Gold is Finally Ready to Launch
Summary
Gold appears to have wakened from what has been a very challenging 10 month decline. Ever since last September’s rally failed (bull trap) to take out the all-time high set back in 2011, it has literally been straight downhill for gold. But the signs of a trend change are everywhere now, and this is evident technically in the charts and within the changing composition of the Cycles. Be warned we are due a $50 pullback this week towards a Daily Cycle Low. However beyond that, all indications point to a substantial rally about to take hold. According to my Cycles analysis, we’re looking at a 10 week gold rally back to the $1,520-50 region.
The Weekly Cycle
There are plenty of reasons to get excited here, as the early developments of this new Weekly Cycle point to a longer term trend change. Gold is now 4 good weeks into a Weekly Cycle (these Cycle average 20 weeks) which was confirmed once it broke above the declining trend-line and the Weekly Swing Low point (Above $1,301). The technical indicators show strength is building while the slow moving weekly oscillators are beginning to bullishly cross. There is no way of knowing for sure how far this Cycle will run, but the early indications are very encouraging as the Cycles on every time-frame are turning higher.
With a new Cycle, we’re on the eve of yet another significant rally. We know from past experience that big Right Translated Weekly Cycles can easily gain 25% before topping. When we look at the weekly chart there is some volume resistance at the $1,400 area, but besides that it’s clear sky back up to the $1,520-50. It’s at that area where gold was supported numerous times in the past before eventually collapsing, and it’s at that level where resistance will now be found. That area is where plenty of trapped longs can still be found and it’s where this coming Weekly Cycle rally will top.
Precious Metal Miner Confirmation
I love looking towards the miners for confirmation of where gold could be headed. We know from experience that the miners most often lead gold out of Cycles, and that is especially true around the major turning points.
The miners are up 20% in just 4 weeks and they’re breaking out of the established bear market downtrend. Unlike past failed attempts, this time the miners are showing great accumulation volume and rising relative strength. With the first weekly MACD cross in over year, this is exactly the type of evidence we’ve been seeking to confirm gold has found a major low.
The strength in the miners chart is showing up on the bullish percent chart. This is an indicator that measures the percentage of miners that are now showing bullish long term P&F charts. We've witnessed only one significant rally since the bear market took control early last year. Coincidentally that was a massive 9 week rally that started almost at the same time last year. So now with 25% (and climbing) of stocks showing bullish charts, we’re seeing early signs that the miners are breaking the long established trend and beginning a powerful new rally.
COT Confirmation
As seen within the COT reports, the speculative short positions were recently at record levels. But as is the case at key turning points we’re seeing open interest spike while the record short positions have since receded, evidence they are being forced to cover positions. That’s a result of this 4 week Weekly Cycle rally, the higher gold moves the more speculative shorts will begin to panic and start covering their positions. This process creates a sell-fulfilling feedback loop and as they begin to cover their positions they become the driving force of the next big rally.
Courtesy Sentimentrader.com
Gold’s 4 Year Cycle – New Bull Market
I believe the bear market and therefore the 4 Year Cycle in gold is now over, but of course without real confirmation that statement remains just an opinion. Yes gold has broken the weekly declining trend-line, which confirms a new Investor Cycle. But to confirm an end to this bear market gold needs a monthly close above $1,423. That’s currently monthly Swing Low level and with gold’s monthly chart showing early signs of turning, any move above $1,423 will also provide technical confirmation too. During the 2009-2011 gold bull run every Weekly Cycle topped after week 10. But since the Aug 2011 top, they have all topped well before week 10. All forming in Left Translated fashion, those are classic bear market Cycles we experienced.
If gold is to close above $1,423 it will break that trend and it will likely put in the first Right Translated Weekly Cycle (Top after week 10) in over 2 years. That’s the type of action that will confirm that this is a new 4 Year Cycle and more importantly the end of this bear market. Although I firmly believe we will get there within the next 12 weeks, only then can we truly entertain the prospect of a new cyclical bull market.
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, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
The Dollar Showing Signs of a 3 Year Cycle Top
/in Public /by Bob Loukas$US Dollar Cycles
This is only Day 3 of a new Daily Cycle, but the Dollar is struggling to lift off. Normally after a long decline and consolidation we would be looking at a much more powerful response here. Since the first Daily Cycle rallied 17 straight days to make new 3 Year Cycle highs, this 2nd Daily Cycle should be following through with more upside. It's a little early to tell, but so far I'm not impressed with the muted response.
Instead the initial 4 week surge in June to marginal new Investor Cycle highs now exhibits signs of a bull trap. Unless this Daily Cycle gets busy putting in a similar rally as it did in the 1st Daily Cycle, then I will remain skeptical. Because the 3 Year Dollar Cycle is now well past its midpoint, we must now entertain the thought that the recent highs were also the top of the 3 Year Cycle.
We don’t have any confirmation of a pending Cycle failure, but the recent weakness here is most likely confirming that the FED is not going to be tapering anytime soon. As long as we don’t experience a crisis like event that would spike the dollar, I believe that the coming equity bear market will force the dollar down towards its own 3 Year Cycle Low. True equity bear markets normally coincide with a drop in the dollar and the dovish stance the FED will maintain during a bear market ensures the dollar will fall too.
God Save the King
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The FED Keeps the Party Going
/in Public /by Bob LoukasYesterday’s GDP release of a 1.7% gain underscored just how lethargic the economic recovery remains. Now 4.5 years since the last recession, the fear for the FED is that the business Cycle is in the process of turning over. Forget the rhetoric that the economy is going to gain steam and start growing quicker; we’ve been hearing this same nonsense since 2010. The fact remains that the FED is keeping the economy artificially elevated and the best they can do is keep it right above stall speed.
So when we hear talk of tapering asset purchases, I really do not see how they could do this. The last time that thought gained any traction bonds sold off very quickly and this forced borrowing costs to spike. I seriously doubt the FED is going to allow the stock market to tank and interest rates to spike right when the economy looks the most vulnerable.
The FED’s message in the end was that as long as the economy remains near stall speed then asset purchases at $85 per month will continue. They say if the economy improves enough then they will begin tapering purchases, but I still see that as being years from reality. To me the new black swan event is the need for even larger asset purchases. The thought of a new round of QE is never discussed, but I believe there is a greater chance we see more QE before we see any tapering.
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, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
Midweek Market Update Report
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Morning Coffee
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Gold is Finally Ready to Launch
/in Public /by Bob LoukasGold is Finally Ready to Launch
Summary
Gold appears to have wakened from what has been a very challenging 10 month decline. Ever since last September’s rally failed (bull trap) to take out the all-time high set back in 2011, it has literally been straight downhill for gold. But the signs of a trend change are everywhere now, and this is evident technically in the charts and within the changing composition of the Cycles. Be warned we are due a $50 pullback this week towards a Daily Cycle Low. However beyond that, all indications point to a substantial rally about to take hold. According to my Cycles analysis, we’re looking at a 10 week gold rally back to the $1,520-50 region.
The Weekly Cycle
There are plenty of reasons to get excited here, as the early developments of this new Weekly Cycle point to a longer term trend change. Gold is now 4 good weeks into a Weekly Cycle (these Cycle average 20 weeks) which was confirmed once it broke above the declining trend-line and the Weekly Swing Low point (Above $1,301). The technical indicators show strength is building while the slow moving weekly oscillators are beginning to bullishly cross. There is no way of knowing for sure how far this Cycle will run, but the early indications are very encouraging as the Cycles on every time-frame are turning higher.
Precious Metal Miner Confirmation
I love looking towards the miners for confirmation of where gold could be headed. We know from experience that the miners most often lead gold out of Cycles, and that is especially true around the major turning points.
The miners are up 20% in just 4 weeks and they’re breaking out of the established bear market downtrend. Unlike past failed attempts, this time the miners are showing great accumulation volume and rising relative strength. With the first weekly MACD cross in over year, this is exactly the type of evidence we’ve been seeking to confirm gold has found a major low.
As seen within the COT reports, the speculative short positions were recently at record levels. But as is the case at key turning points we’re seeing open interest spike while the record short positions have since receded, evidence they are being forced to cover positions. That’s a result of this 4 week Weekly Cycle rally, the higher gold moves the more speculative shorts will begin to panic and start covering their positions. This process creates a sell-fulfilling feedback loop and as they begin to cover their positions they become the driving force of the next big rally.
Gold’s 4 Year Cycle – New Bull Market
I believe the bear market and therefore the 4 Year Cycle in gold is now over, but of course without real confirmation that statement remains just an opinion. Yes gold has broken the weekly declining trend-line, which confirms a new Investor Cycle. But to confirm an end to this bear market gold needs a monthly close above $1,423. That’s currently monthly Swing Low level and with gold’s monthly chart showing early signs of turning, any move above $1,423 will also provide technical confirmation too. During the 2009-2011 gold bull run every Weekly Cycle topped after week 10. But since the Aug 2011 top, they have all topped well before week 10. All forming in Left Translated fashion, those are classic bear market Cycles we experienced.
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, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
Hard to Believe
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Midweek Market Update Report
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Gold is Starting to Shine
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Gold is Starting to Shine
/in Public /by Bob LoukasWithin the member reports I outlined that last week's pause below the $1,300 level was very characteristic of the declining Cycles of this past 12 months. It was at that very point, Day 12-15 where the Cycle would top and very quickly roll-over into yet another punishing Cycle Low. Technically too all of my tracking indicators and oscillators were at the same level where Cycles typically topped.
But within those reports I’ve also been tracking a bullish secondary scenario that I said held a reasonable (30%) chance of developing. It was the scenario where the consolidation below $1,300 and the declining Cycle trend-line was part of a Half Cycle Low. The theory then was that if gold could launch this late in the Daily Cycle, then it would indicate that this could only be a powerful 1st Daily Cycle, and these tend to run between 27-33 days from trough to trough.
So the bullish scenario is now playing out with that massive upside breakout of the declining trend-line. It occurred on Day 16 of a Daily Cycle, which was exactly where one would expect it to break-down and drop towards a Cycle Low. This is extremely bullish and signals that we’re now in a new dominate Investor Cycle (These run 20 Weeks in length) and with it should make very quick work of taking out $1,400 and then $1,500 respectively.
But first we need some more confirmation; break-outs are often fake-outs. I suggest traders/investors buy this break-out to avoid being shut out of a potential series of powerful lockout days. But if the break-out fails and gold falls back below the break-out point, then the reason for buying has been negated and selling positions is a must.
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