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Excessive Crude Speculation

October 17, 2016/in Public /by Bob Loukas

Excessive Crude Speculation

Crude has been on a fantastic run, and has gained 20% during just the first half of a single Daily Cycle. Unfortunately, however, we need to temper our enthusiasm, since Crude tends to move quickly during both up and down trending Cycles. And with the first half of the current Daily Cycle lining up with the rising portion of the Investor Cycle, the prolonged strength we’ve seen becomes easier to understand.

Macro news this week helped to fuel the current move by providing a catalyst for speculators to push their upside bets. Russia announced that it is considering joining OPEC, and that it’s open to the possibility of cutting oil production.

This announcement is almost certainly just talk designed to push up Crude’s price. Russia is not the collaborative type, and it certainly wants to maintain complete control over its natural resources. And with Russia currently pumping record amounts of Crude and its economy struggling for revenues and foreign reserves, it’s hard to imagine that Russia would consider such a move.

From a global economic standpoint, the macro data is poor, yet Oil is flowing faster than ever. Even with a fair-sized reduction in high cost US production, estimates have the world pumping 1.8 million barrels per day above current demand. And any price increases tend to quickly push a flood of additional Oil from high cost producers back onto the market.

In summary, the global supply/demand imbalance that led to the bear market has not corrected itself. Sure, higher cost Canadian and US production has decreased, but the declines have been offset by higher Russian, Libyan, and Iranian oil production. From a Cycles standpoint, we have little choice other than to assume that a cyclical bear market Cycle remains in control. By extension, all shorter Cycles should follow this bearish construct, and influence price significantly to the downside.

A huge number of bullish Crude Oil analyses have recently found their way into the popular press. It appears that many people believe that Crude’s lows are well behind it. As outlined above, I disagree completely, but the dynamic both reflects the speculative nature of the Crude market and explains the horrible picture that has developed in the COT report.

Crude Oil speculators are, once again, Long by nearly record amounts. This is the second largest speculative Long position in 30 years, giving you an idea on how quickly this market have become overheated. And on the flip side, commercial traders (smart money) have taken a significant Short position. These positions, in a bear market context, are evidence that the Crude market is fast approaching another significant top.

Too many people appear to be focused on the inverse head and shoulders bottom that has developed in Crude. While H&S patterns have their place, the problem with the current pattern is that for it develop and complete, Crude needs to be in a new cyclical bull market. I’m OK with a partial breakout – a solid punch above the below trend line – that acts as a bull trap, but that’s all that will make sense at this point. Crude Oil is structurally not ready to resume a bull market, and the macro-economic landscape simply does not align well with one. I believe that we’re seeing a bear market, counter-trend rally that is near exhaustion.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Gold Price Reversal

October 3, 2016/in Public /by Bob Loukas

Gold Price Reversal

The Gold market continues to be lethargic. Two weeks ago, negative rumblings about Deutsche Bank pushed Gold higher out of the Half Cycle Low. But the move quickly stalled on a gold price reversal, ensuring that the current Daily Cycle (DC) would remain Left Translated.

Gold’s current sluggishness is not unexpected, however. 18 weeks into any Investor Cycle should see sellers largely controlling the action, and I’d expect that to be the case with Gold until it finds an Investor Cycle Low (ICL).

Considering the advanced age of the Investor Cycle (IC), it’s impressive how well Gold has held up. And it’s a boost to bulls that the Miners and Silver are following suit with relative strength of their own. The broader precious metals complex appears to be consolidating its massive gains from early 2016 via time, rather than price, and that’s decidedly long term bullish.

The Miners, in particular, provide a case in point. GDX rose 120% in 6 months to start 2016, and in the 2 months since topping have retraced a relatively meager 20%. I’ve discussed the volatility of the Miners frequently, so readers will know that such relative strength during a move into an ICL is extremely bullish for the intermediate and longer terms.

It’s easiest to see the Gold’s bullish consolidation via time on the Investor Cycle chart. Gold topped 12 weeks ago and has a failed Daily Cycle behind it, yet is down only $70 from the IC peak. It’s a classic bull market consolidation of the huge six-month rally, and is a significant change in character from what we all lived through during Gold’s bear market.

A Gold Price Reversal is on the way, make no mistake about it, but we may need to be patient as we wait for it. Gold could need another full Daily Cycle lower before finding its ICL, and that would mean another 4-5 weeks of declines. Rest assured, however, that the bull market trend is firmly established. During the next series of higher IC’s, I expect the general public to again pay attention to Gold.

Trading Strategy

Long term investors should already be holding a strong core portfolio. Short term fluctuations in the Gold Price market should only be viewed as an opportunity to add to long term positions. If you’re under invested, I personally would not wait for a Cycle Low, this price level is more than attractive.

Traders should be flat or short this market currently. There is a real possibility that we’re going to see a large stop run below $1,305 on gold and the Sept 1st lows in the precious metals miners. Within 5 to 10 trading days however, we should see a Cycle Low and reversal form, providing an excellent opportunity for traders to get Long this sector for what could be a promising new Daily and Weekly Cycle.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

The Winds of Change

September 13, 2016/in Public /by Bob Loukas

The Winds of Change

(An except from the Financial Tap Weekend Report – See here for more detail)

Friday’s 2% + decline in the equity markets was impressive. After a record run of low volatility and muted price action, equities suddenly awakened and exploded lower. This is exactly the sort of action I expected (although favoring upside price move) when I titled last week’s report Expecting Volatility. The market had been setting up for a big break for quite some time.

Extended periods of a lifeless, low volume trading range usually give way to volatility and significant moves in price. Going forward, at least over the short term, I expect we will see a series of 1% (plus or minus) moves in the daily indices. Although Friday’s break has significant bearish technical implications, it is too early to assume that the next extended move will be lower. What we can assume, and with a high degree of confidence, is that the next major market move has started.

The primary problem with being more definitive on direction is uncertainty around the Daily Cycle (DC). In a traditional DC (40-45 days), the low on September 1^st – day 47 – could easily mark the DCL, especially with price subsequently jumping back above the 10 and 20-day moving averages. On the other hand, the September 1^st low was not particularly deep, nor was the following rally of any real strength or duration. Further, a move back above the 10-dma was no big feat; the lack of a significant preceding drop and the sideways consolidation meant that the 10-dma bar was very low. Moreover, Friday’s drop appears to embody the sort of capitulation that we’d expect at the end of a DC.

For a number of weeks, I’ve maintained that a major market move was coming. Based on Friday’s action alone, I believe the move has started, so we need to be prepared for some serious volatility. The million-dollar question, of course, is whether the eventual move will be higher or lower.

Turning to the VIX, my research uncovered an interesting, and potentially telling, relationship. Whenever the VIX reached a low and then spiked higher, it appears that a) volatility continued to expand, and b) the S&P topped and began a move lower toward a DCL or ICL.

If the above chart holds, we should probably assume that the markets have entered a corrective mode. That doesn’t mean that a major selloff is necessarily at hand, but we should expect a decline that spans more than just a single trading session.

So the Daily Cycle question becomes important. If we are seeing an extended Daily Cycle that capitulates for a few days before bottoming, the longer term move could be higher. On the weekly chart, we would likely see a back test of the breakout, with the rising 10-week moving average as the floor.

The bearish case, however, is a new Daily Cycle, one that will cascade lower out of the recent tight trading range. This would leave behind a very clear week-7 IC Top and a comfortably Left Translated IC that would have cyclical bear market implications.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Another Cycle Higher – S&P

August 29, 2016/in Public /by Bob Loukas

Another Cycle Higher - S&P

What we know for certain is that the Daily Cycle is well into the timing band for a Daily Cycle Low (DCL), and has reached a new low on day 44. To the naked eye, equities appear poised to move even lower. But from a Cycles standpoint, the S&P is now in a position to move significantly higher. Read More

Bond Sentiment Extreme near a Cycle Turning Point

August 15, 2016/in Public /by Bob Loukas

Bond Sentiment will lead to a Cycle Turn

The Bond market has obviously been in a strong rally since the April Investor Cycle Low (ICL). History teaches, however, that even during solid bull market moves, corrections into major Cycle Lows are a normal part of the Cycle flow process.

And this is where we find Bonds today. The Commitment of Traders report shows a massive Long speculative position, while overall Bond Sentiment remains sky-high. Weekly Cycle timing is well into its topping range, and the 4th Daily Cycle (shown below) is beginning to struggle. I would never count Bonds out, at least until we see a failed Daily Cycle, but I am starting to believe that a new down leg in Bonds is almost upon us.

A technical caution – if price were to move higher and exceed the current day 6 high, a bullish continuation is possible. For the bulls, loss of the 10-day moving average would be extremely negative, as it would signal a potential downturn and Left Translated Daily Cycle.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Will this Crude Oil Rally hold?

August 9, 2016/in Public /by Bob Loukas

Will this Crude Oil Rally hold?

Crude has finally reversed higher to recover some of its recent losses, and is now showing clear evidence of a new Daily Cycle (DC) and Crude Oil Rally. There are early signs of a new Investor Cycle (IC) as well.

Midweek, Crude bottomed on day 44 before reversing sharply higher and punching through the declining trend-line. And when it closed above the 10 day moving average, Crude confirmed that it is in the early stages of a new Daily Cycle. From this point forward, Crude’s performance will depend on its Investor Cycle and the bear market as a whole.

(Note: Chart is from the weekend post. Crude is approaching my first mini target at $44 on Tuesday)

In terms of sentiment, there was enough of a selloff to suggest that an ICL occurred. Even though pessimism did not drop to the level of the previous 2 bear market ICLs, it was more than adequate for an ICL, especially with the weekly Cycle extended beyond its normal timing band.

At the very least, Crude has seen a DCL, so we should expect at least 1-2 weeks of upside. Eventually however, given that Crude is in a bear market with a series of lower ICs in play, all paths should lead lower. And that should continue for some time to come.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Gold Setup

August 1, 2016/in Public /by Bob Loukas

Gold Setup

This is a follow up post to June’s blog post – Gold is Ready to Perform and is an excerpt of the weekly premium report.

This is once more a very bullish setup for gold, as the second Daily Cycle within a bull market advance will often significantly surprise traders with its intensity and duration. Predicting price movements is a difficult game, but a rally over 20 trading days (up to day six now) is to be expected, adding a minimum of $100 from the Cycle Lows.

When we widen the timeframe out to the weekly Cycle, we see a similar bullish picture. A clear bear market trend was decisively broken in early 2016, and now that a second straight Investor Cycle high has been made, the trend has clearly reversed. The early, massive out performance shown by the precious metals miners tells us that a new bull market is already well under way.

For this Investor (weekly) Cycle, a drop back to the 10-week moving average during the first Daily Cycle Low (DCL) was just classic bull market behavior. Although the ascent off the December bear market lows is certainly steep, and arguably not sustainable over the longer term. But for now, we’re still in the early portion of this Investor Cycle with some serious momentum behind this sector.

There is a tendency during bull markets to overthink each setup or for traders to become overly aggressive/greedy. I have seen many traders lose capital trading the long side of a powerful bull market. By adding more and more leverage as a Cycle rally extends, only to be shaken out by a DCL because they did not have “strong-hand status”. And far too often traders look to out of money call options as a means to riches, only to see a powerful rally fall just short of the aggressive strike price.

The lesson here is not to over think the setup. In any bull market, it is best to buy large early out of a Cycle Low and then sit back and watch. If you decide to use leverage, then again do so early to allow for a tight stop (off prior Cycle Low) and wait for the bull market to get your positions deeply in the black. Then it becomes a matter of reducing that leverage as the Daily Cycle progresses, as opposed to being under invested when the move begins to where you feel like you’re missing out, at a point where you should be harvesting profits. Above all, as I have said all along, establish a solid core position that you can buy and forget.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Golden Fireworks

July 5, 2016/in Public /by Bob Loukas

The Financial Tap – Premium

NOTE: For the first time ever The Financial Tap offers a Full 14 day, no risk, money back Trial on our premium reports. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Golden Fireworks

This is a follow up post to last month’s blog post – Gold is Ready to Perform and is an excerpt of the weekly premium report.

Gold surged on the Brexit vote a week ago, then then spent the early part of this week consolidating the gains. The net gain since the Brexit vote has been impressive, but Gold has still not regained the intraday high from the day after the Brexit vote. Since spiking to 1362 the morning after the vote, Gold has been filling and confirming the Brexit surge.

The initial spike after the Brexit vote was clearly an over-reaction, but the bullish action since has confirmed that the move higher is real. With Gold now approaching the Brexit intraday high, I believe that we should see another 2-5 day rally before the Daily Cycle peaks and turns lower. At this stage of the Cycle, any Swing High will likely mark the DC top.

At the end of 2015, the precious metals Miners were undervalued in relation to Gold by a historical amount, and the January-May Gold Investor Cycle (IC) allowed them to play catch-up. I have shown the Gold:Miners ratio chart numerous times in the past to illustrate how Miners typically catch the first real bid during bear market turns. And that’s what happened during the 1^st IC. Now, the other precious metals can make their own runs.

Silver has taken off as only Silver can. It has already become significantly overbought, but the current move is showing no sign of stopping, and could become epic. It’s important that we recognize the move for what it is, maintain our composure and hold through the dips where appropriate. Silver is still trading at a historically massive discount to Gold, but it doesn’t need to catch up all at once. There is plenty of time for it to do so in coming Cycles.

Platinum and Palladium were also big winners this week. They have been underpriced (relative to Gold) and both saw broad-based buying. And as the end of the bear market has become clearer to investors, the entire precious metals sector has received an increasing flood of money.

The Miners are seeing buying across the board, and even the laggards and lessor quality names have begun to see bids. And that’s fine. Increasing participation confirms the bull market and tells us that we’re still very likely only in its early innings.

Recent history has not seen the precious metals Miners bullish percentage index ($BPGDM) pegged at 100, and the fact that it is now is a clear sign that we’re comfortably into the bull market’s next phase. It’s also, however, a warning that we’re likely beginning to approach the next DC top.

There is not much room for alternative analysis. The entire Gold sector is in the prime portion of the Cycle, and speculators have begun to lift the market higher. We’ve prepared for this outcome, and must be aware that short term, violent, counter-trend hits are possible at any time, as over-leveraged speculators bail on positions. Each of us needs to avoid being chased out of positions by making sure they are correctly sized, and that leverage is appropriate.

As predicted when the DC started (some $100 ago), we are likely to have another 6-10 weeks higher in the current Investor Cycle. My minimum target is $1,420, but my expectation is that the IC will top somewhere between $1,450 and $1,480. Be smart about your entries and exits – it is best to buy during dips and sell some during rips, as opposed to becoming excited during surges and adding leverage at the end of intraday moves. Most investors will be best served by not watching the tape too closely and by being content with the positions they have.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: For the first time ever The Financial Tap offers you a Full 14 day, no risk, money back Trial. It’s just $99 thereafter for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Will They Buy the Dip - The Financial Tap

S&P 500 – Will They Buy the Dip

June 23, 2016/in Public /by Bob Loukas

Will They Buy the Dip

Below is an excerpt from the past 06/18/16 weekend’s premium member report. If you would you like to see the full premium report, please sign up using the email form at the end of this post. During the past few years, we’ve seen plenty of sharp sell-offs in equities that have reversed (Buy the Dip) to make new highs, but this time the sell-off feels different. I sense that the market’s character has changed on multiple time-frames. That said, I’m keeping my eye on the recent S&P high at 2,120.55. It’s just shy of the all-time high, and if the S&P rises above it, a big new all-time high is likely to follow.

Last week’s equity selloff was accompanied by an unusually big move in the VIX (fear) index. And in a clear sign of market distress, world sovereign debt markets rallied sharply, as capital moved from equities into the most defensive of asset classes. Such desperate bids to own debt at 0 or even negative interest rates, tells me where the smart money wants to be invested.

The decline this week was expected and the timing (day 19) for a move into a Half Cycle Low was perfect. The market tried to rally on Friday and failed, although I believe that during the coming week, the S&P will recover to retrace at least half of its recent decline.

Surprisingly, sentiment has remained significantly elevated. Bull market conditioning has left far too many people believing that equities will see another big rally in the near future. I don’t think that’s at all likely.

For the past 2-3 years, the market has not been driven by fundamentals. Earning grew until 2014 and kept the market at least somewhat satisfied. But now, with earnings and revenues both having peaked 2 years ago, and with the age of the expansion at 7 years, the economy has almost certainly peaked for this Business Cycle. Its next move should be toward the trough (recession).

Fundamentals were an afterthought while earnings were increasing. But now that earnings have turned lower, all eyes are on the FED. Only easy money from the FED’s printing press can sustain a market at historical overvaluation.

The FED’s recent policy focus has been on ZIRP (Zero Interest Rate Policy), yet it is clear from the chart below that ZIRP alone cannot lift the market higher. We’ve had a zero interest rate environment for 8 years, and to expect a new stock market breakout from a continuation of ZIRP is ludicrous.

The markets are running dry of liquidity again and only a new round of quantitative easing (QE4) can get equities going again. It’s my view that there are only a couple of events that could lead the FED to embark on QE4: a) the market takes a massive dive, or b) the economy turns decisively lower.

We are left with an Investor Cycle (IC) that stalled near the S&P’s all-time high. The market has spent nearly two years in the current topping range, and now that the current IC is at a typical topping point, I expect the coming Daily Cycle rally will quickly reverse lower. I expect that traders this tile will not Buy the Dip, and the next big Weekly Cycle decline over the summer will begin.

In summary: perceived risk for equities should continue to rise, volatility should increase, and a summer selloff should begin shortly. This should become one of those instance where they will not Buy the Dip.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: It’s just $99 for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

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Gold Is Ready to Perform

June 14, 2016/in Public /by Bob Loukas

Gold Rally

A solid bid returned to the Gold sector this past week as the market saw a solid Gold Rally. And the GLD ETF alone added more than 15 tons of Gold. The precious metals Miners, which had fallen 10% from their recent Cycle highs, rallied to recover all of their losses, and to print new 2016 highs.

Considering that the Dollar also moved sharply higher last week (and continued to start the week) out of its own Cycle Low, the action in the Gold market is surprisingly bullish. If Gold were destined to decline for one more Daily Cycle into an Investor Cycle Low (ICL), I would have expected a rising Dollar to be the catalyst to send it lower.

If a new Gold ICL were not in play, there would be no reason for the Miners to make new highs, or for Gold to slice upward through its 10 and 20 day moving averages. Although I’m not willing – yet – to entirely rule out the possibility that Gold’s current DC could fail and drive price lower into an ICL, that’s not what the evidence currently supports. Admittedly, my last call for a possible $200 Gold Rally did not exactly pan out and that trade was stopped out. The key difference here is that call was, as clearly noted within the post, based more on a chart pattern and did lack Cycle’s confirmation. With this current setup, the Cycle’s picture is well defined.

In fact, the evidence is significantly lopsided here. None of the action here resembles the type of behavior you would see in a final, failing Cycle. The technical indicators (10dma cross back over 20dma – MACD bull cross – Strong RSI) and great price action (nearly $100 off the bottom) both point to only the first Daily Cycle of what is generally a 20-25 week Investor Cycle. If that’s the case, we could see an additional 10-15 days of generally higher prices as Gold rallies toward a typical day 20, 1st Daily Cycle top.

There are still a few bearish indicators to contend with, however. For several weeks, we watched the COT report thinking that it might need to fully reset before we had an ICL, and that didn’t happen. Plus, sentiment has moved upward, and is again at a level that is highly elevated. Nevertheless, when we view these metrics from the perspective of an extreme bull market, it’s clear that their current levels are not out of an expected range.

There are many encouraging signs of a new Gold Investor Cycle. The Gold Miners’ bullish percent index ($BPGDM) had dropped to 50%, matching the level that accompanied ICLs while Gold was rising out of its 2008 low. Subsequent ICLs registered very little sell-off in the Miners, and it was not until 2010, a full year after the bear market low, that the Miners saw a real decline. Last week’s rise in the Miners to a 2016 high is very much like the lock-out rallies the Miners saw after the 2008 bear market low.

Gold is looking increasingly like it’s in a bull market. We should not be surprised – the world’s central banks are clearly struggling to contain deflation as they become increasingly involved in different debt markets. The central banks’ purchase of debt has driven yields to near-collapse, with the sovereign debt (out to 10 years) of most industrialized nations trading at negative rates.

It’s little wonder Gold is catching a bid! Why would investors pay to own a risk-off asset like bonds, one which will not appreciate with inflation, when they can own Gold free and clear with no counter-party risk?

On the weekly chart, we see a clear low on Week 26, which is perfectly timing for an ICL. We had a relatively mild 1-month decline into the ICL, but it was significant enough to be a bottom. In total, we have more than enough evidence (by early bull market standards) to support a new Investor Cycle. I believe that we’re going to see a big 2^nd leg higher in Gold this summer.

Trading Strategy

I want to reiterate my belief that everyone should hold a solid, long-term position in both bullion and the Miners, positions that are being held for the long term Gold Rally and not traded with the Cycles.

Disclaimer – In terms of trades, I have a Long position in gold via the etf – GLD. If a new IC is underway, this trade would remain active for possibly another 2-3 months.

The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond’s, and Natural Gas Cycles. Along with these reports, members enjoy access to two different portfolios and trade alerts. Both portfolios trade on varying time-frames (from days, weeks, to months), there is a portfolio to suit all member preferences.

NOTE: It’s just $99 for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

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Excessive Crude Speculation

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Gold Price Reversal

Trading Strategy

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The Winds of Change

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Another Cycle Higher - S&P

Bond Sentiment will lead to a Cycle Turn

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Will this Crude Oil Rally hold?

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Gold Setup

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Bob.

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Golden Fireworks

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Will They Buy the Dip

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NOTE: It’s just $99 for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

Gold Rally

Trading Strategy

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NOTE: It’s just $99 for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining The Financial Tap and receive two reports per week and the education you need to become a better trader or investor See >> SIGN UP PAGE!

Bob.

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