It’s difficult not to seek answers when prices are going against you. Bearish articles calling for $700 gold, a major breakdown and the bearish death-cross attract nervous investors. These are the emotions that create significant bottoms/tops. In my opinion, prices are merely stretching within an overly aggressive 6-month cycle decline, likely orchestrated by big money. The big banks and large funds need massive liquidity to enter vast sums of money. The best way to accomplish this is to scare the little guy and force them to cough up their shares.
Yes, prices have fallen further than I expected, but that doesn’t invalidate the 5-year bullish basing pattern. The indicators are very oversold and consistent with prior 6-month lows. As soon as the selling abates, prices will bottom, and a new advance will begin.
Gold would have to bottom, form a failed 6-month cycle and crash below the 200-week MA for me to consider a major breakdown and new bear market.
-US DOLLAR- Prices bounced after closing below the 20-day EMA. The dollar would have to rally and close above 95.00 to extend the intermediate rally. Otherwise, I’ll expect a 1-3 day bounce before prices turn back lower.
-GOLD TRENDLINE- The next line of support is the longer-term trendline currently passing through $1250.
-GOLD DAILY- The 65/66 day cycle failed to produce a swing low, and gold continues to press towards the longer-term trendline. Let’s see if the $1250 level can support prices and achieve a swing low.
-SILVER- Prices dipped a little deeper into the 4-month support zone. Last Thursday’s swing low failed, and now we require a close above $16.35 to bolster a bottom and potential reversal. Closing sharpy below $16.00 would indicate a breakdown and recommend a decline to $15.65.
-GDX- Prices sold off slightly into the close but held their own on a relative basis. Prices need to close above the 10-day EMA to recommend a possible bottom. Again, miners should outpace gold significantly once gold finally relinquishes a 6-month low.
-GDXJ- Juniors reversed the morning down-gap and carried above last weeks $32.16 low. Relatively good performance despite golds persistent decline.
-JNUG- I’d like to see JNUG maintain closes above $13.10.
-USLV- Prices are at support.
-SPY- The McClellan oscillator continues to decline. I think we could see a little more weakness before a bottom. Metals and miners aren’t doing much so I’m considering a mean-reverting trade to fill yesterday’s gap near 274.50.
-WTIC- Oil jumped to the $70.60 level cited in the weekend newsletter. Closing progressively above $70.60 will sponsor the potential for new highs. The next 40-day window arrives around July 20th. If prices continue higher, we could get another shorting opportunity around then. In the interim, we could see a quick pullback or consolidation; prices closed above the upper Bollinger Band.
-ERY- Prices need to close above $37.00 to make another attempt at the primary target box. Breaking and closing below the lower trendline will signal an end to this bounce and set the stage for new lows.
I’ve been through several of these “puke-points” over the years, and they still make me uncomfortable. Nevertheless, prices always bottom and begin to rally. Shell-shocked traders find it difficult to buy after the bottom arrives. Occasionally, prices rally out of the low as sharply as they declined. Immediately, would-be investors find themselves waiting for a pullback that may never arrive.