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#
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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Look Out Below
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Bernanke’s Bubble Set For Final Blow
/in Public /by Bob LoukasChairman Bernanke rode into Congress on his white horse again and the markets just “ate it up”. The man just loves double talk, saying all the right things about the economy while quick to point out that if something doesn’t go to plan then they will be accommodating. In other words, he has found a way to “have his cake and eat it” and the market is more than happy to go along with it. If the FED is to tapper, then that means the economy is just fine. If the economy sours, then they keep buying assets (POMO).
The FED is viewed as infallible and that has bred a lot of disrespect towards the natural Business Cycle forces. The market (as it always does near tops) is essentially saying that “this time is different”. But the kicker is that the economy is getting worse and corporate earnings have flat-lined, despite their heavy hand. What the market is not pricing in is the FED’s inability to avert what will be an eventual Business Cycle decline down into a recession. After $3T of asset purchases, all they’ve managed to do is sustain this economy at stall speed, nothing more. But at the same time they’ve help blow yet another massive bubble as the equity markets have now seriously diverged from underlying fundamentals.
So thanks to the FED, I have no doubt now that June 24th was a DCL and ICL. This dramatically alters the Cycle makeup as this is now just Day 16 of the DC. Still overbought on all time-frames, I expect to see no more than a 40 point drop to the 50dma and a HCL before it's off again. The current double top showing should have the bears thinking that this is finally the big top. But I believe otherwise, the market is getting speculative and far too overconfident, and this is what runaways are made of.
So as June 24th becomes the new ICL, that makes the 5 week decline into the ICL one of the shallowest ever, retracing just 33%. The Cycle barely cleared out any of the bullish sentiment of that massive 6 month rally, so it only reinforced the notion that FED sponsored market is invincible, that every dip should be bought. Over confidence is everywhere as the mere mention of fundamentals is scoffed at as being completely irrelevant to this market.
So it’s no surprise that this new Week 3 (of expected 20 weeks) is starting out in overbought territory. All of the characteristics and emotions that I remember from the big 2000 and 2007 tops are now firmly in play here and we could well be looking at an equity market that is about to go on one last big push higher. I’m thinking that we pullback slightly here (40 points max) and then rip higher for some weeks into what will eventually be a big 4 Year Cycle Top. Of course timing a top is difficult, picking a price even more so.
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Midweek Market Update Report
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A Blow Off Top is Brewing
/in Public /by Bob LoukasA new Cycle puts us on Week 3, and already the weekly RSI is into the “sell zone”. Typically it takes 7-8 weeks to get up into that region, so any long term bull here should be praying that this is not a new Investor Cycle, they should wish for 2-4 more weeks lower first. From a breadth standpoint this is supportive of a new Cycle. The S&P bullish percent index back to 78%, having dipped to only 70%, far short of where an ICL will typically bottom. Net new highs are healthy at 687, while 81% of S&P 500 stocks are above the 50dma. Again none of the indicators ever hit traditional ICL levels, so it’s either a new Cycle starting out at overbought levels, or a big bull trap with a very unusual end to an Investor Cycle.
Here is the problem for the bulls and why they need a good pullback. This ICL was also meant to be a yearly low too. But obviously that does not qualify; Yearly Cycle Lows take speculative and over leveraged traders “to the cleaners”. June 24th simply does not qualify!
The monthly RSI never dropped below 70 or moved off the top of the Bollinger bands. From a monthly perspective the needles have barely moved off the overbought levels. So if we keep going, then any new Investor Cycle has 20 weeks ahead of itself, that’s 5 months into the next low. I doubt this level of increase can continue for much longer. Without an ICL and YCL here in the next 4 weeks, this will end up being a short lived runaway or blow-off move that will result in an extended 4 Year Cycle Top.
One thing is for certain, after a 1,000 point 150% rally in just 4 years, this cyclical bull market is right near a top. I don’t care how much Bernanke talks, recessions are inevitable and we’re approaching the timing for the next downturn. Markets are cyclical and they always turn right around the time where nobody believes they could. The bears have capitulated.
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