What Is The Golden Key

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Lets get right to the charts…

I mentioned yesterday that in addition to other things like the SOX, TRAN, and a few other things, AAPL showed signs of cracking. Please dont shoot the messenger, but it sold off further. Watch to see how this acts on the Bounce or recovery move higher. 

AAPL

AAPL

Futures are MUCH higher for the DJIA, SPX, and NASDAQ as I write. I lost my charts, but if you look at the weekend  report , you can see that the SPX remains in this consolidation.  Can it break to new highs ?

SPX wkly 7-30

There are concerns since various markets are losing and toying with their 50 & 200sma.  The DOW has now made lower lows and lower highs, so we will watch for recovery or more weakness.

DJIA 8-3 2

 

The Dollar ran higher,  but the move does not look real  to me yet.  I still see evidence of  weakness internally.   We shall see as time goes on.  ( Sorry, no chart)

WTIC – Looking for a bounce, but can it excede the 10sma?  I think this time it may.  why?…

WTIC 8-4

WTIC #2 –  This pattern with divergence  and the extremely bearish negative news that I’ve been hearing could cause a break out & test of the 50sma. Then when people start saying OIL to $70 again,  we may roll over again.

WTIC 8-4 2

 

NATGAS- I pointed out this triangle a while ago & support did hold. It looks like a good set up, we’ll see if it can break out higher  ( It has moved back above key moving averages)

NATGAS 8-5

 

GOLD & MINERS

 

The extremely negative sentiment and data on the Gold C.O.T. indicate that a real nice rally will be coming in the Gold market.  Needless to say, the waiting is getting concerning. frustrating.  In a sideways move like a bear flag etc,  oversold conditions can begin to dissipate .  We see that in the Gold market too.  It doesn’t mean that a drop must follow, but it opens up the chances for a quick drop.

I went back to the charts to find an example of a similarity to what we have today.  CONDITIONS ARE NOT EXACTLY THE SAME,  the extreme COT reading wasn’t there , but other conditions were similar and we were approaching an ICL type bottom.  That being the case,  let me just throw a small caution out there by pointing this out.  It will serve to mentally prepare us for what we might expect if a drop does happen.

GOLD

– we have discussed that for a Daily Cycle Low , we look for a trend-line break and a break of the 10sma.  Well in a sideways move,  you CAN break that trend line , but it takes a lot longer just moving sideways to reach it. And since we are SO LATE in this cycle, could it really drop & become a daily cycle of over 40 days?   I found an area where what is happening now – also  happened then.

Was this a 50 day cycle Jan to March?  Or did we count the FEB lows as a DCL without a trend line break?  I cannot recall.

 

GOLD 8-4

I looked closer.  Did we actually use the trend line starting from the exact TOP of the daily cycle, like this?  IF SO –  THAT trend line didnt break , so we would have had a 50 day cycle…

GOLD CYCLE

Or did we change the trend line to the RED one, and not use the exact top?  If we did, can we do that now?

GOLD CYCLE 2

 

2 important points could be found from this observation-

1. If we used a trend-line that didnt come from the exact top of the daily cycle, then we can use one now too.  The RED ONE  broke  on the sideways move. This COULD indicate that we are on day 8 today of a 4th daily cycle.  A  drop could be expected if we did, maybe a shorter daily cycle as the 4th one..

or

2. If we didnt use a trend-line from mid point in Jan – March, then we had a 50day cycle back in Jan thru March?  Then we can now too.  It too could include a quick drop, like we saw in February. We would be on DAY 42 if you erase the RED TREND LINE 

GOLD cycle 3

Now look at GDX and I will show you what has happened in the past with MINERS

GDX MAY 2014 –  looked similar to GDX today

1. Sitting on support going sideways, it looked like it might hold up. Formed a triangle over time.

2. Couldn’t get a close above that 10sma, that concerned me.  I always caution not to buy heavy at all until we do.

GDX MAY 2014

We had a 2 day flash crash & then a great short covering rally. 

GDX 2014 ICL

 

Whether you fully follow & understand what I am trying to point out or not doesn’t really  matter .  May the above charts simply serve  as a reminder that we could get another quick drop.  The above 2 charts of GDX  shows a sideways move similar to now where the Miners couldn’t close above the 10sma, and in TECH ANALYSIS,  that always concerned me.  We either need real strength in the form of buying or a short covering move. Until then, we look at the above chart and see that a quick move could shake out longs and the reversal then looked like a bear flag and left many behind.

 

Markets are tricky, deceiving, and frustrating at times,  and the Precious Metals are in that zone now.  The signs are still all in place that the GOLD market wants to put in a nice rally.  Apparently it wants to do so with emboldened shorts having to cover,  and longs being shaken off first.  I think it is already working out that way.   I advice positions remain on the smaller (or manageable) side until we see PROOF of a GOLDEN KEY in place to finish the puzzle known as a trade able bottom .

 

~ALEX

p.s.  this is bullish looking for GDX

GG

49 replies
  3. Gary Savage
    Gary Savage says:

    The dollar is within spitting distance of the upper triangle trend line. And despite several attacks to try to force gold down it has been resisting further losses as the dollar has rallied out of it’s DCL. Looks like everything is setting up well for an ICL once the dollar tops, unless gold suffers another large premarket or overnight attack (which is always a possibility).

    • Onlooker from Troy
      Onlooker from Troy says:

      I suppose you could say that it appears that selling pressure is drying up on GDX too. But maybe that’s wishful thinking.

    • Ken
      Ken says:

      My concern also is that GDX may Gap Down soon because of overnight selling/manipulation, and leaving the longs in pain. With that intuition in mind I may reduce my position by 1/2 by the end of the day and going back to my starter position. Will look to add a second tranche back at Gold 1040sh or above the 9 sma.

  4. Rube
    Rube says:

    Thanks for historico-microanalysis efforts Alex. I go with 4th DC scenario: Already in stealth 4th DC, running flat until sudden descent to DCL and ICL. Believe minors have been sensing this all along. Hoping they will lead to give guidance.

    • chartfreak1
      chartfreak1 says:

      I am 50/50.
      I wanted to write that report today to keep us alert. I know some are buying leveraged 3xetf’s and I am trying to impress upon the readers here to remain cautious under the 10sma. Sideways moves in those 3x ETFs can decay slowly, and then a 2 day slam down like we saw in the chart above would damage people mentally if they were heavy.

      It would be too hard to re-enter after that.

    • Gary Savage
      Gary Savage says:

      Not a fourth daily cycle IMO. It would require that the cycle topped on day one. This is what has become the norm for a while now. The market (bullion banks) have figured out that they can make money by stretching cycles and creating false bottoms to trap cycle traders. They’ve been making money with premarket attacks to break technical levels and trigger stops for a couple of years. Now they’ve figured out how to run the cycle traders stops too.

    • chartfreak1
      chartfreak1 says:

      Gold ran higher in OCT, but GDX topped on day 1 here
      .
      Maybe the Bankster Gangster guys are figuring out how to TOP GDX cycles on day one so no one will see it coming? lol

    • JDWM
      JDWM says:

      gas invs: 0.811m f/c -0.488m prev -0.363m

      crude invs: -4.407m f/c -1.49m prev -4.203m

      eia stocks: 0.709m f/c 4.533m prev 2.588m

      positive it seems?

      • chartfreak1
        chartfreak1 says:

        Thanks…OIL was whipping around quite a bit at 10:30 , mostly heavy selling on the 5 minute chart, but a mini reversal right now (still 5 minute chart- refresh for a clickable chart )
        .

        • Cason
          Cason says:

          Natgas inventories tomorrow. It has gone down every Thursday for last 3 or 4 weeks. Is a quick DGAZ or UNG puts 24 hour trade in order? Every time it gets going we hit a Thurs and start over again. Last week report was actually bullish and it still took a huge hit!
          Sorry, I’d draw all of circles all over it if I wasn’t on mobile.

  6. Ken
    Ken says:

    For Discussion purposes:
    In today’s world Do you consider Gold as a Currency in it’s own right OR is it still being used only as a hedge against inflation for wealth preservation OR just being manipulated by the bullion banks for profit?

  7. Cason
    Cason says:

    This chart is 2 days old b/c I had an error posting Sun/Mon. I exited IMH at 23.8 bought back yesterday at 20.15. Playing the rails in this one has been very lucrative last month. Any you don’t have to follow a commodity and it doesn’t care about the $$ strength.
    Chart failed, will try again later.

  8. Onlooker from Troy
    Onlooker from Troy says:

    Well, here we get to see if selling pressure has really dried up as GDX tests the lows yet again and gold is at the lower trendline.

      • chartfreak1
        chartfreak1 says:

        SO crazy that it keeps selling down to the $13.19 area and bouncing.
        The bullish feel is that buyers step in-
        The bearish feel is that they keep doing that like jiggling that fishing bait out there, making it look safe to go in there.
        Then suddenly bamm, they run those stops.

        This really is quite a game…:)

  11. knight
    knight says:

    Alex, Can you please update us on your GDX buy model you used to use in the past. I have referred to it several times it would be nice if you could include it in your daily summaries. I also see you are using MA envelopes to decide on buy and sell signals. Are you keeping those parameters for yourself or are you going to share those parameters. tks

    • chartfreak1
      chartfreak1 says:

      Hello Knight,

      I thought I answered you before, sorry if I didnt.

      Its not an area where you watch it day by day and keep commenting on it after it triggers. You can comment on it daily as it approaches the buy , but once it triggers? It triggers and it is extremely rare, so it signals that downside is about done & a buy is in. It doesn’t undo and re-issue. It doesnt need monitoring in case it backs off. It is a flat out buy . One triggered at the close on the 20th for GDX & 24th for Gold.

      I have several and others are all at extremes, I will post one in the next report to show you what I mean.

      I did develop one that tells you when to buy in a sideways move, and that hasnt triggered yet.

  14. Cason
    Cason says:

    Yeah, the longer this sits down here, the worse it gets. Starting to think that there is no way we don’t at least dump lower quickly on gold/miners. Pretty much written my GDX options off at this point, pending a miracle. Now, starting to get back in DUST as a hedge against lower prices with nearer dated options. Day traded DUST call for quick win, hold small position in shares, and also next week calls in case we get a whack on Friday jobs report numbers.
    Alex, want to thank you for repeated calls to reduce risk and honor stops. I have increased my discipline since joining and my account is thanking me. Multi year or lifetime ultimate lows today in GDX, CDE, GDP. So we need to be careful while bottom fishing!

    • LeChiffre
      LeChiffre says:

      Well said Cason. Same here. GDXJ calls are worth almost nothing and my DUST puts are worthless… gold is not shining just yet

      • Cason
        Cason says:

        I had DUST puts 2 weeks ago. I took a bit of a loss on it but thankfully sold before they went totally worthless (which they would have). I’ve quick traded JNUG twice, but I’m done now until I see something positive; lost enough on the GDX not to compound it.

      • SonOfGud
        SonOfGud says:

        i hope you scoffed all your tasty JNUG snack in the morning, before it went tits-up (or tits-down)

      • Cason
        Cason says:

        Thanks, Maria. Liked your EW charts below, nice work. Just to be clear, I’m not a bear, def following Alex and all in here. I was unexpectedly too early realized as it continues to back down needed to hedge my positions.
        JDST – GDXJ hasn’t made a new forever low but GDX has, maybe JDST would double top of GDXJ tested lows?

        • Maria
          Maria says:

          Thx C.. appreciate that.. just trying to learn.
          Bull/Bear doesn’t matter zip to me & i think u were smart to hedge as well..;o)

    • SonOfGud
      SonOfGud says:

      The question is .. will DUST break out here?
      -ve divergence on indicators saying nope.. but still I lightened up on GDXJ today … just in case of gap down.. and i want some sleep tonite.

      • Cason
        Cason says:

        I didn’t think so. But needed insurance in case miners contiue to slide. I really thought we had something special going on here, but it just isn’t working. If I can pull a couple of bucks off the table while waiting, I’ll do it.

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