The market is full of bloggers
who write their own forecast. They’ll tell you one thing, and then another.
Some will call it early, some will call it late. Some call it late because
they’re afraid to call it period. But, what you don’t know is the
trend. The trend dictates direction. Direction tells you where.Direction tells you everything.
The Gold market is in a BULL
market. The long-term trend is up. The intermediate trend is up. The short term
trend is down. Name a point in time when levels
of bullish sentiment were at extremes, and you have the majority of people
calling for a top? It just doesn’t happen. Take GDX for example. GDX has
extended to marginal highs, but if you look closer, its individual counterparts
are struggling. GDX is made up of 49 stocks, 21 of which have reached new
highs. The other 28 have not.
Those numbers aren’t terribly
bad. They’re also not great either. And if GDX goes higher, those numbers are
subject to change. I know. But, this ETF is cap weighted.
And its top 10 holdings account for nearly 61%.
Only 4 out of the 10 stocks have
reached new highs. 3 out of those 4 are ranked in the bottom half.
Can these numbers change? Sure.
But if another stock, or group of stocks break to new highs it does not project
a bullish outlook. It’s called front running.
Front running is a trap. And a
very costly one. Front running makes you think what isn’t. Front running is
also short lived.
The culprit will be the dollar. From 2014-2015, the dollar
rallied for 10 consecutive months. Today it suggests nothing short of a
consolidation. Its intermediate trend is up, and still looks very bullish. It
too will rise.
The next few weeks should go
something like this. GDX attempts to rally a wee bit higher. But, anything
higher is only to form a top. Then comes the selling.
And the correction coming is not
going to be pretty. It’s not going to be short. It’s going to last for several
months, and run late into this year. It’s also just around the corner. GDX Weekly Chart:
The warning did not come until Thursday, when price had several attempts to rally, but instead dropped to its previous low. Now after two failures, a third test of the lows would undoubtedly break support and send price in a precipitous decline. S&P 500- 4 hour chart
Other clues came during the last 2-3 weeks of the advance, when price would accelerate to new highs, but after a few days a minor correction occurred. The pattern now has formed several mini peaks along the way, indicating momentum loss. S&P 500- 4 hour (chart 2)
Technically, since we are still in an uptrend, there is the possibility of a final short-squeeze to higher highs. Anything upward of 20, even 50 points would theoretically take the S&P into May for a top. The result would be a divergent peak, indicating the rally is a bad one. It would also be the best scenario for the bulls - as price would form an even larger top, providing enough time for everyone to get out. In any case, whether we drop immediately, or continue on, the coming decline should lead to a 2-4 week sell off.
Stay tuned, more to come next week. Darah http://thecompletecoveragereport.blogspot.com
While most 4th
rate analysts unwittingly misdirect you into watching for a big dollar collapse
and cling on to its alleged correlation to gold, all you have to do is look
back a year and see their relationship is worthless. The gold trade has been an
obvious disappointment and its most recent breakdown through 1320 has brought about
a ‘think tank’ infested with analysts fetching for all sorts of reasons that
seem rational for calling a bottom. None of which are true--and of course these
same analysts that tell you to keep an ‘open mind’ are the ones mentally
blocked from knowing the characteristics of a downtrend. And they’ve been
sending you emails and newsletters for months saying this “JUST MAY BE the TIME”
we have reached the final low!
As you all know
the reality has been much different, with every rally being met with tremendous
selling pressure, giving you no indication of a possible bull market. Did you ever
think that once the bull gets underway and reaches 3200, they will all tell you
it’s time to get out?? The same crowd of forecasters that were keeping you in
at $2000 have ridden the bear “A L L- T H E W A Y- D O W N” to these current
levels, still claiming every oversold condition is just a pullback to a much
bigger uptrend! I’m sure after 22 months it will be that ‘conspiracy theories
of manipulation’ or some ‘finishing wave count’ are the reasons.
once you break the apex and have a lower low you add the width of the triangle
from the breakdown point to get the measured move. This shoots for a price target
of 1200, which is a minimum expectation, but perhaps on the next failing rally
we will see a climax low to 1140.
CHART OF GOLD (1)
That also would
have price return to the 61.8% area from the lows of 2008 to the highs of
September 2011 and a good place for an extreme reversal bar to appear.
Chart of Gold (2)
too is a potential fold back measured move from the point the trend went parabolic
in 2011, to where we are now in the current downtrend. Notice that the parabolic
uptrend of 2011 equals the parabolic downtrend of 2013 in size and that it happens
to fall in the vicinity of these same target lows. Not to mention, the downside
volume is now much lighter which is a sign that most of the selling pressure is
being absorbed by central bankers and giant institutions controlling the demand.
CHART OF GOLD (3)
lose money in downtrends because they have no strategy, they become instant
long term buyers, and, they must ‘wait it out’ only to recover 70% of their
losses, if they’re lucky. Timing the market is not the same as ‘time in’ the market
and you should know that after a price base of 4 to 5 weeks your odds of ‘a
bottom’ is more likely. Or basically draw a horizontal line from 1200 out, and even
with giving five or so percentage points to account for volatility it won’t be
a surprise to see in a couple of weeks that price will be trading flat. We are
hovering above extremely tough support on all time frames, and once 1350 is regained,
the bull market will launch!