What is Goldtent TA Paradise?
Pure Plunger (HOT!)
S&P topping near term and a rotation back into treasuries is about to begin. Just look for pattern breakouts. This level makes infinite sense for this to happen. Plus I’ve never seen so many bullish people ever…hehe. Completely analogous to extreme bearishness I was seeing around Sept 28 when I suggested we go long the S&P. Herd mentality…..
An exhaustion maybe? Don’t know , but maybe. Clearly one should have been playing the long side as Spocks system has shown, however I have to say his comments this morning pre-open smelled of short sellers fear. He was right that stops no doubt have been set at 2020 and a breach of that level should set off another round of squeezes. The fact that we had that breach and it didn’t may be significant. Maybe a reversal here?
Yesterday got my long setups for FCX (Freeport), SGDM (Sprott Gold Miners, SIL (Silver Miners) and EWA (Australia equities). Unable to post media so here is as a summary of current positions (ALL long):
SOXL, XLB, EWA, EWC, EDC, SIL, GDX, GDXJ, FNV, SGDM, FCX, UCO and ERX
100% cash deployed on long side now in these ETFs. If the bears can turn this around, then I shall exit. In the meantime, long and staying long. On the macro level, USD and TLT (US long dated treasuries) are both on SELL signals. Global equities, especially commodity related, are on BUY signals. So capital appears to be flowing out of US long treasuries, and into equities and commodities.
Short squeeze or something more? No idea.
Well, crap. Why’d we have to wake up in bizarro world!? The yellow triangle is breached to the topside, and other resistance I was watching on this and other timeframes yesterday are now breached.
What now? Lots of time till the open but this could be a short covering blood bath starting today, no?
This is what Sir Surf City couldn’t envision: What will happen to gold if the dollar is going to the bottom of its bull flag or heck to make the bull flag bottom rail all the way down to 90!? A super short squeeze in gold up to $1240!?
Now, I find myself hoping for a false breakout and a quick drop into the open. But if gold stays up here, it’s possible according to the premarket action that gdx and gdxj open above their respective highs of yesterday.
Mark? Anyone? Your thoughts before the open please?
unable to post media. the question is: where exactly is X? Depending on where X is placed the pictures are entirely different. For example, if X is at 2130 (this is a valid X, like all the other Xs) then here are the points:
X = 2130
A = 1840
D = 2100
Now if one was a bear and getting squeezed here, where would I place my stops? I would be thinking just above B, that is 2020. Now the question is, how many short stops are there AND what sort of energy would that create? I would think there is a bucket of stops at B, enough to take this thing to D.
Assuming this scenario happens, the whole picture changes, as the critical MAs would have been breached from below, and price above them. These MAs then provide support, not resistance.
We need to be very careful in locating where X is.
Now what is the macro picture? Where is the capital moving? I mean the big money, not us. Its moving OUT of US govt long term US treasuries and bonds? And this trend has just started. Where are they putting it? Its gotta go somewhere.
Bottom line: You go short here and you may get eaten for lunch. Recency bias is a hard thing to deal with. Spock is 95% long and 5% cash now for the last few days. The bears had better get moving to prove their case, otherwise I just have to stay long, until the signals say otherwise. It is what it is.
Very good entry point for YANG/EDZ or YINN/EDC..? MY stomach says YANG/EDZ.
That would make a lot of the BOs among miners now FBOs I guess. But it does not make sense if the USD is breaking down as it seems it want to. Maybe the USD is just doing a head fake right now or will just go sideways, making room for other stuff to move. This is tricky.
We are now trading outside the symmetrical triangle. It can of course morph. My other option, the inverse h&s, is now out of play I would guess. yesterday I thought we might have a FBO. The BO seems very calm which makes me think that the pattern has no meaning and/or that we will just move sideways from here. I guess we will notice if we get the big drop from here. And just to repeat, the PO downwards is exactly at the support line for the larger bull flag.
Amazing how a little short squeeze price action gets the juices flowing and gets one dreaming of the riches again. I just see this launch in the GDX and the market also as simply the mechanical action of the shorts getting into position to profit from a logical down draft and then someone yells fire in the theater and sparks a short squeeze. Once the squeeze is on the upside panic changes the psychology to that of the bottom is in then it feeds on itself to the upside. And now we witness a cottage industry develop overnight of bottom callers and the race is now back on!
That’s not what I see in the price action however. Mark has well pointed out the gaps in the charts. Let’s talk about what they mean. I see the initial spark portrayed in the breakaway gap of October 2nd. 99% of gaps eventually get filled, however it is the breakaway variety which has the most chance of not being filled. So thats bullish, however where is the volume??? True bull market starting breakaways normally have massive volume dwarfing previous days trading volume and frankly, you can see, its just not there. Next we have a series of two runaway gaps. These gaps denote urgency. Urgency from short covering is the likely source. Runaway gaps almost certainly get filled in relatively short order. Also note the volume has tailed off on each successive thrust upward until now it has exhausted itself until todays downside reversal
Now lets discuss what it takes to really start a bottom. It needs a base And that base must form below the 30 W EMA. Normally we get a few thrusts above that 30 EMA and each gets slapped back down. They are made up of good soldiers doing their duty making the attack, but ultimately diving off for the greater cause. This is the process of eventually turning that 30 EMA up and then we can finally get a thrust above it. That “real deal” penetration will be on volume. 2-3X normal daily volume. Eventually we get a pullback and the all important test will be will it hold that 30 EMA. If it does and then starts an advance only then should we make claims that the bottom is in.
Take a look at how far from this process we are on a 5 year line chart:
And here is an example of the process when it has matured and actually formed that bottom. See how we have the dutiful little soldiers all trying but failing to breach then sustain themselves above the 30 EMA. Then finally one successfully makes it over the wall and stays there. observe how it is a critical requirement that the 30 EMA is actually pointed in an upward configuration and no longer tilted down. This must occur before we can have a sustained uptrend. This is how we must train our eye to look for. Compare this chart with the current 30 EMA of the GDX… not even close
So the point of the exercise is this is likely just another flash in the pan. We don’t even have a breach of the 30 EMA. In fact it seems we may have just gotten repelled by it, not even being able to reach it. Hold your horses knights, sure you can trade it as you see fit, but lets not get on the bandwagon yet. If we don’t take a step back before you know it some of us may be out there buying half their net worth in silver leaps like another infamous newsletter writer who lurks out there
Here is a related article.
A poisonous “triad” of global risks is pushing the world to the brink of a new financial crisis, says stark IMF report
Emerging market companies have over-borrowed by an estimated $US3 trillion in the last decade, threatening to trigger a sharp capital crunch and capital outflows in economies that have already been hit hard by low commodity prices, the fund warned on Wednesday in its latest Global Financial Stability Report.
Here is a Cycle update on the USD from LikesMoney.
He also sees the USD moving into a Trading Cycle low here. Somewhat Puzzling as the Gold Cycle appears to be topping as well. Here is my chart on the USD. It will be interesting to watch how a USD moving into a cycle low will impact the price action in Gold here.
Added: Weekly chart of the USD showing that it is holding above the 30ema. This will be interesting to watch as this is day 16 and the USD has found cycle lows as early as day 17.
As I wrote in one of the comments, the configuration doesn’t have to be exact to still behave like a Gartley. Investing.com has a Gartley tool that I applied while following the textbook rules. It’s very close to textbook and meets the criteria as far as I’m concerned. I’m not a Gartley expert but Ive traded them before successfully. In blue I wrote the general rules for the geometry. You can see how close it is. If anything, prices don’t need to go any higher but perhaps they need to move sideways just a little more before the geometry is even more exact.
Edit: Added a chart below that provides some non-Gartley indications of a possible swing high close at hand in the S&P.
Sir Surf City had a good point that it matters where you connect X.
X can be connected higher on the Dow. On the chart above, is the highest point X can be connected though because one of the stipulations is that B goes up to the 61.8% retrace. If I connect X higher than this, then the B retracement doesn’t get all the way to the 61.8% retracement.
Sometimes there’s some overshoot and extensions through the fibs like false breakouts on chart patterns, so the Gartley isn’t a perfect precise predictor of price but does allow for some play…
What does all this mean to me? I think since no matter where the X is on the S&P, AN S&P GARTLEY IS NOT COMPLETE, so the S&P may be looking for higher, even though 2000 is a nice psychological point.
Both the Dow and S&P could go higher and both still have perfectly legit textbook Gartleys… and many of the Gartley traders will be looking for higher before heavily shorting….
What does this mean? Well, based on historical data, after a ZBT, the market will rise ON AVERAGE 24.6% in ON AVERAGE 11 months.
Careful Bears…Since 1867 SPX was NOT breached per EW a downtrend can not be confirmed. IF SPX breaches 2040 per EW this would have ended P4 at 1867 and off we go to new highs per P5. Completion of p5 will end the bull market at minimum 2200 SPX…I cannot post the chart per the proxy server; however, the chart was posted earlier:
What I find interesting is that the Dow has completed its Gartley to the 78.6% fib retrace which interestingly enough coincides with the resistance shown by the arrows but the S&P has not completed its Gartley. If the S&P completes its Gartley, as the arrows show, it would hit the exact equivalent resistance as shown on the Dow chart.
Mark appears to have nailed this with the general markets! Nice call sir.
DEFINITION of ‘Gartley Pattern’:
-In technical analysis, it is a complex price pattern based on Fibonacci numbers/ratios. It is used to determine buy and sell signals by measuring price retracements of a stock’s up and down movement in stock price.
Sir FGC, I wasn’t sure what the heck this thing was either. I found this info. Learn something new every day in investing huh?
For more info this is good:
This pretty much says it all. Market psychology at its best. I love how many technical methods all converge and tell the same story….all on the opposite side of sentiment. Steer clear of herd and you will make money.
Remember this chart I posted on 9/25 when everybody said the markets were about to crash and that we should ignore bullish structure in the GDX because the S&P was about to collapse and that nobody wanted to buy miners with tons of debt? Well the miners bounced and the broader markets did as well giving us a setup which provides an infinitely better risk/reward short setup. I said at the time that the structure just didn’t look right for a market plunge and that we’d more likely get a rally to Dow 17K before setting up in a way that made more sense for a plunge. Well here we are. Ironically everyone is now bullish….;)