Loading ...XAU Cup and Handle Bullish Continuation?
Bigger Picture above. Zoomed below.
This S/R rail with all the touches is important. Gapped below recently but back above. Bottom may be in.
Be careful here though.
Historically commodities are VERY undervalued compared to the S&P. Now is the time the smart money, in my opinion, is shifting to and accumulating commodities for the shift of money to these still heavily undervalued sectors.
Gentlemen, I am not trying to be confrontational vs the onslaught of bullish opinion around here. However I am going to tell it like I see it. Again, I have to begin with saying the gold stocks are in a bear market. I’ve written on before the basis of this conclusion. Not only this, but the PM stocks are now entering into the advanced stages of such bear market. As a result here is how I see the best way to approach the PM stocks. Observe them from the sidelines. Until the PM stocks can put in a tested bottom and advance to a higher swing high nothing of major importance is going to happen. Unless this occurs the next event one should be on the look out for is a major oversold bottom.
The market has been avoiding this event since the beginning of the bear market which of course dates back to August 2020. The final wipeout that we should be on watch for will turn PM investors stone cold bearish and provide the base for a solid rise into a newly formed bull market.
Of course this occurs within the context of a phase III and is known as capitulation.
Serious money loves bear markets. It is the great investor who arrives at the bottom with a full purse and can scoop up great companies at fire sale prices. This requires one to make some hard decisions much earlier in the process.
I think you make a very good case for a bear market in gold stocks, however there is also a case to be made for a continuing bull market based on the trend lines in the charts that have been posted. The chart here shows an overall price decline from the August 2020 peak to present of around 22.5%, after it had just experienced a 162% rally over a 4.5 month time period. The upper trend line may indeed not hold, but until it fails I see no reason to view this as anything other than a very frustrating back test.
Again, the time factor here has effectively tested the patience of gold investors. It has been a year since the correction began, and we are still not in a new impulse move upward. It’s enough to make anyone throw in the towel and think that a huge impulse move down must be ahead of us. We should find out soon. There is an FOMC meeting next week that could act as a catalyst.
I have to go back and rehash some of my previous explanation as to why I say this is a bear market NOT just a “correction”. But one of the main exhibits would be the classic textbook price and volume action of the BMR from Mar-May. That’s what we are looking at above that line. It was so classic that it makes the case that it was indeed a BMR thus a BMR within a bear market. So here is the thing, lines of support ultimately get swept away like sandcastles by the tides. Until the market presents its capitulation phase one should respect the claws of Mr. Bear.
Thank you both for your insights.
I have no idea, but you both provide valuable food for thought.
Cheers