Nov 29, 2012

So the dollar threw us for a loop today.. it decided to print a lower low.

This invalidates what I said yesterday about the dollar printing it's daily cycle low yesterday. It didn't.. and it appears that it may have today. Majority of the time, once a low is printed, we can confirm with a swing low. Notice I saad "majority", not "all" of the time. If the market always made sense, then anyone could trade it.

That makes the dollar's last cycle a stretched cycle putting in it's low on day 30. The normal timing band is 18-28 days. That doesn't mean that it HAS to bottom within that time period, it's just the average time period. Sometimes it can go short and sometimes it can go longer.. although both are very rare.

There's also one other alternate scenario.. and it's that the dollar actually did begin a new daily cycle yesterday, printed it's high, and then began immediately to reverse into a new DCL. This is HIGHLY unlikely, but I just wanted to throw that out there.

For the sake of time, I will not repeat everything I wrote about the dollar and it's timing that I wrote yesterday. Just go back and read it, then apply it one day forward to today's low. I expect the dollar to rally for 4-6 more days from here.

Note the red trendline.. we'll need to break above that to confirm a new swing low.

Nov 28, 2012

Today was an odd day in the markets. Gold sold off heavily.. rumors of a fat finger from some institution. The Dollar rose early to form a swing low and then reversed to end the day below the open.

With today being the swing low candle on the dollar, that marks day 1 of a new daily cycle. As mentioned before, I'm expecting left translated bearish cycles.. due to the draw from the intermediate and yearly cycle decline pulling price down. What this means is that the dollar rally out of the bottom will be short lived. I believe the earliest the dollar could top is on day 4 and perhaps the longest it could go is on day 8. So, let's settle it in the middle and say the dollar will top on day 6.. deal? That gives us until about next Wednesday to find a top in the dollar and a low in metals.

For some reason.. my live charts that I use to track real time prices throughout the day posted a much different looking candle than my stockcharts subscription. I'll post both for your review.

Nov 23, 2012 - Weekend Update

So far the cycles have impressed me and have really helped me keep a handle on the progress and directional movements of the market. Today was a big day for metals, and the dollar dropped like a rock.


Today was day 25 of the dollar daily cycle. We could still drop for a few more days.. which I think is highly possible. The dollar hasn't really found any significant technical support at the level where it currently sits. I'd think the price could move below the 50 DMA at $80. If so, I'd highly doubt a big move back above it on the next daily cycle rally. Take note of how the MACD histogram did a great job of predicting a downturn before it ever got here. There was a clear divergence and now we're seeing it reflected in price.

The next daily cycle for the dollar is in big trouble. We're due not only for a weekly cycle low, but we will also be in the timing band for a yearly cycle low after the new year. I expect all new rallies from the coming daily cycles to be short lived. Even if we get bad news out of the Euro, the rallies should be sold and reverse quickly. In my opinion, this is about as bearish as a chart can get. Once that $79 area neckline is met, lookout below..

Gold rallied strong today. It has broken the neckline of the iHnS.

Today is day 13 of Gold's daily cycle. We've also broken above and closed above the 50 DMA. And not shown on this chart, is that gold's close on the week shows us a weekly swing low. This is very bullish.

Here's a look at Gold's weekly swing low..

The same is true for silver.. iHnS neckline break, 50 DMA taken back, and weekly swing low formed. I expect both metals to top out in their daily cycle this week (bullishly right translated now) as the dollar continues to search for it's low. Once the dollar bounces for a few days, the metals will correct and digest a bit of these big gains and begin to move into it's daily cycle low.

The Gold miners in GDX had a great day as well. They have all but completely erased the thrashing they took last week. We've regained the 200 DMA AND the bull flag. That means that the breakout of the price below the bull flag was a false move.. and in the technical world, a false move is often met by a fast and aggressive move in the opposite direction. Let's hang on and see where this goes. The next daily cycle decline in the dollar should set these miners on fire and break this bull flag for good!

What can I say about stocks? They have posted fantastic gains out of this intermediate cycle bottom. The indicators have all turned up and we've had strong buying action for 4+ days now. The 200 DMA has been regained. Once the 50 is regained, look out..

Things are about to get really interesting..

Nov 19, 2012

Since I didn't get to post a weekend update, we have a lot of catching up to do. The markets turned last Friday, showed us some positive, and followed through today. I got home from work early today and turned on CNBC. Those guys are idiots. They talked all day about this political reason or that fiscal cliff.. blah blah. Never once did they mention the US Dollar and the value of equities or metals being priced in those dollars. This is why we follow cycles. It cuts the noise and keeps us on track. Those guys really give me a foggy mind.

The dollar put in a big top last Friday. Price shot all the way up to $81.50 to be very quickly rejected. We've since fallen back under $81.. a more than 50 cent drop in one trading day. Let's first recall what cycles we count so that I can paint a full picture for you here. The smallest cycle we follow is the daily cycle. The next largest is the weekly or intermediate cycle, and the final is the yearly cycle. There are also other cycles created by the yearly, but those are different depending on the asset being discussed.

The dollar's current daily cycle is on day 22. They normally last 18-28 days, so we are in the timing band for a daily cycle low. I expect the dollar to decline for another 4-5 days. Once that bottomed is formed, we should see another small rally to signal a new daily cycle.

Nov 15, 2012

Whew, another day where Mr. Market shows us his strong hand.

Stocks continued to sell off today putting tremendous pressure on the metals miners. I honestly have no idea what is driving this tremendous selloff again today, but I can assure you, whatever it is, it's completely irrational. The talk of fiscal cliffs and US downgrades have made stocks a risk and year end liquidations have been creating selling pressure. In the meantime, the metals themselves have shown tremendous strength amidst all of the madness in equities.

Normally Metals and the miners trade fairly parallel. In other words, when gold goes up, so do the gold miners. There are only a few exceptions when this has not happened before. The last time was in 2008 when the country entered a recession. The spread was also very extreme this past summer when miners launched out of their bottom. So, where do we stand now? At nearly the same extreme spread.

I believe that the miners, which were already grossly undervalued, are now extremely drastically undervalued. Gold prices have gone higher while the miners have gotten crushed. Remember what I said about the rubber band? These miners will snap back with a vengeance. Also remember what I said yesterday about weak hands being pushed out and smart money entering at these discount prices? Soros didn't get his BILLIONS from being a weak hand in the market. He was a buyer today, and so was I.

Soros Adds to Gold Miner ETF Positions, Raises GLD Stake

The November filing indicates Soros has more than doubled his GDX stake to 2.32 million shares and now holds a sizable chunk of call options on the ETF as well. 

Here's a look at the $HUI. There's a fairly large channel that we've been oscillating in and out of. Perhaps this irrational selling will be countered with enough buying to catapult the price back into the range. The bullish MA cross leads me to believe this could be the case. The only problem.. is when. As you can see, we broke below this range before. We tested it on 3 different occasion and were unable to break back through it. After one more dip.. the next push went back into the range. WD Gann says that past resistance, one broken, should become support. Now is time for that test.. but not without a little pressure to scare you out first.

Nov 14, 2012

Wow what a day! There's been lots of screaming, cussing, and folks thinking the market is going to crash and their lives are over. The white flag has been waving..

So tomorrow I buy.

We've always been told to buy high and sell low. But does anyone stop to ask, "What is high and what is low?" Such a silly question.. but isn't it the most important?

This is low.

First off GDX. Miners got HAMMERED today! I sat back watching in joy as others spent their day wiping sweat from their forehead from anxiety. I didn't buy near term options on purpose. My GDX options are for March. I mentioned a couple of weeks ago that my target price for those March 54 options would be $2. I instead got anxious, broke my own rules, and bought in early. I only ended up with 7 of the intended 10 call options and paid $2.70 for them. Today they traded at $1.30. I'm in the red.. but I'm not worried. Time is on my side and I'm still confident in the fundamentals. Miners are grossly undervalued at this point in time.

What happens when you stretch a rubberband?

What happens when you stretch it really tight?

GDX found perfect support on the 50% fibo today. This is a decent step below the 200 DMA. I'm still not worried.. weak hands are being flushed by the dozens while smart money steps in to scoop up the cheap prices. This is the name of the game.

Watch for a quick snap back into the trading range very soon..

Nov 12, 2012

I skipped the weekend update because there wasn't much to update on. Only a few minor developments to note today.

First up.. Dollar.

The Dollar has formed a fairly large ascending wedge. This is a bear pattern and I mentioned it for the first time last week. As the action gets tighter, it forces a decision to be made. There are a lot of technical buyers and sellers (including programmed) in the market. A break either way is usually a strong one. The majority of the time, this formation is a very bearish one and breaks to the downside.

Nov 08, 2012

Tonight's blog is brief.. only a couple of important factors to cover.

First off, gold. What does this chart tell us?

- 50 DMA over 200 DMA "golden cross".. extremely bullish
- RSI Broke resistance
- MACD has now given us a buy signal by crossing over
- Price has broken the declining cycle trendline
- Price bounced off of the 200 DMA as support

Now tell me what is bearish in this chart? Exactly, I don't see anything either. Hope you got your tickets for this ride.. it's already pulling out of the station!

Nov 07, 2012

Just a quick update tonight..

Gold closed outside of it's trading range today. This falling trendline is the daily cycle trendline. Aside from the swing low formed yesterday, this was the next indicator we needed to confirm a new daily cycle is in effect.. the trendline break. Today would be day 2 of this cycle. This is a very bullish development for gold. The next big step will be forming the weekly swing next week.

Nov 06, 2012 - Election Day

Today was election day. From early this morning, the markets began to speak. Metals rallied, the dollar began to falter, and stocks rallied. I mentioned yesterday that there could be a lot of volatility today.. and we got it.


First off, the dollar fell from it's highs. Yesterday could have very well been the daily cycle top. If that is the case, in order to confirm it, we need to create a swing high and fall back below the daily cycle trendline. That swing high was not created today. My stockcharts price showed today's candle low at the exact price as the low of yesterday's candle. Tomorrow will give us the story.

Nov 05, 2012

Quick update for tonight.. as markets were fairly quiet today.

Of course the big story is the move in the Dollar. It's continued to rally pushing other assets down. I believe this rally is very short lived now and will show us a quick reversal very very soon. It's right up against the 50 DMA. It has already stretched well above the 200 DMA. We have seen a "death cross" of the 200 DMA over the 50 which has always signaled a 3 year low. We have a very large HnS formation which is tremendously bearish and we're right up against a long term point of resistance that has always been respected. Could the dollar paint a more bearish picture?

Weekend Report, Ending Nov 02, 2012

This week ended with brutal selloff after the NFP numbers were released. The NFP caused a spike in the $USD, which conversely triggered a massive liquidation in metals. The dollar finished up .65% on the day. Gold was down 2.24% and silver fell down 4.39%.

This massive spike in the dollar has caused me to reevaluate our current cycle count. I'll address each individually below in their respective places. Please check the "Cycles" link on the right hand side to see the updated cycles charts/counts.

$USD:

The dollar spiked today to find resistance right up against the 200 DMA and the 61.8% fibo level. I wouldn't be surprised for the trend buying to push it over these levels temporarily to create a short term overbought situation causing a quick liquidation back into the range. Price is also against upper channel resistance.