Loading ...Precious Metals Bull Phase 1 : Final Impulse Dead Ahead
Everything is now aligned for the final upward impulse to complete Phase I of the great bull market in the PM stocks. All the technical work is now done. The backing and filling complete. The final fuel stop taken to fill up on short sellers who will provide the fuel for the final surge powered by short covering. The psychology is properly set with several prominent newsletter writers having kept there subscriber base out and on the sidelines of the market. So let’s take a look at the weekly and daily gold price and see how it has been methodically taking all the healthy steps required to set-up for this rally’s completion.
Here we see my daily Matterhorn chart where the methodical process of gold’s march higher is revealed. All the classic elements are here. The two cup and handles are quite evident. The $1309 matterhorn peak and resistance served to repel the advance two times. Note how the second attempt in mid June was a mini False Break Out with a quick intra day penetration, but it could not hold. Finally when we got the break out it was indeed on MASSIVE volume, just like it should be…classic. I use the word methodical to describe this process as gold then took the next 6 weeks to construct a double backtest to the $1309 breakout level. In character, it did this forming a clean bull flag correction from the beginning of July. This week we broke above that bull flag then appropriately backtested the flag, finishing the week with a strong advance. Folks it really doesn’t get cleaner and more methodical than this. The technicals of this chart more than anything argue that this is a bonafide bull market with explosive internal power. Also note the increasing volume in the daily gold chart. Take a step back and view it from a distance, this is the growth of volume in a bull market.
The next chart is the weekly gold chart where we can see a different weekly bull flag which may be a halfway pattern projecting a measured move to the mid-1500’s. It is my hypothesis that this is the level the gold price is seeking as it treks back to “Known Values” which fulfills the role of Phase I in a bull market. Later on Phase II will unfold where the general public and the financial institutions will come to recognize it as a bull market and will want in themselves. Until then its our private little party.
Next up we have two views of the HUI. First is the entire move since Phase I began on January 20 2016. The thesis I am working with is Phase I with its trek to known values projects to HUI 350 minimum. This move began with an upward impulse which morphed into an extremely strong upward bull flag consolidation. The bull flag may turn out to be a halfway pattern for the entire move. It even appears that within the bull flag consolidation we underwent a mid-point bull flag correction in the middle of May which lasted 2 weeks. If it was indeed a mid-point flag within the larger upward tilted bull flag that means that it has now timed out and is set to resume its accelerated move upward, This impulse move would be targeting the ultimate objective of Phase I of HUI 350 minimum.
In the second HUI chart we focus on the most recent action using the one hour bar perspective. This is a very important chart IMO because it shows how the market may have set itself up for a short squeeze. On July 6 several well followed technical indicators flashed an upside exhaustion sell signal. I myself took chips off the table as a result of it. Many traders, looking for a deep correction actually shorted the PM stocks. The army of sidelined bystanders hoped for an extensive pullback so they could get on the train that they had missed since many newsletter writers had advised them to not to enter this market yet. Well, this hour chart shows how this very shallow correction played out. I based the FIBs off of the move from the bull flag support line starting 22 June. It retraced a classic 50% where support came in from the bull flag support line.
So here is the thing, this pullback was so short and shallow that I suspect the most of the sidelined watchers never got in. Also there still must be lots of short interest in the market. This is the perfect prescription for a final powerful quick move to the upside once we break through the upper bull flag resistance line. This area from HUI 290-345 has little resistance and should move quickly. Target range is 340-400 IMO . Good luck riding this Precious Metals Miner Baby Bull.
Plunger
Nicely done sir! I am loaded to the gills in Mining Stocks. Way over my disciplined allocation but such is the nature of this Bull. 🙂
Well, that’s where judgement comes in. There are times where one fully leans in. I as you believe this is one of those times
THANK YOU Plunger!
I see lines and formations with clever titles everywhere but it’s how they tell the story of sentiment that I find most intriguing – exactly as you’ve illustrated here.
The poor CB’s – seems they are doing all the heavy lifting for us – when will they ever catch a break.
Sir Plunger, thanks for this superb piece. Are you looking at any timeframe for the known values to be reached?
Ah! I must be blind…Your charts clearly already mentioned it. Thanks again.
Well, that’s not my area of expertise, however it can be seen on the chart to be late August. Surf City is a much better timer than me and his cycle analysis says mid Sept- Mid Oct I believe so we will ask his advice. Let’s just see when it enters that 300 level, it could go fast then
Excellent work.
Wonderful analysis, thanks. How far and for how long we correct when we end phase 1 is the unknown in the equation.
And that’s the million $ question!
Cross that bridge later, however there are several things to consider. First and foremost is the still to consider concept that this is not even a bull market but a giant head fake in a secular bear.. (this is not my view, but still possible) In other words has this rally since January just been a giant A-B-C correction of the 2011- bear market?
A more conventional view is we correct 25-30%. That’s my view, but it could be even more. Once the top is in we will put all resources and talents towards this question. Keep in mind there are lots of big gaps all over this rally. Do they get filled?
Thanks so much, Plunger. Great work.
You led us on the way down, and you are successfully leading us on the way up. Still need to breach 30.73 and that small gap at 31.40…
Terrific analysis as usual, Plunger. Thank you for your charts and guidance.
Aye-aye Captain. Check Andrew McElroy PM Cycles And Trends: A Complete Review
Stunning,If that don’t unfreeze you nothing will!Yes thank you!
“the level the gold price is seeking as it treks back to “Known Values” which fulfills the role of Phase I in a bull market”
Dear Plunger, you like that word “Trek” and I wonder if you are tipping your hat to Spock when you use it!
Maybe this is the precious metals Trekkie site.
Anyway, it is interesting that your targets as “known values” are close to the breakdown points from the excitable phase of the previous bull market in 2010-2012.
GOLD $1550, roughly the support lebvel from late mid 2011 to April 2013.
HUI 350, well, the HUI had a massive head and shoulders with neckline around 365 in 2010-2012.
These seem like good major resistance levels to stop off as phase 1 ends.
The day that the current HUI phase I bull started (January 20 2016) would have been the last day my Dad would have been 100 if he had lived. The next day he would have been 101. Strangely, he was also 65 on the day that gold topped in 1980 but he didn’t retire rich because he didn’t have any Krugerrands. 🙁
Lots of Karma in that one:)
I have written before how I came up with the “Known Values” level. Essential it goes along with your Karma theme. In the bull that ran from 2001-2011 we had a bull market POR. I remember it clearly and it was Sept 2007. It occurred at the HUI 350 level. Fast forward to the 5-year bear of 2011-2016 and the POR was the Goldman raid in April of 2016. This can be seen clearly on the charts and its where the word”Bear Market” first started to be used. Also at the HUI 350 level. So there is something very significant about that level in the minds of investors. This is just my theory with little other historical precedent to make this claim, but let’s run with it.
Cheers Plunger. Yes, it’s very worth considering since these are such key levels in the HUI along with $1500-1550 on gold or thereabouts. It’s funny because as I read your article I recalled that level on the gold chart and I went and checked what the HUI chart looked like and as Spock says sometimes it pays just to look. The first glance and there it was. 350-360 was a key HUI level. I like you don’t think it is merely coincidence. After all, its the same market on the way up as down. The same shares, the same metal.
I have not studied charts nearly as deeply as you have but I have done a bit along with watching this market for many years and remembering (nearly) every turn.
For the first time in my growing-lengthy life I am on the right side of a trade and loaded to the gills, thanks to the likes of you, Plunger, and Spock, Fully, SurfCity, Rambus and many others. What is crucial in the analysis you post is the confidence it brings to just getting right and sitting tight. The single most difficult thing to do as an investor. This third time around I am able to do so because of the stellar guidance and analysis of this community. (head bowed in humble thanks)
You know what you are not alone! I played the great bull in PMs and base metals from 2001-2011 and I was up pretty huge, but I gave the majority of it back mainly from my base metal exposure. I witnessed the beginning of the super secular bull in August 1982 and dabbled with it over the next 20 years, both scoring gains and giving them back. So I have been in the game as a self taught retail investor scoring my licks and taking my licks. That’s learning from the school of hard knocks. I have a library of breath and depth and feel I have paid my dues over a lifetime to have finally arrived in a place that I can finally put the knowledge I have to work. Like Rambus has said very few ever find themselves in at the start of a generational sized bull market. Well here we are, a select few. So few have any clue what is going on. You don’t really have to know, just ride it. But if you must, here it is. This is the start of the final leg of the great bull market in precious metals that started in 1968. The engine that is driving it is negative interest rates and government sponsored financial fraud. It won’t be over until the level of debt to GDP begins to correct to normal levels. How long will that be? I have no idea, but rest assured for the next 3-5 years we are going to have the wind at our back.
Be Right- Sit Tight…. strap yourselves in!
Stunning, And thank you!
Nice article! The silver chart seems to be ready to break out over 20.41-20.50 towards a 25+ target. I’m very late to the party but did get very good exposure this recent dip. Several charts are setting up for a big move up and this seems to fit well in your thesis.
Right, now a QUESTION:
Given the forecast possible highs for this Phase 1 of approx. $1550 Au and 350 HUI in the near term, what happens NEXT?
How deep is the corrective phase likely to be. The Gann work that was lined from somewhere on this site suggested a pullback of approx 25% in the HUI, given precedents from 1986, 1992 and 2001 and 2009 or whatever dates they were.
Does it mean that, apart from someone hoping for a quick trade it would be as well to wait and try to raise money to buy that first major pullback instead of buying right now? Maybe it implies that once this last part of the first phase up-move gets going to these levels (if it indeed does), prices may soon pass the level where the first major correction will go anyway sometime in the future.
Thoughts?