cycle that shouldn’t top until the dollar completes its ICL, complete with bloodbath phase.

    Should be 4-5 weeks before the dollar cycle bottoms.

  23. Gary Post author

    The trolls are awfully quite today.

    They have the luxury of crawling back under their bridge when it turns out I was correct all along. 🙂

    In a bull market all timing mistakes ultimately get corrected.

    1. Pedestrian

      When you say trolls do you mean bears, Gary?

      Bears are not trolls. How can you make money if there is nobody on the other side of the trade?

      Think of them as business customers instead. 🙂

  24. Goild

    I am done for today.
    Decreased the purchase of the 1K NUGT shares to $11.90.
    With yesterday’s $1K gain, the purchase price of the earlier 2K NUGT shares is $12.00.
    So call 3K NUGT shares at $12.00.
    Next step is to add another 1K shares effectively at $12.00. We shall see.

    Good trading to all.

  25. Don

    Gary, it’s a little to early for gloating . You have been calling, relentlessly I might add, for the dollar to fall since last fall so cockiness is not warranted just yet.

      1. Pedestrian

        Seriously though. There has been no significant change in my outlook for silver to make a multi week correction. As far as I can tell all we have here is a minor overshoot of resistance but even that may not amount to much once the day and weeks close are recorded. Copper has already started its decline. I would have to see breakouts lasting longer than a day or two to change my opinion.

          1. Pedestrian

            In about 3 months time. Shorter term not a good outlook though unless the correlations break or silver goes out of bounds and does the unexpected. I would expect a recovery to get underway in June. FWIW though I am having trouble with timing the macro so don’t put too much stock in the dates.

  26. Option Trader

    I’m glad the miners turned around today and are leading the metals. I was really hoping that this was going to happen through the end of the day tomorrow.
    As far as my charts go, tomorrow’s close is very important for the miners. I’m looking for green weekly closes on GDX and SIL.

  27. Option Trader

    SLV

    Today it broke above its daily 200 moving average. That’s good.
    But… it’s up against its weekly 200 moving average. There is tremendous resistance here that goes back several years. Silver has not cleared its weekly 200 moving average since 2013. Do we a lot to prove here? yes. Maybe somewhat rocky for Silver over the next week.

    1. Pedestrian

      Options expiry tomorrow. Not long to wait now and direction should change. We will know Monday if there is a light at the end of the tunnel for the bears or if silver breaks to new highs. Fingers crossed but I will admit I really don’t know. Nobody does. Anything could happen at this point. Even the unexpected.

    1. Pedestrian

      I did see that. Great work too. I appreciate his balanced point of view. Neither bull nor bear. I think he is a realist who attempts to maintain objectivity. He doubts the sustainability of gold and silver right here though and I agree. We are right on the edge. Did you read my commentary over on Rick Ackerman’s site? I cover silver and copper charts in some detail.
      http://www.rickackerman.com/2017/02/yellens-idea-of-a-heated-economy/#comments

    1. Pedestrian

      Nope. All country. How do you think I got the bad attitude?

      My TECK call is coming off fabulously. And needless to say it was timed to perfection as was my copper call. Down 4% since I left the commentary precisely on the day of the peak. Not sure why Bill keeps saying I am wrong. Kind of makes me laugh actually.

        1. Pedestrian

          Bill, that’s 4% of one of the worlds most important commodities. It’s not a handful of shares of XYZ Corp for Christ sake. Sorry but that was a superb call. And I will be right on silver too. It is going to face-plant next week off the high board. Nice and bloody. So take care not to own too much when the day of reckoning arrives.

  28. Don

    My penny stocks are not taking notice of the rally in the PMs. That is a bit worrisome . The speculators who buy penny stocks may be waiting for a stronger move in gold before they start pumping up the pennies.

    1. Option Trader

      Don, be careful with the penny stocks. They have many other factors which affect their movement. The most important thing to understand is that the ownership of these small companies are entitled to withdraw shareholder funds at their own discretion. They can withdraw a very large chunk of funds to pay for company expenses or pay their own salaries and at any time. Many of them have no morals and greedy.
      It’s much safer to stay in larger stock funds that are better regulated.

      1. Don

        I am well aware of the risks. Penny stocks are not an investment. They are for the most part, worthless. That said, if the CEO and the CFO are buying, I am interested. The time between the insiders buying and the pump and dump can be extensive as in two or three years. I have about a half dozen that I bought at one half cent to three cents and most are up around the four to seven cent range. When one buys a couple hundred thousand at a penny and it goes to 5 cents, well do the math.

    1. Pedestrian

      None of the above. At least not immediately. I still think we will have some kind of a correction. Possibly in the range of 5 to 10% to reset sentiment and wake investors up again. The complacency right now is mind numbing. My timing is not perfect on this though because I was thinking it could come this week or last if certain conditions were met.

      But they have not been (yet) and so this is dragging itself out.

      You might recall I have been talking repeatedly about the Nikkei needing to hit the 20,000 area before we would see a US market correction of note. And I also wrote extensively on the correlations between the 30 year bond, gold, yen and Japanese stock market.

      If you are wondering why I use the Nikkei I can answer that question in just a few words. It is because it is the only stock market of significance that has not already hit all-time highs. It is therefore the only one that can offer me easily accessible reference points to judge where a top may come in.

      And because of that it can still be used as a proxy on US and European equity markets when you need to locate a prior resistance point worth talking about. So if I want to know when US markets will correct all I need to do is watch the Nikkei for its arrival at the first of two serious resistance points.

      We are rapidly closing in on the first so its time to pay attention.

      The second peak is higher and may also indicate a topping place and corrective point. Its up around 21,000 and you will need to view a monthly chart to see it. Without getting into too much detail, this is important because it is only one of two charts I can use to identify market resistance points and so the idea is just too juicy to ignore.

      The other chart I use is the EuroStoxx50 and if you examine that one (also on a monthly) you will see its also closing in on major resistance and may do so timing-wise around the same date as the Nikkei peaks at 20,000. Keep your eyes peeled and watch those old peaks like a hawk because if my hunch is correct that’s where you may have luck getting short the S&P.

      Now if your next question is to ask my why in hell the Nikkei could possibly have any bearing on US equity markets the answer should be obvious. All developed nations indices travel together these days. When one is up they are all up. And when there is a correction they all correct. It does not matter if its Europe, Britain, the US or Japan because the algos have them all tied at the hip (most of the time).

      So by deduction we should be able to use inter-market analysis methods to arrive at reasonable conclusions about impending tops. What is curious is that I wrote to Rick Ackerman about this idea last week but he dismissed it in a recent interview. Probably thinks I am nuts and maybe I don’t blame him. A lot of people have tried to call market tops…. Pretty much everyone to be more precise.

      And until now they have all been wrong. Every last one of them.

      But I think this idea of mine has merit. When the Nikkei gets around 20,000 i will take a short position.

  29. Option Trader

    I’m seeing very large leap call spreads today in silver and gold, in the options market. These are experienced buyers/funds that see the metals going higher.

  30. Option Trader

    Another nice day for the metals. We need follow through tomorrow.

    BAC

    Bank of America provided the confirmation that I was looking for today, after a bullish set up I noticed in prior weeks. BAC is ready for a multi week bullish advance. I am looking to accumulate on any pullback.

    1. WallStreetJesus

      I was surprised the metals didn’t do better today considering how well they have been holding up. I thought they might blast off.

      Since that didn’t happen I wonder if the metals are topping?

        1. Pedestrian

          Agree. Topping pattern on gold hourly chart. Exhaustion in silver. All bear on copper and platinum peaked on February 9th. I just don’t see the excitement unless one gets short. But bulls abound. We must be looking at different charts.

  31. crow

    Wow, it seems that Ped is the only one defending the bearish viewpoint for precious metals now on this blog. The contrarian in me says that all of you who are increasing your positions in NUGT, etc. at this point with such conviction are likely to get some chastening from the market. Has everyone forgotten that the best time to buy the miners is when they are oversold. They are currently overbought on the daily charts and in need of a bit of a pause (at least) on the weekly charts.

    Gary, how could we have completed a daily cycle low? The five-day RSI for gold, GDX, etc. did not come close to oversold territory, the ten-day moving average did not turn down, and there was no resetting of sentiment that I could see (except for a bit of selling in the first half hour of trading on a couple of days). Nobody seems the least bit worried that the market might go down at this point. We never had a single daily close that would give the bulls any real cause for worry.

    Also, note the volume of JNUG and JDST over the last few weeks. The volume for JNUG has been declining as the price has risen, while the volume of JDST has been increasing remarkably. This hardly seems to support the bullish case for precious metals.

    Finally, we are still below important resistance for gold in the 1240-1250 range.

    1. Gary Post author

      Neither one of the recent dips had the characteristics of a normal DCL. But…

      The dollar looks like it’s ready to start the next leg down. If that’s the case then gold should be ready to begin another rally.

    2. roadrunner

      weekly charts of gold, gdx and gdxj look fine. Not suggesting that we are not still in a bear market as we may still be, but based on the weekly charts, nothing there to scare me out of a long position. However, I am not adding anything around these levels.

    3. Pedestrian

      Good observations Crow. What I know about gold bugs is many of them don’t really bother with examining charts. Judging by the stuff they use to make their case they seem to mostly take their cues from the hundreds of online promoters and assorted hucksters who allege to have insight into precious metals.

      So when they are short of answers they just link someone else and say they agree. Wow.

      You will have far better results ignoring that rabble and just doing your own charting. Gold is surprisingly easy to read if you give it the kind of attention you are already doing. There are some bullish comments you really have to ignore though and they come from guys who almost never back up their comments with anything more than an exclamation mark.

      As if that’s all the proof you need.

      Like this recent one “Gold is going up! Hop aboard!!!”

      Pretty convincing stuff there eh? LOL!!!!!!

  32. crow

    Yes, but that was because of a special circumstance (earnings report), not because of any particular bullish factors for the pm complex in general. Same with GG.

  33. Option Trader

    I want to clarify something on my BAC call.
    I am not entering a BAC position or recommending to enter a bullish position here.
    Today BAC confirmed a bullish set up going into an upper Bollinger Band. This is not where I enter.
    I will wait for a significant pullback for a bullish entry. Because the general market is looking tired here, there’s a good chance I’ll get the pullback I’m looking for in the near future.

  34. Gary Post author

    I would not short the stock market ahead of the State of the Union address on the 28th.

    I doubt the new administration will allow the market to correct significantly ahead of that event, anymore than it was allowed to correct ahead of the Humphrey Hawkins address.

    In our modern managed markets it’s just not safe to sell short.

    1. ras

      Absolutely. All momentum indicators for SM are powering up with white candles. Svxy pulled back yesterday a touch above daily ma20 and recovered smartly today in a hammer. One day wonder bounce in uvxy, about which some interest showed up here yesterday, vanished in a reversal candle. For now, we have an established trend in place in pms. Just ride it until price contradicts. The most difficult thing to do is to stay with the trend because it is so boring and unexciting.

  35. MegaMind

    After watching Trump press conference today, I realized that his tax plan and healthplan are planned to be released in march. So basically gold has until then to rally because, as soon as the tax plan is published, dollar will zoom like a rocket (as corporations rush to bring it dollars to us)… so I guess gold and miners have few more weeks to hit the highs… all conjecture at this point….

    1. cazabrujas

      CorporTions would rush to bring dollars back IF (and that is a big if) congress approves his proposed tax reform, and that process is going to take a while.

  36. Option Trader

    What I’m watching in tomorrow’s market:

    Prior to 12pm:
    – Any sign of continuation of weakness in SPY, QQQ, DIA and IWM
    – TLT trying to prove itself here, looking for bullish follow through

    Tomorrow’s close:
    Metals & Miners to prove themselves on a weekly close

    1. Pedestrian

      I doubt TLT is really ready to rock n roll. Ideally I would like to see it back at 117 before entering and I say that because long treasuries have not (in my opinion) completed their decline to the support line. Same with Yen and gold. All of them are in flux right now and working out a bottom that seems to never quite arrive.

      1. Pedestrian

        That being said, there is always the unpredictable to make my life complicated and wreck my chart patterns. There is an outside possibility of a DOW decline of 450 to 500 points tomorrow or Monday. Nothing to get too alarmed about but if that happens then TLT will be pretty responsive, bonds will take off and gold will make a move higher (in spite of my bearishness).

        LOL.. Just what the doctor ordered. A big dose of “told you so!” from the likes of Bill.

  37. TraderPete

    Michael Belkin’s number one recommendation is to buy silver and silver stocks. The second leg of the bull market in gold and silver in underway, and silver will outperform gold. Therefore, buy the dips in gold and silver, but especially silver, he says. The second leg is going to be a doozy.📈♉️

    1. ras

      No idea about the amplitude. Just buy the dips in your favourite pms/pm stocks and take it one day at a time. Market has its own time table and follows its own script. Do we have any choice except go where the price takes us?

  38. Goild

    The gold/NUGT action toward the end of the day was weak. Today is a Thursday which is a strong day and so one could have expected a strong close. Perhaps tomorrow we will see it but tomorrow is pay day and the SM likely will close with a strong week. So gold may not have the fuel to go higher.

    Since tomorrow and Monday I will only have an IPhone to trade while traveling, I decided to sell the 1K NUGT shares I added today.

    I am closing this week with reasonable profit so my long weekend trip will be even pleasanter.
    Hope you guys have strong profits for the week.

  39. Goild

    To note that TIP and YEN are on a sideway channel.
    So the expected leg up continuation of gold may not happen so soon.
    The sudden drop of USD yesterday could be corrected tomorrow.
    As pointed by Option Trader tomorrow metals/miners will be tested.

  40. Goild

    Add to that the daily stochastics are overbought by already a significant period, suggests that tomorrow may not be a bright day for metals/miners.
    The late drop in gold/miners correlated with the uprising of the SM and since the retirement funds need
    to pay extra at pay day, tomorrow may be from a bad day to a neutral day for gold/miners.
    Though the weekly stochastics appear trending to enter the overbought zone.

    1. Pedestrian

      Generally, gold has been following stock markets up for most of 2017. And that is happening in spite of a correlation to Yen that ordinarily would see gold fall as stocks rose because the Yen falls when the Nikkei goes up (and gold falls with the Yen).

      Whew, too complicated.

      Anyway, we are not exactly meeting expectations in that department and so now we have arrived at a moment when gold is somewhat oversold and the MACD’s are clearly rolling over at the daily level. So gold will correct here but perhaps more interesting, gold will likely decline WITH the stock market.

      And I suppose this is because gold has indeed been rising with the stock markets all this year.

      Should we really expect it to do anything differently therefore? What will move up instead though is USD and long bonds as yields fall so lets watch those for positive price action instead while taking care not to get overextended on either silver or gold (or copper for that matter which has already begun to fall ahead of the pack).

      I have downside targets for a decline in US markets that could get underway today. These are not too significant and does not suggest portents of a big worry that a sustained decline is about to get underway. More likely it will panic some people and draw in rafts of fresh shorts that are destined to be the energy to push stocks much higher somewhere down the road.

      Meanwhile, look for a possible 2.5% fall in US equities with the Dow falling back towards 20,000 as a worst case scenario and the S&P dropping back to 2290 (futures charts). We should bounce back from there easily.

      That could happen today at the earliest or possibly Monday. At this hour (4:30 am NYT) I am watching for signs that we have a minor top in place and a wobble that will manifest by morning. So by the time you read this it may already be over. I do expect silver to get hurt if markets fall though and this is usually the case as it still functions more as an industrial metal, not a monetary one.

      This is not serious though and I think we might best typify the coming action as mildly corrective which is NOT the same as a correction so lets watch our terminology here and not panic at a few hundreds point decline.

      The Nikkei incidentally appears in this case to have led the charge as it is already off almost 500 points from its Wednesday peak. It is the chart I was watching most closely for signs of a topping process but it may actually be correcting ahead of my estimated target.

      1. Gary Post author

        I don’t know what charts you are looking at.

        All indicators are pointing down for the dollar and nothing is even oversold yet.

        All indicators are pointing up on gold and nothing is overbought yet.

        Possibly even more important, sentiment is dead neutral at 56% bulls. It’s going to take weeks and much higher prices before we have to worry about running out of buyers.

        And to top it off the COT levels are mildly bullish. The Blees level is miles away from bearish readings below 10. (It’s at 62 as of last week).

        1. Pedestrian

          Watch the stock markets Gary. We are going to see a corrective decline of about 2.5% on most indices today and Monday. I feel reasonably sure of that but as always the market want to kick my ass when I get too sure.

          Can you see that happening?

          Get back to me at the end of the day and ask me how I knew since it is supposedly impossible to identify any kind of correction before it actually happens. Meanwhile, I am speculating on what will happen to gold and silver this afternoon but will admit I am not 100% sure what comes next. I presume copper and silver will fall but it looks like gold is going to respond positively to an equities decline. So we have a divergence setting up.

          1. Pedestrian

            About the indicators Gary. All I can tell you is there is an art to reading them. Don’t take what you see at face value and assume what looks like a trend will persist. Some of the commentary I post is going against the grain here but none the less I am more often right than wrong. I follow indicators I developed myself and they offer good guidance when I am not sure what’s happening.

            I might be from a farm but I didn’t fall off the turnip truck yesterday!

            About the decline I see in the markets. I should have been more4 specific that I think its starting now and Monday. It should run for a week minimum though.

  41. ARends

    Ped ,
    as I said before there is a much larger picture weekly to looking at Gold with technical (D or W charts)…they are proven red herrings that are all (heads or tails, (H&T)) with value at instances. If you don’t look at the Blees, futures and sentiment then you can only consider day trades H&T with you known tricks for day trades to earn $. Looking at the larger picture (daily and weekly charts, the picture of the foundation of trade and what you know changes what you put your faith in risk management. Each has value for risk management but some time frames are better with a better combination tools if you aware what tools work for PM. Correlations have value at points dependent on market and financial market conditions as you know and I see them breaking today faster and faster while swapping as money is swirling faster and faster with world dynamics. You possibly know more than most traders in your trades, not that I would know more. Just when yo think you know whats going on then you realise how little you actually know, and to the depth and diverse options, there are in the value of contrarian as each has a value of the approach. Gary knows best approach for the style for the trade instrument which works. Does anyone get it right all the time? No but the best odds of the tools used for your trade style and instrument in its time frame I believe is diverse and success ratio. So …you right when you take a specific area but could be wrong in another. As you hinted as a wise person…..the more you get to know, you realise the little you know…hahaha. The bottom line we dont realise that PM drivers creating past correlation do change as world dinamics changed from investors interests and their drivers right to consumers in the new fast changing financial influence with wealth owners.

    We in a fast-changing financial world and new dynamics. Just consider: In past year alone poorest half of world money value was held by 68 people and is now 8 people…that’s frightening thought.

Leave a Reply