THE PATTERN OF PREDICTABILITY

Investors have experienced a state of prolonged frustration--where prices are TRAPPED between the upper and lower width of a symmetrical trading band. This is a reversal sequence that is gradual in nature, but unfolds in a horrendous ‘up and down’ affair until a sufficient amount of both time and distance is reached. Prices here regroup, gather strength, and undergo heavy accumulation as both, buyers and sellers, eagerly anticipate a forthcoming directional move.

Word out is that the most current and up to date pattern of GOLD is shaping into a five wave structural decline that in most cases, signifies the completion of a trending move! But there are some circumstances where it’s not impossible for the price to subdivide into six or even SEVEN WAVES before the pattern reaches its culmination; especially in a mature advance or one that stays in effect.

The ACTUAL pattern developing is a contemporary variation of the [seven cycle pivot-wave-structure] - which formed in 2008. The end result that is occurring now- is a six to eight month advance - that will (with certainty) reach a minimum target of 1900, or as high as 2200 in the most bullish case.

The canvas below is a reminder that ALL patterns repeat themselves and, if you will notice in this alphabetical sequence – G completes the developing structure.

GLD- DAILY CHART (click to enlarge)

 

WHY the pattern is reappearing is of no interest, so long as we can observe that it exists! And from the looks of it, the first test of survival is complete and what lies beneath the surface is the muscular structure of one STRONG OX, in the best shape of his life!  

Investors want to know the bottom line - and "the end" of this multi-month correction.  As late as early March, gold will have reversed course to fulfill its long awaited uptrend.

The CC Report offers two subscription services---$9.95/month or $100/year. It is well worth the information received.

www.thecompletecoveragereport.blogspot.com

Darah

THE TIME IS NOW FOR ALL GOLD INVESTORS!!!!

There is a universal understanding that no major trend can exist without Major Institutions being ‘in on’ the trade. With the deepest pockets on Wall Street, these BIG BULLIES are also notorious for manipulating the displacement (of shares) at key bottoms in order to better position their entry points! The most traditional and common method is a running of stops at crowded support levels. It creates a forced debacle where prices are in a reeling tail spin, leaving investors totally shell shocked! Then within days, or in some cases intra-day, prices immediately reverse back to their collapsing point.

The Miners is a working example- because its chart pattern is a clear cut technical aberration with now an oversupply of shares up for grabs! And this inspired stroke of selling has generated a deeply oversold condition that is, comparable to the “July Bottom”---- of which came several days prior to a multi-month advance.

But this discrepancy and perhaps most encouraging sign of all is ---that prices are residing at higher levels! Let me explain.

Elevated readings of the ‘Gold to Miners ratio’ have a credible tendency to mark important bottoms. Readings, especially this past week, certainly justify the current climate as not only bottom worthy, but very stretched-- while holding safely above the “July lows”.

There is an implication here! And that is, that the most recent three day wipe out is unlikely to go much further because everyone who would’ve sold out, has already done so! This ground halting reversal will be in keeping of a larger framework of the current Bull market’s livelihood, and that is, maintaining an orderly (trend shaping) sequence of higher highs and higher lows.

The Gold to Miner Ratio (click to enlarge)

The Complete Coverage Report offers two subscriptions—$9.95/month and $100/year. It is well worth the information received.

Darah

www.thecompletecoveragereport.blogspot.com

THE INFLECTION POINT OF 2013!

Most are sunk in contemplation, and hopelessly clinging on to the ever- changing era of big government spending.

Central bankers and big financial institutions are borrowing money from the FED at rates near zero, and then reinvest it into the ten year or thirty year notes, which are paying 2% to 4%. From the standpoint of any financial institution, it is logical and also more profitable than say, lending to a risky borrower.

Quantitative Easing was- and is now-the Fed’s response to this credit crunch, BUT!- with money being created out of thin air! And this new infusion of liquidity will inevitably flow back to the same institutions that initially purchased these long term government debt instruments! Overall, the hopeful consequence is to saturate the debt market and encourage creditors to invest elsewhere-- i.e. business owners, entrepreneurs, and the everyday consumers.

Bond prices and their corresponding yields have an inverse correlation. If prices rise, then yields will fall. When the FED intervenes it creates the illusion of demand, making prices go up. In theory, their intent, is for bond holders to cash out with a profit, then consider loaning really-where there is MORE RISK.

Interestingly enough, this theory is only a theory, not a solution. When the government increases spending through measures of stimulus plans, the budget deficit will soar. This debt, however, must be repaid and consequently, higher taxes will largely fall on the wealthy, but also on the middle class because most, if not all will receive reduced payouts. Higher taxes will also cut back consumer spending, forcing companies to operate with fewer employees. The result is higher productivity because one worker is doing the job of two, or three in the extreme.

This all will come at a time of rising inflation because despite the Fed’s efforts to keep rates (yields) low, their plan is failing. International creditors are quietly fleeing from bonds because of fears of a possible default. They will focus internally on the growth of their domestic economy. Bond holders will take their bread and butter back to their homeland to focus on the very products that create organic growth and exports for all.  

Mind you, the technical picture must accommodate this inevitable outcome. And as we all watch from a far, the bond market is cracking, but has not imploded, at least not yet. I suspect that this sideways bearish pattern will ultimately give way in the early part of 2013, and at the same time initiate its Bear Market in full effect.

TLT- Weekly Chart (click to enlarge)

We have a major turning point approaching in all markets, not just bonds. The corresponding cycles for stocks and Gold, both long and short, will manifest into a decouple process that- I have long maintained!

Investors should be prepared for the coming tax hikes and rising long term capital gains, which together hold little to no incentive for owning stocks. This will be the true culprit for a worsening stock market, actually a Bear Market; while the media misdirects you with political theater to alleviate the worries of going off the fiscal cliff.

S&P 500- Daily Chart (click to enlarge)

As for the Dow Jones, it too doesn’t look very promising either.
 

The Dow Jones- Daily Chart (click to enlarge)

 

But there will come a time, a time long before the Fed downsizes its balance sheet, if unemployment ever reaches 6.5%. A time far removed from improving GDP or the presumption of an economic recovery. A time when bearish conditions seem extended indefinitely and there is no end in sight! In the same breath investors will rush out of bonds and enter the only non-government asset that in the times of pervasive gloom outperforms any other market---GOLD!

Gold- Daily Chart (click to enlarge)

The CC Report offers two subscriptions— $9.95/month or $100/year. It is well worth the information received.

Darah

 

 

 

 

MINERS AT A LOW!!

The history of the stock market reveals how specific patterns come into being, and how it influences subsequent behavior. Pattern sequences of a previous time are reborn and under the right circumstances, can identically repeat. It is simply a reproduction of how investors are behaving collectively at two different points in time. But knowing that a pattern has a particular script it follows can constitute a path that holds (or leads to) a likely outcome!

Ninety percent of the time all market declines will have two panics. The first is associated with volume and volatility, invoking maximum participation. The second is a byproduct of the first and unfolds in a final ‘flush out.’ It is less dramatic in size and influence- but prices reach new lows.

Time is also a component and is equally as important. Once a protracted decline sets in, historically there is not a typical short squeeze of five to eight percent in the other direction, but a tremendous upward spike which reverses the trend all together.

The modern day scenario that is most fitting is of course, the GOLD MINING INDEX. And after an extended three month correction, we can officially say "the rubber band has been stretched!" The technical picture provides enough evidence to define a clear cut two- panic low sequence, but more interestingly, the second panic has a particularly complex nature that morphed into a sideways and seemingly base pattern. This now calls for a violent uptrend underway!

GDX-Daily Chart (click to enlarge)

The CC Report offers two subscriptions- $9.95/month or $100/year. It is well worth the information received.

Darah

PANIC COMING!

The TV pundits all contribute their fair share to the conditioning process by clouding thoughts of any market player. To the extent that all ambiguities presented will bait investors to thinking IRRATIONALLY! Like, waiting for a 1000 point rally to emerge once the fiscal cliff is resolved.

Fortunately, underneath all the headlines a visual and graphical interpretation can be mathematically extracted. It is here, in these very charts, where you will find an answer that illustrates what is really going on, so that us technicians can observe, scrutinize, and formulate a particular bias.

The information provided does not tell you why, or when, but what!

In this case, ‘the what’ is a bear market rally. These particular rallies are very sneaky and most convincing, but can be properly identified when using the right tools.

For starters, a basket of heavily weighted companies, ‘THE NIFTY FIFTY,’ which offer the bulk in the performance in the averages -all now have chart patterns that cannot sustain the continuation of this advance. Invariably, when volume remains light during an extended window of time, the result is an inevitable sharp collapse back down to the previous lows or worse, new lows that can no longer support a bull market.

The S&P 500 index is a case in point, which is still in rally mode, and perhaps can continue higher if there is further consolidation. But if only mother market is ever so accommodative to our own expectations.

And it is because of her complexities that make it an impossible arena for perfection. The current rally back is clearly overworking itself to recapture the previous drop in November and rather than guessing where exactly it will end, think of it in terms of direction. The future course of these violent counter trends ultimately end in a scare plunge; and all the pumping in the world cannot uphold the violent cascade of selling pressure that will implode on the masses.

Consider the technical chart below, which projects a disaster waiting to happen, and with only a small chance of one last leg higher before this rally is all said and done.

S&P 500- Daily Chart

 

The CC Report offers two subscriptions- $9.95/month or $100/year. It is well worth the information received.

Darah

OVERSOLD RALLY COMING!

The ever changing nature of the stock market will often boggle analysts if the current price information displays an unclear message. There has always been, and there will always be a fascination to wrongfully challenge what the future holds, instead of interpreting what’s at hand.  It’s as if what is already known is simply not enough.

Such aspects should never be the primary tool of one’s own decision making. In fact, this is very reminiscent of my encounter with one wise expert on Wall Street. He is a seasoned grizzly who has weathered decades of all different market climates and his ever influencing demeanor once expressed to me, “Don’t tell the market... let the market tell us!”

Many have already come forth with bottom expectations, but none hold any convincing basis for this belief. With regard to the averages, the message across the board is simply no message at all. The only, if any, ‘take away’ from this most recent emotionally inspired wave of selling has served as an oversold condition. No reversal has transpired to even consider a change of events.

BUT, the last thirty minutes into Friday’s close did reveal a heavy interest of buying for reasons we will soon find out next week. Any follow through of this will result in a swing low, but I must caution those who feel this may in fact be the more important bottom. Let me explain.

Even in the perverse of markets, rarely do stocks ever go down and then turn back up to form a ‘v-bottom.’ These particular bottoms are suspect and almost all fail. A true bottom worthy condition must present a subsequent retest of the low or in the very least, find support near the general area to confirm that prices can hold despite all of the bearish news.

Bottom Line:

After a second low is presented, odds increase tremendously for an oversold rally into year end. Leading into the second low, divergences will erect on all fronts and most of the selling pressure should be ‘wrung’ out. Below is several examples to further underscore this very sequence.

NDX 100- Daily Chart

 



In case Friday was not a low of some kind, a bottom will soon be realized in the coming days.



 

The CC Report offers two subscriptions- $9.95/month or $100/year. It is well worth the information received.

Darah



A Free Lunch!

Click on the link below to preview a sample of the Nov.5th Premium Newsletter.

11.05.2012- Sample Newsletter


For a more comprehensive analysis on the markets, please go to the Premium newsletter tab and subscribe today.

Darah