Pre-Mkt sell off in GOLD – Still just a battle of the Bulls & the Bears

JULY 24 –  Pre mkt    

I spent some time yesterday researching, since we are at a point where some people are ready to throw in the towel in GOLD , others arent.

Some are saying that “GOLD is weak here (And miners) and if this were a 2nd daily cycle…it should have blasted off by now. It has no follow through & is too weak.”   Others even think  (And it could be)  that “Maybe a 2nd DCycle may not have started yet…maybe we are still in an extended 1st DCycle?”  I began to wonder myself too.  Since We have no overhead trend line break, it IS a possibility that we are still in the 1st DCycle , even  if they “Run the stops ” here in GOLD and it dips below $1292. It could recover.  We are selling off pre-mkt,  as mntioned yesterday, there are signs of weakness, however,  I am not THAT concerned yet.   

$GOLD – So Lets look at some charts-

GOLD  – is  selling off in pre mkt , but this chart shows that its not that bad. Its still a normal pullback using Technical Analysis, so we’ll keep our eyes on things.

 I do keep hearing that ” MINERS  are too weak, if this is the start of a second daily cycle”  (or the  2nd Leg Up that I have been anticipating).    So what can you do??       Research, right??   Is it Too weak here?   Has what I will call a   “Delay in launch”  for a 2nd leg up ever happened before??    IF so – Did it end in a BULLISH manner, or bearish??  I looked back to see what I could find.

1. Yes , it has happened.

2. IT resolved BULLISH when conditions were similar to now.

Notice $GOLD in 2009.  Remember that 2008 was an ugly bear mkt sell off for gold, so GOLD was still trying to recover amid doubts a yr later (  Sounds very Similar to now, did GOLD bottom in June 2013? here we are a yr later) .  So what happened in 2009?

Above we see that  1. GOLD bottomed  (ICL) in July and spent 30 days in the 1st daily cycle.  Did it “BLAST OFF” like a rocket during the first days of the 2nd dcycle?  2.  No–It meandered and even dropped hard 2x during a 10 day sideways move.

Thats important, because we are only on Day 6 so far , if our 2nd Dcycle  (2nd leg Up) has started here. It meandered then for 10 days.   Never the less, it bears watching from here  (both BULLS & BEARS need to watch Gold / Miners here).  Gold has been  trying to BASE for the last year .   When it takes off upside, everyone gets excited and Bullish,  when they do a normal pullback,  we have all been ‘conditioned’ to  worry,   to  recall recent sell offs & Pain during the Bear mkt episodes,   and maybe even panic.

IF THESE ARE THE LOWS being formed within this 1 yr BASE , the gains could be great.  Why?  2008 just had a small mini base from Oct to Dec , it then took off higher and based again  for about 8 months, Thats about a year of basing too. Then we hit that 10 day sideways period  people would say was a sign of weakness and  “Should not happen if we are going higher” – so people likely gave up.   THEN LOOK WHAT HAPPENED from that Summer to Dec!!   

People possibly gave up at that 10 day sideways period and the Rocket Launched. 

So, I am NOT promising that a rocket is about to launch, but by examining similar circumstances we can find clues and areas to look at for ideas of the future move.  I got some emails yesterday , because I put a baby bear in the report .  People thought I called a bearish move, and when it dropped yesterday , they were happy with the call, but I was just pointing out short term signs of weakness, really.   We have to stay alert, and Bearish follow through could add to the bear side, no doubt.    In the bigger picture, however,  we find likely support areas nearby  (The fib #’s and the 50sma in the 1st chart) .  If there is a stop run below the recent lows of $1292, and it breaks the 50sma, it still could be just a “shake out” .  look at the 200sma.  We could reverse and that would then be the real end to the first DCycle, and the 2nd one might start here.  SO there are still BULLISH implications , even while GOLD is selling off as I write. ( See chart below)

My little Bear in the prior post was to put us on alert, to be careful with leverage since there are signs of weakness – IF things start to fall apart, etc , but not to get too fearful.  Today I am just showing possible paths that the Bullish side of Gold can take too. If things are really going wrong or looking Ugly in the future , If I think we are about to get eaten alive …you will see this guy !!

Until then, you may notice that when GOLD is selling off and people get gloomy, I usually show how that bearish drop may play out, but also show the bullish  implications too,   IF THEY ARE VALID.   When Gold is Rising,  I show Bullish prospects , but also cautionary notes,  to help us to remainbe alert.  Why??    Its just a balanced approach that helps one not get too emotional.  Emotional trading & a strong Bias can be costly.

Best to all!

Alex