Options
***JANUARY 2011 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
Posts: 5,405 ✭✭✭✭✭
This is a continuation of the monthly for discussing relatively short or near term movements in precious metals and related securities.
2010 was a great year for PMs and December was a great month. Gold was up 29% for the year overall, almost $300. Silver and Palladium finished the month at long-time highs, and copper with a new all time high.
December gave me a 76.5% gain trading futures, and overall 2010 gave me about a 50.5% gain in my stock portfolio which consists mostly of mining stocks. I don't have any real annual gain figures for 2010 as I made a lot of deposits and withdrawals and the resulting number would not be meaningful, but I did end the year with a great profit.
The charts to me look rearing to go for all PMs, and I expect the first week of Jan will be exciting. I expect that Jan could possibly and probably will see a $100 rise in gold. The parabolic move is nearing its end, so the moves will be fantastic at this point. Current projections are for $1600 gold minimum, with the $1900s being the top end before a collapse, barring any collapse in the USD. I don't have any official projections on silver, but such a move in gold will probably correlate to $40-50 silver.
Crude went from $99 to $147 in 15 weeks and took only 4 months to decline to $33. If I am correct, we can expect a similar collapse in PMs some time this year once we peak out, and then it will be time to climb back aboard the PM train. 2011 will be exciting, so jump on the train and enjoy the ride.
Silver monthly:
2010 was a great year for PMs and December was a great month. Gold was up 29% for the year overall, almost $300. Silver and Palladium finished the month at long-time highs, and copper with a new all time high.
December gave me a 76.5% gain trading futures, and overall 2010 gave me about a 50.5% gain in my stock portfolio which consists mostly of mining stocks. I don't have any real annual gain figures for 2010 as I made a lot of deposits and withdrawals and the resulting number would not be meaningful, but I did end the year with a great profit.
The charts to me look rearing to go for all PMs, and I expect the first week of Jan will be exciting. I expect that Jan could possibly and probably will see a $100 rise in gold. The parabolic move is nearing its end, so the moves will be fantastic at this point. Current projections are for $1600 gold minimum, with the $1900s being the top end before a collapse, barring any collapse in the USD. I don't have any official projections on silver, but such a move in gold will probably correlate to $40-50 silver.
Crude went from $99 to $147 in 15 weeks and took only 4 months to decline to $33. If I am correct, we can expect a similar collapse in PMs some time this year once we peak out, and then it will be time to climb back aboard the PM train. 2011 will be exciting, so jump on the train and enjoy the ride.
Silver monthly:
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Comments
Happy New Year all! MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Gold and silver closed above the nice fat round numbers of $1400 and $30.
Gold achieved new record closes for daily, weekly, monthly, and yearly.
MJ, what do you mean by "fingernail time" in the dollar? Do you expect it to bounce or to fall off the cliff again?
roadrunner
Great news for the New Year
Glen
<< <i>
MJ, what do you mean by "fingernail time" in the dollar? Do you expect it to bounce or to fall off the cliff again?
roadrunner >>
It's holding on to the 50mda by a fingernail and it's below the 20 and 200. It's falling fast with momentum There is very thin support all the way down to .76 where at the risk of repeating myself ad naseum it must fall to.
A $USD bounce here is possible and who knows maybe a hunk of Europe will go out of business soon.................. but eventually it will hit .76
Aussie and Swissy still on a tear and Cando back to par. There was some suspious Yuan movement today as well. I need to wrap my head around this. Heading to China next week.
Happy New Year to all.................MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Aussie and Swissy still on a tear and Cando back to par. There was some suspious Yuan movement today as well. I need to wrap my head around this. Heading to China next week. >>
What kind of suspicious yuan movement? I thought the trading action overall today was strange, but not sure I can explain it. Quite a few penny-stocks (mining) that I had had GREAT days, up 5-10% but most other mining stocks were up a little to flat. It just seemed like for what was supposed to be a quiet trading day, someone was looking to make sure they got INTO PMs on the last day of the year.
I knew it would happen.
PC- there was significant removement in the Yuan/Dollar yesterday. My sources are telling me things I need to verify myself. I will be in China with bankers next week. Nuff said for now.
Happy New Year all................MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Yes, China has over built dramatically in some areas. I've seen this first hand. At the same time they have rebuilt almost all of their major cities from the core. They are kicking our a$$ in improvements, infrasctuctive and transportation. Not even close. I used to go in China in 1988 as a young pup and would say to myself, " MJ, China reminds me of what the US must of looked like in the 1940's". Now, in those very same Chinese cities I say to myself, " This reminds me of the Jetson's ". Today, a first time Chinese visitor to the US that lands in JFK or LAX would step off the plane into the terminal and say to themselves, " This is what China looked like in the 1970's!". (However, they would say that last part in Chinese
PC- there was significant removement in the Yuan/Dollar yesterday. My sources are telling me things I need to verify myself. I will be in China with bankers next week. Nuff said for now.
Happy New Year all................MJ >>
Happy New Year to you!
Can you give us a hint? Is what you are hearing good or bad for gold (if it is true)?
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I don't know. My guess is that it is neutral/good for higher gold prices...............MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
My Numismatics with Kenny eBay Store Over 6000 listings and growing with more than 39,000 items sold
My Numismatics with Kenny Twitter Page Instagram - numismatistkenny
My Numismatics with Kenny Blog Page Best viewed on a laptop or monitor.
ANA Life Member & Volunteer District Representative
2019 ANA Young Numismatist of the Year
Doing my best to introduce Young Numismatists and Young Adults into the hobby.
<< <i>Yes, China has over built dramatically in some areas. I've seen this first hand. At the same time they have rebuilt almost all of their major cities from the core. They are kicking our a$$ in improvements, infrasctuctive and transportation. Not even close. I used to go in China in 1988 as a young pup and would say to myself, " MJ, China reminds me of what the US must of looked like in the 1940's". Now, in those very same Chinese cities I say to myself, " This reminds me of the Jetson's ". Today, a first time Chinese visitor to the US that lands in JFK or LAX would step off the plane into the terminal and say to themselves, " This is what China looked like in the 1970's!". (However, they would say that last part in Chinese
PC- there was significant removement in the Yuan/Dollar yesterday. My sources are telling me things I need to verify myself. I will be in China with bankers next week. Nuff said for now. >>
I was in China a few weeks before the Olympics and visited many major cities doing the whole tourist thing. I can say that I didn't think it was as great or advanced as you claim and I don't think the US is as bad either. But this difference could be perspective, as I haven't spent hardly any time on the east coast where a lot of things are older and I know there are some major looming "maintenance issues" with infrastructure, but those are largely maintenance issues rather than functionality/capacity issues. As a minor example, my experience in China was that western-style toilets were still something special and not at all ubiquitous, and a so-called "5-star" Chinese toilet is perhaps 3 stars at best by my western standards... This isn't to say that they aren't making fantastic progress, my observation was really just that their cities are comparable to western cities - not any better, and not really any worse.
I also don't see where our airports are that bad. I fly quite a bit through SEA, LAX, DEN, ORD, DFW, PHX, LAS, and MIA and of those MIA is the only one that's in rough shape, IMHO.
The Bradley international terminal at LA is below third world status. Deplorable. JFK is only slightly better.
China probably has rebuilt 30 major cities since you've been there. Chances are you wouldn't recognize some of the places you visited or the airports that you used. How did you like the high speed trains? They are linking all of China more and more everyday.
PC, some things to ponder
The decline of American exceptionalizm.....LAX is us
Detroit of all places has the nicest US airport international and domestic.
O'Hare, Vegas and Seattle airports are mediocre at best
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Interesting that the last 2 deep downtrends in the GSR in 2004 and 2006 ended after a 33% dip. The current steep drop is also at that same 33% point. The dips were coming about every 2 yrs but the 2008 deleveraging fallout jumbled up the cycle timing.
roadrunner
My question is whether or not 2008 is an anomaly or whether 2010 is an anomaly?
The 33% drop inflection point does mean something, but does it mean what it used to mean?
I knew it would happen.
<< <i>PC, please re read what I posted. I said first time Chinese visitors. Meaning those who clear customs or immigration in the US. Most come through LA/SF or NY. I was speaking of first impressions.
The Bradley international terminal at LA is below third world status. Deplorable. JFK is only slightly better.
China probably has rebuilt 30 major cities since you've been there. Chances are you wouldn't recognize some of the places you visited or the airports that you used. How did you like the high speed trains? They are linking all of China more and more everyday.
PC, some things to ponder
The decline of American exceptionalizm.....LAX is us
Detroit of all places has the nicest US airport international and domestic.
O'Hare, Vegas and Seattle airports are mediocre at best >>
I did mis-read that a little bit. I agree that LAX baggage claim is awful, but the terminal has been redone and I think it is fine, IMO. I haven't been through Detroit, but DEN is 100% new as of 1994-ish and I think it's great. I think LAS has one of the best airports as they handle those big crowds very efficiently and baggage claim is one of the nicest I've seen.
One thing that is utterly deplorable in China is their train stations. The 2 I went through were just mob-scenes and chaotic. I didn't do any high-speed trains, but the regular-speed trains were also rough... no western toilets there either, just a hole in the floor.
Couldn't read the NYTimes article, don't have a subscription. I don't disagree with the second article. The US has given away its status - literally handed the keys over to China and India and for what, so we could have cheap goods for 10 years? The company I worked for has been sending stuff over as fast as possible, and I have never believed their "logic" that they need to be "closer to their end consumer" and that they "couldn't find talent" in the US. BTW, the offshore locations STILL can't engineer their way out of a paper bag and their production quality is abysmal (they still send a lot of product back to the US for re-work). This isn't China though - this is Malaysia, Indonesia, and India.
RR, The GSR is interesting to note, but IMO generally useless... gold and silver both have a lot of upside and it's a waste of time/effor to try to pick which one might go up faster. Clearly the commodity markets are making a big shift right now and it may be a while before we know what the new "normal" will be.
2011 Silver Forecast - $100 Likely {Part 1 of 2} - Youtube Endlessmountain
2011 Silver Forecast - $100 Likely {Part 2 of 2} - Youtube Endlessmountain
Here's a good article predicting QE3 in Mar/Apr...
As a minimum it means to me that loading up on silver after the current GSR downtrend isn't the most logical thing to do. I don't buy the idea that GSR is no longer relevant. If that's the case then toss out VIX, currency pairs, and bond pairs that have also been historical measures of liquidity and risk. From the body of evidence I would submit that 2008 was the anomaly in many things financial. Toss out 2008 and the last few months of 2007 and the trends are relatively smooth. If 40 yr market vets like Bob Hoye can still find value in the GSR for signaling market changes, I guess I should too. But fwiw, the GSR still hasn't turned the corner back up. Might head into the high 30's for all we know.
GSR hanging close to 45.9-46.1 on Sunday night open with gold slightly lower. Looks bullish as long as it consolidates around the 46 level. London markets closed Monday.
roadrunner
<< <i> I don't buy the idea that GSR is no longer relevant. >>
I hear you RR... I asked Bob Chapman a couple of questions about his opinion of GSR, and he replied that after studying GSR for years, he no longer pays attention to it... and since I respect his opinion I've been wondering what I've been missing...
The 10 year chart looks to me as though it about to break to the downside hard if it gets below, say 44.5... the past month or so has been impressive imo.
<< <i>That guys' videos are hard to listen to, but worthwhile. >>
meluaufeet, those 2 silver links are a great summary of what happened in 1979-1980. 72 days in 1980 where silver moved at least $1. And about a dozen where it moved $4. 2010 barely managed about a dozen $1 days.
A lot of basic material stocks showing gap up gravestone doji's today (Teck, Vale, Stillwater, etc.). Some possible concern for Tuesday/Wednesday. The senior gold miners jumped out today but pulled all the way back to have a significant down day. If gold continues to head down the trend will accelerate.
Today's and the last 2 peaks for GDX, GDXJ, GLD and SLV are exactly 19 days apart. Coincidence? Meaningfull?
roadrunner
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Turns out they were, along with yesterday's gravestone doji's in some of the senior miners. Looked back an additional month to October and there was a 3rd peak another 18 days earlier. So the 18-19 day pattern over the past 3 months was there for the taking. GDX and GLDX have already filled that gap from 5-6 days ago. GDXJ only has about 15 cents to go. Gold closed it's $1383 gap. Silver/SLV still have some work to do, if it drops that far. This hit seems to be more about gold and silver than anything else. Copper was hanging in as are many of the soft commodities and grains....but I can see copper finally joined into the drop as well.
Update: GDXJ and Silver gaps filled as well. Now that these lower gaps are filled....the gaps that were created today on the drop are now eventual targets. Seems like the silver futures trading had successive 5 minute flash crashes down to $28.75, enough to take out the SLV gap in the area. The dollar dipped down this morning to close a gap from Sunday night's open and now probably headed back to retest the 80 line.
roadrunner
<< <i>Update: GDXJ and Silver gaps filled as well. Now that these lower gaps are filled....the gaps that were created today on the drop are now eventual targets. Seems like the silver futures trading had successive 5 minute flash crashes down to $28.75, enough to take out the SLV gap in the area. The dollar dipped down this morning to close a gap from Sunday night's open and now probably headed back to retest the 80 line. >>
I think you meant 29.75, not 28.75. Regardless, it has bottomed at 29.325.
Today's move was bloody and painful for me, I did not expect a move of this magnitude. In the back of my mind I had an intuition that something like this was coming, especially since I had previously mentioned a Gold low the first week of Jan... but then the way things were shaping up I started to discount it. So far gold has bottomed out at 1375. A few weeks ago when gold surpassed 1375, I had expected a retest of this 1375-1380 level from above but it never came. I should have known that the test would only be delayed.
I was pretty complacent on the move down as I was fooled by silver and palladium's early resilience. These two didn't really follow along until after gold had made half of its move. This move doesn't feel very "genuine to me and feels very temporary.
Today's move should really re-energize the long term charts which were already primed with energy and ready to go. Now the move up from here should be explosive. This it THE TIME TO LOAD UP if you haven't already done so.
RR... well 'put'... 'spot' on...
That is what I gathered from the youtuber Endlessmountain video that was posted in the December thread. It is pattern that has developed over the past few months and we ought to enjoy it as long as it plays out. I'm hoping that I don't see it on goldseek, kitco, cnbc, bloomberg, etc. So I would prefer that stays on the down low, so it lasts longer. I would be pleased to see this hold through April... I doubt it will though.
If my memory serves me... I also think that when the CAD is above the USD a correction is in the cards... I believe this started around Dec 06.
One week up... Three weeks down/sideways. January could end up looking much like December where todays low would be a decent entry... I usually look towards the second week of January as time to buy some physical... but I recall that ProofCollection said in NOVEMBER that the first week of January was closer to his timing models.
The Silver Log (12.24.2010) -15th Day Breakout (Youtube Endlessmountain
edited to add: PC... props on that timing call (you'll have to let us in on that one... at your discretion) I started my post, had breakfast, finished it and posted BEFORE I saw your post. So yes, I did recall your timing and was planning to buy some physical (it will just be a week earlier then I planned during November).
The finviz futures charts showed some long tails to 28.75 on the 5 min chart. Maybe it was just a glitch in their system.
David Nichols fractal charts show the same built up energy you are refering to. He suggests that at any time from here gold could move up $200 in order to dissipate the huge amount of fractal energy in the charts. I was aware of those 5-6 day old gaps on the charts and started to discount them a bit as well. It didn't seem likely that in 2 days GLD and GDX could fall that far. But with attacks on 4 of the last 5 trading days at exactly 8:15 to 8:30 am sort of hints of a coordinated attack. I'd be a lot more concerned if those hits were entirely random.
Added some GDXJ on today's drop. It's hit the 50 dma which at least since July has held. Doesn't seem reasonable to me that this move from July has ended with gold "peaking" at only 17% above the 200 dma 1-2 months ago. It's "peak" this past week was 13% and today it's down to 9%. Volume spikes today in GDX/SPY and GDXJ/SPY ratios could indicate a volatile turning point in progress. The miners in general have been consolidating for a month, possibly two months depending on how you look at the charts.
Note the volume peaks occuring at peak points of this ratio chart. Today's spike would concern me a lot more if it was occuring much higher above the 200 dma and the fact that miners have been consolidating for 1-3 months, in some cases up to 1 year (IAG, KGC, etc). But today's volume spiked touched the 200 day line and pulled back. I also like the 5 waves down in the ratio that has occured since December 7th...similar to the move in early July that got the miners ready to run again. The July decline took about 18 days. This past one just hit 20 days. And if you look at the PPO (price) momentum it's been consolidating and coiling since October. Sort of a 5 wave running correction over several months, or possibly an ABC with the B being made up of an abc zig-zag. I like the combination of all those factors.
GDX to SPY ratio
But if the peaks have been running 18-19 days apart it is odd that the bottom could essentially occur just one day later.
roadrunner
Knowledge is the enemy of fear
No blow off top or evening star formation as is typical for the end of strong PM rallies. Where is the bullish blow off sign that gold has given at every significant peak since this bull started? I still think gold is finishing up a running ABC correction that began back in November. As it did at $1044 and $1155, gold will reverse hard the other way as soon as everyone is convinced it's headed much further down. Getting close to that point now. Those Nov and Dec corrections only lasted 4-8 days before gold bounced. 6 seems to be the norm. Now on day 3 here.
roadrunner
<< <i>edited to add: PC... props on that timing call (you'll have to let us in on that one... at your discretion) I started my post, had breakfast, finished it and posted BEFORE I saw your post. So yes, I did recall your timing and was planning to buy some physical (it will just be a week earlier then I planned during November). >>
I get those tops and bottoms from the McLellan newsletter. I'm a little frustrated because one was due out mid-Dec which should have had a better date in it, and I haven't seen it yet. A new one should be out shortly. It's uncanny how accurate those dates tend to be. The newsletter also regularly discusses a 13.5 month pattern which looks like an M and consists of a low every 6.75 months, and I think this is one of those lows as well.
RR, do you subscribe to Nichol's fractal report? I combine about 5 different sources/methods to come up with my reads and Nichols is one of them.
RE the three black crows, not sure what chart is being referenced, but I see three consecutive red candles but they don't qualify as black crows. Here's part of a definition I found: Two more long-bodied consecutive down days then ensue. On each of these days, it appears as if the stock wants to regain its former strength, as the stock opens higher than on the previous day. The key words are that the stock opens HIGHER than on the previous day, which didn't really happen or has barely happened, depending on what chart you look at. We are not seeing a reversal.
Yesterdays' move did not register as part of a bigger trend so it is a short term move, and I suspect today is a continuation of that move. I do expect a rapid recovery and I still expect $1600 gold in February. This is a great place to load up.
I did sell to open this week GLD 134 put when GLD was 133.50.
Knowledge is the enemy of fear
Regarding 3 black crows. You are correct when analyzing stocks, but for currencies and commodities it is a bit different as these trade continuously--no open and close. In technical analysis it is not always prudent to follow definitions to the letter. Three big red candles after a long and parabolic move, should catch everyones attention.
Knowledge is the enemy of fear
<< <i>Regarding 3 black crows. You are correct when analyzing stocks, but for currencies and commodities it is a bit different as these trade continuously--no open and close. In technical analysis it is not always prudent to follow definitions to the letter. Three big red candles after a long and parabolic move, should catch everyones attention. >>
I also wasn't sure if you were talking about ETFs either. We have to make lots of assumptions when all you do is post a picture.
I agree somewhat, but you also have to understand the formation of the pattern to see if it applies. The black crow formation demonstrates a battle between buyers and sellers with the sellers winning out at the end of each day. There really is no struggle going on in this selloff, it's pretty much been a selling deluge so far, with (I expect) the only strength to come in here at the end of the day. I would be very surprised to see gold close before 1377, and will be concerned if it does.
Edited to add:
RR, Looks like the FinViz charts have glitches... All data providers seem to have problems like that from time to time, some better than others.
gold begins it's march up to 1,800 now. Yes, I mean a quick march to 1600, and then onward. We shall see.
Gold closed, just barely though, under the 50dma. Momo has been waning for weeks. Bollinger bands are getting quite tight. Consolidation could continue for another week or two. Gold has been trading above the 200dma for 20 months--its longest streak since the rally began, and still about 10% above. If risk appetite is returning, PMs could clearly underperform. The "safe haven" currency du jour, the Swiss Franc is down nearly 5% this week. Granted it has still done extremely well, but this volatility shows money is moving very around the globe very quickly. Whats hot today, may be very cold next week.
Knowledge is the enemy of fear
Xiphos trading
I like the long term gold chart analysis above. Shows where gold has been and why, and what it's probably currently doing. Many breakouts and backtests. He too talks of gold in a running correction over the past few months. If you look back to Cohodk's call in Sept 2009 about gold being finished at $1071, the breakout of that symmetrical triangle at around $960-$990 perfectly targeted the $1226 point. It took 3 steps up to complete the pattern with the 2nd step retesting the cup's neckline. The subsequent end of run pull back once again re-tested the neckline of the large 1-1/2 yr cup. Gold could head back to retag the last rising wedge at $1310 but it doesn't seem to me that it could now head that far down from here. Even if it did, it wouldn't change the story. In order to put a mortal wound in the bull from here it would take running the HUI back to around 450 or GDX back to 50-52 and gold back to around $1250-$1260. Doesn't seem very likely with how advanced the current correction is (ie C leg of an ABC).
Spent some time analyzing Jeff Kern's latest work and finally realized that the USERX chart published in stockcharts is all whacked out. Gave me fits. In bigcharts and yahoo it is correct. In any case USERX has been on a short and intermediate buy signal, though that doesn't mean the correction is over. The fact that the 35-39 day index has been breached ensures the opportunity for this bull to re-energize for another extended up move....assuming USERX can push above the 20.3 level in the next week(s) (roughly 60-61 on GDX). GDX also breached it's 35-39 back days support as well....which is bullish if/when a turnaround occurs.
roadrunner
<< <i>PC, I don't subscribe to Nichols newsletter but used to read him all the time when he was public. During those years his batting average seemed slightly better than average with a decent # of missed calls. When you've talked about chart "energy" I should have realized it was related to Nichols' work. >>
It's not all Nichol's work when I refer to chart energy. I've learned to take bits and pieces from lots of different sources to piece together a bigger picture. Nichol's charts are good for identifying loose timing and whether something is a trend or consolidation, or fully consolidated. But it's hard to be predictive without additional analysis. I find it very helpful to know that right now the long term charts, and by tomorrow the short term charts will be full of fractal energy meaning another SIGNIFICANT move is coming soon... of course it could go either way and Dave is ever-cautious. The gold chart has a nice triangle/pennant consolidation pattern with 3 attempts at ~1425, and I Think the fourth will be the final successful attempt.
Regardless, from here forward a 38.2% retracement of this week's move down is in order which takes us back to ~1394, then we must see what happens there. I think (of course) that we'll get through without problem. So I think that will take up the rest of the week, and possibly next week we should see the next trend kick off.
Did you all celebrate the $14T national debt achievement today?
Absolutely--I covered my short puts on GLD even though they expire tomorrow. Sold them for $1.11, bot back for 66c. I could either make the last 66c, or lose my 45c gain tomorrow. Rule #5- A bird in the hand....
And agree with your energy thing. I see the last 2 weeks' volatility continuing and even increasing.
Knowledge is the enemy of fear
The negative:
-Absolutely no strength in gold this week
-Closed below key level
-38.2% retracement of move down completed - This one is debatable. We retraced 38.2% of the whole move down, Nichols says that he thinks that the retracement must occur relative to the initial low which still requires a retracement to ~1387.
There are a couple of positive indicators left...
-McLellan predicted a low the first week of Jan, so Friday could have been it. We should bounce positively away from the low.
-Gold did not surpass the 11-26 low of 1352, as the low of day was 1352.7.
-DX (USD futures) were unable to surpass prior highs (81.525 & 81.74) - although the dollar is not required to go up for gold to go down, or vice versa
A few more thoughts:
-Looking at Crude futures there was a scary week on its way to the parabolic top ($150) the week of 3-17-08, and crude recovered from it just fine and went up over the next 17 weeks (3 of which were down-weeks).
-A 38.2% retracement of the move up from $253 would take us back down to ~$980... If you all remember, $980 was a very stubborn support/resistance level
You'd think a parabolic move would be an easy play, but these moves are never easy in real time.
So this week has put a lot of doubt in my mind... but that is what gold likes to do right before it really takes off. But at this point, I have to be very cautious because the end of the run could be here. If that is the case, what I would see happening is gold crashing to ~$980 over the next 3-6 months. From there, gold could resume an upward trend, similar to crude's move off of the ~$35 low after it crashed from $150.
So caution is in order, we'll probably get an answer next week for what is in store for gold. Be careful... wish my crystal ball was working better.
On the bright side, stocks (SP500) are looking great... miners, not so much.
I didn't see it until today. Sounds interesting.
Right now I dont know if the next $200 move in gold is up or down, but I do think the odds of either are equal. And unless I can put the odds in my favor, why trade?
After coming in pretty hard early last week, gold has been in a very tight range of about $12--on a closing basis-- (under the 50dma). It will move out of this range tomorrow or Wednesday. Im watching SLV for a break under $28. If that happens, I'll be looking for MJ's ASE in the mail.
GLD under 130 and it will see 125 real quick. Then we'll see how strong the hands are as 125 is the convergence of the 200dma and uptrend line off the Nov 08 low. A break of 125 completes the larger rising wedge pattern.
Knowledge is the enemy of fear
<< <i>Quite a change of thought PC. Any trader worth his salt needs to have the ability to change opinion quickly. Rule #3...When in doubt, out! You can always get back in. IMO, it is better not to lose, than it is to make. >>
Of course! You seem to think I am biased but I am not, I call it how I see it. I think you are mostly right - we're about to see a move up or down this week and it is a coin flip at this moment as to which direction it will go.
I do disagree as to the magnitude of the drop if that is the next direction. The ultimate drop will take 6-8 months and probably retrace the entire parabolic move, which as I mentioned before brings us back to ~$980. Although certainly short term a $200 drop might be the next move for the next month or so.
Gold simply has not shown any strength or real bullishness lately to indicate that it will go up further from here. In fact it has shown weakness. One positive sign is that stocks (SP500) are about to breakout and head higher. The only question is if gold will head higher with stocks. It appears as if that relationship could have changed, but we'll have to see.
In the short term, gold needs to retrace the move down which will take it to 1387-1391 or so, and then we should find out what happens from there.
Support at 1349.6, 1361, 1368.4, resistance at 1379.8, 1383.8, 1395.2
One interesting note is that the media is portraying a lot of positive information about the economy. While I don't believe it, there is some positive news out of the Phoenix area that I do believe... Housing numbers for December are amazing (I'm a part time RE agent). Not sure how things will measure up nationally, but if PHX is any indication, RE numbers are going to reinforce the "recovery" BS the president is selling. Bear in mind that the good numbers are in inventory (down) and sales (up), but prices are still pretty much flat. But of course, lower inventory will/should ultimately lead to higher prices and that will get people excited, and overall, be bearish for gold.
Dollar chart looks bearish to me considering the quick jump that occured last Wed through the 80+ area. UUP showing a big gap at 29.8 or USD near 80. Those gaps usually get filled sooner rather than later. It could still make a move to get closer to 82 but that gap shouldn't stay open for long. Better yet is that the dollar has been building an expanding wedge since early December on lowering daily macd and volume. If the high is in, then this would be a perfect time to go fill that gap.
I don't think the run to $1425 was the end for gold on this move that started in July or even Feb. Again, the difference above the 200 dma was too small and there was none of the usual frenzied ending peak as has always occured after such a long run. Gold doesn't just die of slow exhaustion with a rounding triple top. A drop to the $1315-$1330 range could still be seen but I think that would be it. And it would be a quick one if that's the case. Gold has spent 14 weeks consolidating above the neckline/wedge formed from the Dec 2009 - July 2010 cup. That's still the strong support. Too many analysts starting to toss out numbers like $1250-$1260 or even lower. That's why I don't think it will happen. Too many gold bugs (esp on Kitco) have been flipping over to full blown bears.
Xiphos
Xiphos has some interesting gold charts. His point about the morning star formation with Friday's deep dip to $1352 makes sense.
roadrunner
So this is it... in the next day or two we'll get our answer. I too feel there's a lot of negative talk which will probably actually help propel gold higher, especially as people scramble to add to or re-establish positions.
I've decided that I'm going to play this by lightening up a little (which I did today) and employing some pretty tight stops. Aside from a whipsaw, we shouldn't dip below 1370.
Gold support is at 1373.3, 1380.0 and resistance at 1387.7, 1394.4, 1408.8
If these corrective bowl shaped patterns follow the previous history, they may not go any lower than the current bottoms. Just work off some time to consolidate.
roadrunner
But the palladium indicator is a double-edged one... Palladium is doing so well, and recently it has been leading the other PMs in direction so perhaps gold will proceed higher. The suspense is killing me.
<< <i>Gold mining companies >>
I would agree... both mining stocks and pre-1933 gold appear to be very undervalued compared to just about everything. These items have not really done jack with this latest move in bullion prices.
3/10/30 yr Bond auctions this week might be some headwinds to gold and silver until Thursday afternoon. And from the last schedule I saw the POMO injections ended yesterday.
The dollar (UUP) is now in that gap filling range I mentioned on Monday. It's in a steep enough descent it's almost certainly going to take the time to fill it. This will erase all those gains from Wed-Monday. It might as well fall all the way to the 200 dma and bottom bollinger band at this rate as they are all pretty close together. Once it completes this move not sure which direction it will head.
UUP (USDollar ETF) chart
roadrunner
for a pre-schooler chart reader this 150 DMA is interesting, another 5% isn't really that big a deal?
Au 150 DMA
The immediate outlook for gold is not positive. Keep in mind that these are can be off by a day or two either direction, and that a bottom is something to go down into or climb out of... A bottom is called for on Jan 14, which says to me that gold may be stymied by this current 1387 level and/or 1397-1400 this week. Don't get too excited and add to positions at these levels, or do so carefully. Then there are conflicting signals Jan 26 being a top and Jan 27-28 being a bottom with another bottom on Feb 1 and a bigger one on Feb 8. So overall, there are a lot of bottoms in the forecast, but that doesn't mean we can't have an "ascending M-like" chart pattern either. They do call for a "major cycle low" in January, and it may have already happened or is just ahead between now and Feb 8. Another thing being predicted in the next few weeks is a sharp dip in stocks, followed by a huge rally into June. This seems to roughly mirror what is expected from gold.
One thing I did learn is that JPM and ishares filed paperwork on Oct 10 to start a copper ETF, which may explain some price movements there. Of note is that open contract interest in copper is at an all time high, along with prices. Shorting at these levels may be a good call. Timing will be difficult.
An excerpt:
"The CCI (Continuous Commodity Index) is now just arriving at the level of its 2008 peak, which was formed when oil price hit $145/barrel. This current uptrend is being driven by things like sugar, cotton, and copper. The gold price plot says that the commodities rally has further up to go."