Loading ...A RARE SIGHTING : BULLISH GOLD CHART
From a Goldtenter ( Updated with Response from Pidgeon )
With Comments
The thing is, this chart of mine is a 24 month beast. A breakdown here will be death if it happens. Does that even make sense in this world of wild money printing, shortages and incremental inflation? Not to me it doesn’t. Support on this chart is very solid. I bought a whack of GDX calls dirt cheap yesterday and expect to do VERY well. Like thirty baggers or better if we get the reversal I anticipate. If there was ever a time to make a low risk strategic bet on gold miners then this is that time because negativity is overwhelming.
The thing is, this chart of mine is a 24 month beast. A breakdown here will be death if it happens. Does that even make sense in this world of wild money printing, shortages and incremental inflation? Not to me it doesn’t. Support on this chart is very solid. I bought a whack of GDX calls dirt cheap yesterday and expect to do VERY well. Like thirty baggers or better if we get the reversal I anticipate. If there was ever a time to make a low risk strategic bet on gold miners then this is that time because negativity is overwhelming.
All the best to you as always. Please post. Maybe Plunger will see the light.
OK since I was challenged I will offer a few comments. First off investor psychology is very important to me and part of my process of analysis. It is because the system developed by Hamilton & Rhea of bull and bear market phases is psychologically based. So I pay close attention to investor psychology. This post as well as many other commentaries I have read recently sounds increasingly desperate in holding onto a bull market narrative. This is actually what one would expect to see in later phase II. Bulls grasping at straws to hang onto reasons to hold their underwater positions. Mentioned here are the fundamentals of FED money printing etc. Yes, I would agree they seem bullish, but you know what? Mr. Market doesn’t care and it’s our job to react to what Mr. Market is doing vs our ideas of what he should be doing.
On this subject of Bullish desperation, I ran across this comment written by a commentator who we all know and is beginning to develop a larger following. Not mentioning his name I would classify him as a permabull curve fitter. I chuckled after reading this as it smacks of outright desperation to rationalize his market position because he is so invested in it. Read it and tell me what you think:
“The precious metals bull market is very much very alive. We have just experienced a rough, drawn out consolidation, nothing more. This was not the first one and it will not be the last one. The big picture is as bullish as it can be, and more so than any other sector I would say.”- to remain anonymous.
When I read this I think of Shakespeare “Me thinks she protests too much”
This comes across to me as a person in full blown internal panic that just can’t admit it to himself. He is no doubt fully invested and he needs to take you with him. nuff said.
Robert Rhea used to say that often times when he just couldn’t make sense out of the market he would sell all his positions and just observe the market from the sidelines. This would give him clarity and remove his internal bias. I have done similar here. In June I exited gold and silver stocks and it’s amazing how much clearer the primary trend comes to me. In late February I realized it was in a bear market (not just a correction), but I also foresaw the BMR that was soon to develop. I traded it, but I did get out late after the peak. The market did give us a valid signal to exit, I saw it, but I didn’t listen to it. I am now back to listening to Mr. Market.
Regarding the commentary on the chart insisting this is not a bear market (underlined) if/when it breaks that “support” line it will indeed give further validation that the bear market began back in Aug 2020. In order to recognize the market being in a bull market we will need to see price close on a weekly basis above that previous swing high around 1920. Until then all assumption must remain in the bearish camp.
But this requires me to mention that for us investors it is as important if not more to look at the stocks vs gold. Mainly bc for us mortals gold is for holding as a store of value not as a trade. The stocks are for trading, so I don’t really get that concerned with the day to day week to week gold price, bc I don’t trade it. The stocks are what’s important to me so I pay closer attention to them. Plus they offer us more clues IMO. It is easier to interpret the primary trend.
Regarding the comments about now is the time to make bets on gold stocks I would say this. Show me bottoming action first. This weeks action in the gold miners hardly resembles bottoming action. No it shows the unraveling of a very weak attempt of a rally. If you look at the chart below, after the June smash the GDX spent a few weeks getting its legs back underneath it. It was attempting to muster the energy to rally and resume its advance. When it finally attempted it at first it looked impressive for about 2 days… that’s it. It couldn’t even remain above the 200 EMA for a day. Keep in mind that all of this action was done under a now declining 200 EMA. Then when it sounded the retreat it immediately progressed into a full fledged rout. Folks do I need to tell you this was bear market action pure and simple? Looking back now over the past 6 weeks it is now easy to see this was just the building out of a bear flag beneath a declining 200 EMA. This is NOT bottoming action either.
I am content to sit on the sidelines purse full with a clear objective mind. My goal is to look for the signs for what I believe will be a generational opportunity to buy value at the bottom of a bear market.
The precious metals bull market is very much very alive. We have just experienced a rough, drawn out consolidation, nothing more. This was not the first one and it will not be the last one. The big picture is as bullish as it can be, and more so than any other sector I would say.
https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=5&dy=10&id=p12801234379&listNum=300&a=985071894
BTW- (second printing of the quote on the bottom not intended)
I failed to address that many would point out the action we see over the past 3 days was due to manipulation. I agree that it was, I watched it in real time. In fact as I saw the vertical spike in Silver occur on Wednesday I said to myself, I can’t believe they are allowing this to develop where is the futures sell program.. Well I just needed to wait about another 20 min… bam!
But that doesn’t really change much IMO. As long as the investor class continues to react as they do then that’s the trend. Hopefully someday when such a raid is executed and retail buys it in scale then the primary trend will have changed. Until then it hasn’t.
Response from Pidgeon ( The originator of this Thread ) …I am Fully The Messengeer
My dear Plunger, there is only one way to know which way the trade winds will blow with gold and that will be when we see whether support holds or if price breaks down into the empty zone below. Either answer is a good one since the only real objective is to trade it profitably (whether it rises or falls). I trade both directions seamlessly so even if I do see my calls drop to zero next week I won’t be too concerned. What matters more is if I get direction right as it happens. The calls in this case were just too tempting to resist so I made a decision based on the risk/reward set-up. Could I lose? Absolutely. But it won’t be intolerable or something I regret.
Anyway, this is surely not a contest between us. The outcome is purely binary. It’s either a sell or its a buy but it won’t be anything fuzzy in-between and it won’t take long to get an answer that we can be confident about. That answer could arrive as early as Sunday nights futures open.
I have been a technical analyst for almost 15 years now and despite all those years I still manage to get the markets wrong sometimes. So I will not make any claim with absolute certitude. Not even on a support line that was two years in the making. We all know that supports are meant to be broken and eventually most of them give way. This one looks promising to me but I will admit I am prepared for price to break lower and send the bulls scattering. Even established patterns can morph into something new and sometimes the unexpected emerges from the ashes.
For the moment we have a line we can all focus on. What price does next will therefore be meaningful and may change a few minds (even mine). But the exercise of marking a line has not been wasted. Indeed, that is one of the best ways to judge the potential of a trade while creating a focal point. I am a long time gold-bear btw. Even a failry notorious bear so I won’t remind you of my old handles. Its hilarious to be called a desperate bull for a change of pace! Imagine that. Thanks for the laugh brother Plunger. LOL
Don’t worry, I don’t regard it as a contest either. There are a few around that do try to make it into a contest and honestly I am done with that. I’m more interested in sharing views than debating, I really don’t have the time to spend. I don’t blame you for taking a stab at the options.. premiums likely had been squeezed out. And frankly price in the stocks and gold is well outside the BB. It’s probably going to snap back by the close of trading Monday. As far as lines to call it a bear. It’s already established it’s a bear. Through lower swig lows, price action, volume and psychology. I would suggest drawing more lines in the sand only serves to trigger changes in investor psychology such as a POR or Phase II to III transition.
It is stretched enough to the downside that it could bounce now and make you a buck or two… cheers
Plunger, if you were looking at a daily candle chart such as this.
https://finviz.com/futures_charts.ashx?t=GC&p=d1
and you observed the long tail (reversal) price action on June 14th and 16th without knowing what was to come, and considering it happened at the bottom of the bullish channel that was developing after the 6 month (what I viewed as a) bull flag double bottom, wouldn’t it appear to be a big support/buy signal? Personally my take was that the bullion banks saw this (June 14th esp) and panicked (due to their suppression mandate) and had to execute a massive slam. Then another huge reversal on the 16th (more bullishness). That was my read but of course I got back in at that point just before the huge slam down (no worries, I took my 5% increase in shares). Anyway, I’m not realy trying to make a point other than to get your thoughts on the daily price action just before the dump. Was June 14th and 16th bullish or bearish in your view? I know this is a micro view and you are more macro but wanted to get your take (or anyone elses). Thank you.
Obviously its easier to see this in hindsight, so this is what the chart speaks to me:
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=0&mn=4&dy=0&id=p83405719680&listNum=43&a=1005527957
14 June: I would consider that a wide range Doji. A sign of indecision over a wide trading range. It is done on slightly elevated volume. It is a sign of trend change. They 18 EMA had acted as support on the way up, now its acting as resistance on the way down. Not any one of these is a deal killer, but when they cumulate together it says step aside in my view.
15 June: A pretty hard down day bearish in itself, however on lighter volume and it stayed within the tail of the previous day. This may have encouraged people to stay on the long side looking for a resumption of the upside.. But the overall atmosphere should have been to stay out due to the violation of the original breakdown off the top. I will show that chart below.
16 June:That’s a tough one, bc in real time its a bottom hammer. But we do like to see reversals on higher volume. It didn’t have it. It was just average volume, so in my view it was suspect. It did not serve to clean out he stops and then to change investor psychology. Thi sis particularly suspect because it broke well through the 200 EMA, yet failed to trigger volume… that was the tell it wasn’t valid.
Using GDX as a better charting vehicle it gave a last ditch signal to exit the trade on June 14th. It had been talking to us since June 3rd when it gave a heads up that all was not well. In no mistakable terms it announced get out on June 4th. See below:
https://stockcharts.com/h-sc/ui?s=GDX&p=120&yr=0&mn=3&dy=5&id=p63941222033&a=1005539636&listNum=239
Thank you Plunger for that thoughtful reply, I’ll study a bit further.
I have not logged into Rambus yet to see his take on things but I am sure that is a bearish expanding wedge pattern. Also Jeff Kerns SKI model which I have duplicated shows we hit the 16-20 resistance and jumped away from it severely which it should not do. The 92-93 index is at least another 10% below and that is the sell stop. I have also shared the DSI which is nowhere near a buy point.
“Jeff Kerns SKI model which I have duplicated”
I did that once, as well as the cool graphic that one of his followers created (resembling those Ichimoku bands).
I still couldn’t make out the trading rules to apply with it in hand.
Yup .. still have the files … from 2010, when last used.
Also, as to manipulation someone dumped 15000 gold futures contracts on Friday in a 30 second period and you do not do that unless you want to move price.