Thursday, July 4, 2013

ALL THE WRONG REASONS!


While most 4th rate analysts unwittingly misdirect you into watching for a big dollar collapse and cling on to its alleged correlation to gold, all you have to do is look back a year and see their relationship is worthless. The gold trade has been an obvious disappointment and its most recent breakdown through 1320 has brought about a ‘think tank’ infested with analysts fetching for all sorts of reasons that seem rational for calling a bottom. None of which are true--and of course these same analysts that tell you to keep an ‘open mind’ are the ones mentally blocked from knowing the characteristics of a downtrend. And they’ve been sending you emails and newsletters for months saying this “JUST MAY BE the TIME” we have reached the final low!

As you all know the reality has been much different, with every rally being met with tremendous selling pressure, giving you no indication of a possible bull market. Did you ever think that once the bull gets underway and reaches 3200, they will all tell you it’s time to get out?? The same crowd of forecasters that were keeping you in at $2000 have ridden the bear “A L L- T H E W A Y- D O W N” to these current levels, still claiming every oversold condition is just a pullback to a much bigger uptrend! I’m sure after 22 months it will be that ‘conspiracy theories of manipulation’ or some ‘finishing wave count’ are the reasons.

Truth is, once you break the apex and have a lower low you add the width of the triangle from the breakdown point to get the measured move. This shoots for a price target of 1200, which is a minimum expectation, but perhaps on the next failing rally we will see a climax low to 1140.

CHART OF GOLD (1)

That also would have price return to the 61.8% area from the lows of 2008 to the highs of September 2011 and a good place for an extreme reversal bar to appear.
Chart of Gold (2)
 
Here too is a potential fold back measured move from the point the trend went parabolic in 2011, to where we are now in the current downtrend. Notice that the parabolic uptrend of 2011 equals the parabolic downtrend of 2013 in size and that it happens to fall in the vicinity of these same target lows. Not to mention, the downside volume is now much lighter which is a sign that most of the selling pressure is being absorbed by central bankers and giant institutions controlling the demand.

CHART OF GOLD (3)
Most people lose money in downtrends because they have no strategy, they become instant long term buyers, and, they must ‘wait it out’ only to recover 70% of their losses, if they’re lucky. Timing the market is not the same as ‘time in’ the market and you should know that after a price base of 4 to 5 weeks your odds of ‘a bottom’ is more likely. Or basically draw a horizontal line from 1200 out, and even with giving five or so percentage points to account for volatility it won’t be a surprise to see in a couple of weeks that price will be trading flat. We are hovering above extremely tough support on all time frames, and once 1350 is regained, the bull market will launch!
The Complete Coverage Report offers two subscriptions—$9.95/month or $100/year. It is well worth the information received.
www.thecompletecoveragereport.blogspot.com

Darah

 


Sunday, April 7, 2013

DOWN AT THE DEPTHS


The price of gold is forming into a sideways base that after several weeks, has experienced minimal downside. This is an encouraging sign because it’s a testament to the metal’s underlying strength. It also provides technical evidence that price has the ability to hold, and that there is indeed, “life on the floor.”

In addition to the array of sentiment and internal indicators that now all point to a major bottom; only one--- focuses on TIMING. The moving average--of gold, stocks, what have you, essentially traces price information of the past, but applied to the present. And a good rule of thumb is to wait for the moving average to catch up, flatten out, and then change direction to confirm a bottom.

But do not ignore price alone. After all, price determines its own fate and the moving average is merely a fine tuning. Together, the two provide a technical interpretation that is more insightful than observing one independently from the other.

The twenty day moving average is a case in point, and perhaps very fitting because it encompasses the short and intermediate term price action. Twenty trading sessions equates to one month of time; and most trendless markets tend to run about six to eight weeks before presenting a directional move.  Overlaid on gold, the slope is not only beginning to arc sideways, but now resisting the most recent decline. To explain this, older (minus) readings are being replaced with newer (positive) readings, which on a time scale of twenty trading days, absorbs a broader development and not so much, the short-term gyrations.

Gold remains very much locked in a basing chamber, both seen by price and a trendless moving average. But all factors included, the current bottom forming is, shall we say, “nearing the end of its time zone.”
The climate down below is improving, and looking favorable, more than it ever has before. The inevitable chain of events is predictable; where price ultimately must leave the ‘basing phase’ to begin trending again. And undoubtedly this will cause the twenty day moving average to rise.


The Complete Coverage Report offers two subscriptions—$9.95/month or $100/year. It is well worth the information received.
www.thecompletecoveragereport.blogspot.com
Darah

Sunday, March 3, 2013

A STOCK MARKET ENDING


The individual stocks of the equities market are no longer keeping pace with the broad averages. A vast number of these stocks have faltered because the trend itself has become ever more selective. What initially started as a robust, broad based rally is now narrow; and can only be supported by a handful of stocks.

The S&P 500, which is greatly exaggerated from its components, and perhaps can push a bit higher, is experiencing its very own reading of ‘number of new highs’ increasingly diminish. This particular statistic is useful during an uptrend because it determines strength, participation rate, and only the initial spotting of a divergence reveals that trouble is brewing.

The reversal however will not come immediately. The trend matures, and its remaining strength allows price to carry on. The divergence that was previously recognized is now deeply engraved and building on all fronts. More and more stocks will be left behind and the few that thrive will become stretched even further. All decisions, rational decisions will be overcome by greed and investors will pile in to chase the last bit of euphoria.  

But ultimately what lies ahead is a dead end, where the climate becomes treacherous. A terrifying, trendless market at formidable resistance begins to emerge. The trend is immobilized and prices then shape into one large distribution top. Then, after enough time sets in, the shaky pattern cracks, the market reverses, and like a flood in destruction, it drags everything in its path!

It’s the beginning of the end, and the stock market ends up fighting a cyclical clock of nature. At every climax, prices are deprived of oxygen and must retrace their journey to lower altitudes. This most recent sideways pattern of heightened volatility, represents a saturated state of exhaustion, which calls for a major topping process that will inevitably fall apart!
S&P 500 v. Number of New Highs
The Complete Coverage Report offers two subscriptions—$9.95/month or $100/year. It is well worth the information received.
www.thecompletecoveragereport.blogspot.com
Darah
 

 


 

Monday, February 18, 2013

THE PATTERN OF PREDICTABILITY


Investors have experienced a state of prolonged frustration--where prices are TRAPPED between the upper and lower width of a symmetrical trading band. This is a reversal sequence that is gradual in nature, but unfolds in a horrendous ‘up and down’ affair until a sufficient amount of both time and distance is reached. Prices here regroup, gather strength, and undergo heavy accumulation as both, buyers and sellers, eagerly anticipate a forthcoming directional move.

Word out is that the most current and up to date pattern of GOLD is shaping into a five wave structural decline that in most cases, signifies the completion of a trending move! But there are some circumstances where it’s not impossible for the price to subdivide into six or even SEVEN WAVES before the pattern reaches its culmination; especially in a mature advance or one that stays in effect.

The ACTUAL pattern developing is a contemporary variation of the [seven cycle pivot-wave-structure] - which formed in 2008. The end result that is occurring now- is a six to eight month advance - that will (with certainty) reach a minimum target of 1900, or as high as 2200 in the most bullish case.
The canvas below is a reminder that ALL patterns repeat themselves and, if you will notice in this alphabetical sequence – G completes the developing structure.

GLD- DAILY CHART (click to enlarge)
 


WHY the pattern is reappearing is of no interest, so long as we can observe that it exists! And from the looks of it, the first test of survival is complete and what lies beneath the surface is the muscular structure of one STRONG OX, in the best shape of his life!  
Investors want to know the bottom line - and "the end" of this multi-month correction.  As late as early March, gold will have reversed course to fulfill its long awaited uptrend.

The CC Report offers two subscription services---$9.95/month or $100/year. It is well worth the information received.

Darah

Saturday, January 26, 2013

THE TIME IS NOW FOR ALL GOLD INVESTORS!!!!


There is a universal understanding that no major trend can exist without Major Institutions being ‘in on’ the trade. With the deepest pockets on Wall Street, these BIG BULLIES are also notorious for manipulating the displacement (of shares) at key bottoms in order to better position their entry points! The most traditional and common method is a running of stops at crowded support levels. It creates a forced debacle where prices are in a reeling tail spin, leaving investors totally shell shocked! Then within days, or in some cases intra-day, prices immediately reverse back to their collapsing point.

The Miners is a working example- because its chart pattern is a clear cut technical aberration with now an oversupply of shares up for grabs! And this inspired stroke of selling has generated a deeply oversold condition that is, comparable to the “July Bottom”---- of which came several days prior to a multi-month advance.

But this discrepancy and perhaps most encouraging sign of all is ---that prices are residing at higher levels! Let me explain.

Elevated readings of the ‘Gold to Miners ratio’ have a credible tendency to mark important bottoms. Readings, especially this past week, certainly justify the current climate as not only bottom worthy, but very stretched-- while holding safely above the “July lows”.

There is an implication here! And that is, that the most recent three day wipe out is unlikely to go much further because everyone who would’ve sold out, has already done so! This ground halting reversal will be in keeping of a larger framework of the current Bull market’s livelihood, and that is, maintaining an orderly (trend shaping) sequence of higher highs and higher lows.
The Gold to Miner Ratio (click to enlarge)

The Complete Coverage Report offers two subscriptions—$9.95/month and $100/year. It is well worth the information received.
Darah
















Saturday, January 5, 2013

THE INFLECTION POINT OF 2013!


Most are sunk in contemplation, and hopelessly clinging on to the ever- changing era of big government spending.

Central bankers and big financial institutions are borrowing money from the FED at rates near zero, and then reinvest it into the ten year or thirty year notes, which are paying 2% to 4%. From the standpoint of any financial institution, it is logical and also more profitable than say, lending to a risky borrower.

Quantitative Easing was- and is now-the Fed’s response to this credit crunch, BUT!- with money being created out of thin air! And this new infusion of liquidity will inevitably flow back to the same institutions that initially purchased these long term government debt instruments! Overall, the hopeful consequence is to saturate the debt market and encourage creditors to invest elsewhere-- i.e. business owners, entrepreneurs, and the everyday consumers.

Bond prices and their corresponding yields have an inverse correlation. If prices rise, then yields will fall. When the FED intervenes it creates the illusion of demand, making prices go up. In theory, their intent, is for bond holders to cash out with a profit, then consider loaning really-where there is MORE RISK.

Interestingly enough, this theory is only a theory, not a solution. When the government increases spending through measures of stimulus plans, the budget deficit will soar. This debt, however, must be repaid and consequently, higher taxes will largely fall on the wealthy, but also on the middle class because most, if not all will receive reduced payouts. Higher taxes will also cut back consumer spending, forcing companies to operate with fewer employees. The result is higher productivity because one worker is doing the job of two, or three in the extreme.

This all will come at a time of rising inflation because despite the Fed’s efforts to keep rates (yields) low, their plan is failing. International creditors are quietly fleeing from bonds because of fears of a possible default. They will focus internally on the growth of their domestic economy. Bond holders will take their bread and butter back to their homeland to focus on the very products that create organic growth and exports for all.  

Mind you, the technical picture must accommodate this inevitable outcome. And as we all watch from a far, the bond market is cracking, but has not imploded, at least not yet. I suspect that this sideways bearish pattern will ultimately give way in the early part of 2013, and at the same time initiate its Bear Market in full effect.
TLT- Weekly Chart (click to enlarge)





We have a major turning point approaching in all markets, not just bonds. The corresponding cycles for stocks and Gold, both long and short, will manifest into a decouple process that- I have long maintained!
Investors should be prepared for the coming tax hikes and rising long term capital gains, which together hold little to no incentive for owning stocks. This will be the true culprit for a worsening stock market, actually a Bear Market; while the media misdirects you with political theater to alleviate the worries of going off the fiscal cliff.
S&P 500- Daily Chart (click to enlarge)



As for the Dow Jones, it too doesn’t look very promising either.
 
The Dow Jones- Daily Chart (click to enlarge)
 
But there will come a time, a time long before the Fed downsizes its balance sheet, if unemployment ever reaches 6.5%. A time far removed from improving GDP or the presumption of an economic recovery. A time when bearish conditions seem extended indefinitely and there is no end in sight! In the same breath investors will rush out of bonds and enter the only non-government asset that in the times of pervasive gloom outperforms any other market---GOLD!
Gold- Daily Chart (click to enlarge)
The CC Report offers two subscriptions— $9.95/month or $100/year. It is well worth the information received.
Darah
 
 
 
 

Sunday, December 23, 2012

MINERS AT A LOW!!


The history of the stock market reveals how specific patterns come into being, and how it influences subsequent behavior. Pattern sequences of a previous time are reborn and under the right circumstances, can identically repeat. It is simply a reproduction of how investors are behaving collectively at two different points in time. But knowing that a pattern has a particular script it follows can constitute a path that holds (or leads to) a likely outcome!

Ninety percent of the time all market declines will have two panics. The first is associated with volume and volatility, invoking maximum participation. The second is a byproduct of the first and unfolds in a final ‘flush out.’ It is less dramatic in size and influence- but prices reach new lows.

Time is also a component and is equally as important. Once a protracted decline sets in, historically there is not a typical short squeeze of five to eight percent in the other direction, but a tremendous upward spike which reverses the trend all together.

The modern day scenario that is most fitting is of course, the GOLD MINING INDEX. And after an extended three month correction, we can officially say "the rubber band has been stretched!" The technical picture provides enough evidence to define a clear cut two- panic low sequence, but more interestingly, the second panic has a particularly complex nature that morphed into a sideways and seemingly base pattern. This now calls for a violent uptrend underway!
GDX-Daily Chart (click to enlarge)

The CC Report offers two subscriptions- $9.95/month or $100/year. It is well worth the information received.

Darah