24/11/19 - Hope Dies Last

The irony of the current situation in the gold market is that technically nothing has been broken yet but the feeling is that the bull has already died. We are at the last possible week to get it going and there is only a little hope left that at the last minute a miracle will save us from the 92-96 sell signal. The saving scenario belongs to a "thread a needle" kind of scenarios and historically these almost never transpire.

USERX
Userx generated a double buy signal 16-20 and 35-39. Normally these kind of signals cause an instant short to medium term rallies. The closer together the better hence this one couldn't be more powerful. Having it inside a true bull should make it even more potent. Since the Wednesday last week I have a very strong urge to sell which is, again, a positive sign but I cannot help myself but be pessimistic. The only thing I know at this time is that, since there was a lack of a proper capitulation crash I will sell all my investment positions if the 92-96 sell happens. The scenario that would prevent me from doing it is if we continued current 2 days down to 5 or more days down and sell the 92-96 by the end of the next week at around 8 or bellow. In other words an immediate and undeniable crash wold make me happy. How ironic.

HUI
The HUI index looks better than USERX but the bad news is the 35-39 buy has marked the top for now. Knowing the history of the last two 35-39 signals this is a bad omen.

XAU
The same as HUI, the 35-39 buy marked an exact top so far. :(

GDX
Looks worst than the HUI. If it doesn't start moving up on Monday it will start breaking the 92-96.

GDXJ
The same as GDX, not looking good.

GLD
Looking better than any of the indices but it is under the trend line and the 16-20 is slowly covering the 35-39 and a move up will cause a 16-20 sell before a 35-35 buy which is not an optimal order of events.
The 92-96 echo is sitting at around 50% fibo retrace level and looking vulnerable.

SandP 500
Very bullish posture but it needs to make a short term retrace soon. Touching the 16-20 would really help the USERX short term.

Transport index
One negative for the SandP 500 is the transport index which cannot manage to get to the new highs to negate the negative impact of the Dow Theory. It is down to the trend line now and breaking the 92-96 echo. At the same time it has generated a new 16-20 buy that should help in preventing selling the 92-96.

XGD Australian gold stocks
Looks terrible, feels terrible, no signs of a bottom yet. If next week we go into a crash mode I would like to see a serious divergence from the USERX which would give me a confidence that the bottom is near. The bottom level at around 6200 or bellow would do it for me.

TLT bonds
Sold the 16-20 echo and needs to rise to the 35-39 buy in order to continue the bull market. It is still positively correlated to the gold market and this order of events doesn't really help (especially because it was preceded by a double sell 32 days ago).

UUP dollar
The double sell 16-20 and 35-39 signal from the last week did not cause any damage to this chart for now. I was expecting that this signal would help the gold but so far no good.

BitCoin
Bear market continues.

I am fully invested and waiting for a big move next week, up or down doesn't matter. For me the worst scenario would be a slow decline or a weak rise into the 92-96 sell. If that happens I'm out and will not expect a decent setup for a while.

Good luck to everyone!
Branko

18/11/2019 - All The Same

Not much has changed from the last week but the time is running out for the price of gold to start moving to avoid a 92-96 sell signal.

USERX
The price action last week satisfied the scenario number 3 from the last week update. That is a good news but so far it is meek and it doesn't induce any confidence that it will continue in the same direction. The price is playing with the 16-20 echo and it can buy soon or just keep avoiding it. There is a possibility that, just before the 92-96 sells, a double buy signal is produced to get us out of trouble. We will see soon.

HUI
Hui has a bit more space to move up and down before the take off.

XAU
At the moment XAU looks the best among the gold indices. It is breaking the 35-39 without touching the 16-20

GDX
GDX is about to produce a 16-20 sell before a 35-39 buy. That is not the best order of events.

GLD
GLD is still comfortably far from the 92-96 echo but is deteriorating slowly but surely.

XGD Australia
Australian gold index looks terrible and feels terrible as well. There are no real signs of the bottom yet, it is just dripping and slow deterioration every day. The problem is this index has been a leading indicator for the USA golds for about 12 months now. If that is still intact look at this chart and you will see the USERX (GDX, XAU, HUI) in about a month.

UUP dollar
A glimpse of hope for gold can be seen in the dollar chart. It is almost certain that it will trigger a double sell signal 16-20 and 35-39 in the next few days. Usually these kind of signals create a significant weakness and an instant price drop.  I will watch this.

TLT bonds
TLT is still on its double sell signal and if bonds and gold are still positively correlated than this chart is not a great support for the gold case. It seems like it wants to test the 92-96 support.

SPY SandP
The SandP chart is clearly bullish. This is how we would like the USERX chart to look like but...The triple sell setup is gone. The double sell setup is still present but it is now protected with the 16-20 echo and needs a failed 16-20 buy before it comes into play. That is now less likely.

Transport index
The only weakness that I can spot for SPY (DOW) for now is the transport index. It has not confirmed the new highs and that is in the Dow Theory a sign of an upcoming recession.

UCO crude oil
After failing a true 92-96 buy signal oil is showing some resilience and there is still a strong setup for a powerful double buy signal.  If that happens it would be, in my opinion, positive for the gold.

BitCoin
Still in bear market

The time is running out and I have become pretty pessimistic that the gold is going to make the move needed to get out of the ditch. That is probably a good sign. I am long and haven't touched my investment position yet. As I said last week, I would have been happy if the USERX  price just fell strongly into the 92-96 sell around 8.10-8.20, because I would expect that to be a significant bottom. If the opposite happens and we sell on the way up I expect that to be a top and new prolonged period of weakness to ensue. In that case I will sell.

Good luck this week!

Branko

11/11/2019 - Under The Hood of the Australian XGD Index

For Australian traders, here is my analysis on Australian XGD index

XGD daily
XGD has reached levels that usually produce at least some kind of a bottom. The 200 mav has been breached, the 61.8% Fibo has been reached, it is testing the break out level from above, it is at the lower boundary of the down trend channel and  the bottom of the Bollinger bands channel, RSI is touching 30, rPrice going negative and ADX reaching 40. Every single one of these events is a buying point. Combined with the 3 months of relentless selling it seems to me that we are reaching some sort of a medium term bottom. Considering the SKI bull signal and the strength of the initial rally I sure didn't expect that the correction is going to be so deep but nothing is broken yet in the big picture, not even the SKI buy.

XGD weekly
Lets look at the big picture more closely. Similarly to the USERX chart the XGD chart looks like one giant, 8 years wide, sauce pan. The difference is that the USERX chart is much shallower  and it needs some working to do before it finishes the right side of the pattern. The XGD has finished the right side  and in the process reached the levels of the 2011 and exceeded them. It seems like this 3 month correction was exactly what was needed to set up the next leg up. I wouldn't exclude a possibility to go down all the way to 200 mav but not before some medium term rally. If we keep assuming that the XGD is leading I would expect that USERX should find a support couple of weeks after the XGD finds it and then aim for 2011 highs too. By that time the XGD should be in a blue sky territory.

XGD SKI as of Monday morning. We had an up day

Lets see what happens tonight in the USA.

Good luck,
Branko

10/11/2019 - Breakout Failure - Back To Expecting The Test Of 92-96 echo

There is no market that can change gears like the gold market. The last week looked like a breakout but it was a false one. The question is now, did we break down and, if the answer is yes, how far would we go. Lets look at the charts.

USERX
USERX couldn't overcome the last two interactions with the 16-20 and the 35-39 echoes. It is now about to sell the 35-39 again. In my 'Under The Hood' update from 13.10.19 I explained how the USERX 8.10-8.20 area had been the most important obstacle to be overcome for the last 7 years. It was attacked 6 times before it gave up and become the support. Based on this I expected this level to be tested and projected that USERX price could fall down to this area (probably briefly violating 8.00) before a turnaround and the new 35-39 buy signal. A month ago this would be super bullish development because the 92-96 echo was far enough. Unfortunately the unexpected happened, we went up to buy the 35-39 first and then with the recent development I think that we are back to the original scenario. The problem is we are much later in the cycle and we might sell the 92-96 bull. If it happens I think it would mark the bottom and we wouldn't breach this bottom again before the bull reinstates itself (1). If the bottom happens first (at 35-39 buy) and the 92-96 sells on the way up I would than expect that the 92-96 sell would mark the resistance and we would see new lows before the uptrend resumes (2). There is also a possibility to turn around before the 92-96 sell and rocket up for 3 months and save the bull (3). I don't believe that is very probable any more.
I personally would prefer an immediate hard fall to sell the 92-96 now.

USERX long indices
The 881-885 echo is the border between the bull and the bear market therefore this chart is showing the importance of the 8.00 area. If it gives up it could be bad for the bull for a long time.

XGD Australian Gold Index
It turns out that the Australian gold stocks selling the 92-96 echo last week meant the Aussie stocks were still leading the USA. The Friday carnage in Australia felt like a capitulation and at least a temporary bottom should be in place very soon. If the USA gold stocks fall hard next week I will be looking for Aussies to hold as a sign of the bottom being put in place. This chart is the most important one to keep an eye on since it has been a window into the future of the USA gold stocks for about a year now.

GLD
GLD looks like it wants to visit that 92-96 echo around 133-134. If that happens the GLD still has a better chance to uphold the bull posture than the USERX. If the bull stays alive I suppose that would be positive for a possible longer term bottom for the USERX.

GDX
Same as the USERX except it is a little bit tighter.

GDXJ
Same as USERX.

SandP 500
SandP clearly has broken out and there will be no important events until the price comes close to touching the 16-20 echo. We need a failed 16-20 buy before anything bearish could be considered for this index. The only negative for now is the Dow Theory, e.g. non confirmation of the Transport index.

Tranasport index
As I said above, according to the Dow Theory it needs a serious rise to confirm the new bull market for the GM.

UUP - dollar
UUP bought back its 35-39 and is about to sell the 16-20. It is all happening while on the 92-96 bull buy so it should be a signal of a new up leg. The only obstacle on the way to new highs is the Oct 2008 top that couldn't be broken 10 days ago. I expect a visit to this area soon. If it coincides with the hard drop in gold and then gets rejected it could be a signal of the gold bottoming. Also, if the gold bottoms and the UUP breaks out it could mean that gold, dollar and bonds are back in sync. Unusual but it has been working for some time.

TLT - bonds
For a short time it seemed as the gold and bonds were decoupling but now it looks like they are still in sync and, the same as gold, the TLT wants to test its 92-96 echo.

UCO - oil
UCO failed at generating a triple buy after it had executed a true bull 92-96. Now the bull has sold and the best case scenario still can produce a good double buy but will it have enough energy to do that?

BITCOIN
Some people wanted me to show a SKI chart for the Bitcoin. The Bitcoin is clearly in a bear market and currently on an xxed out 35-39 buy. For this chart to turn bullish the price would need to overcome a clear down trend that started in Jun 2019 and then buy the 92-96 echo.

I am still long, haven't touched my position yet. I am hoping for a quick and hard drop next week (scenario 1) and the 92-96 sell where I would go all in, which I almost never do. If a rally follows I will take off my reserve cash on a 16-20 sell signal and adjust as we go depending on the scenario that unfolds. My sell stop will be the bottom that forms around the 92-96 sell. Scenarios 2 and 3 from the first chart above will not cause me to change my position for now.

Good luck to all.
Branko

2/11/2019 - Break Out and Projections

This week action seems like a confirmation of the bottom and could signal a new rally that should go deep into the Christmas period.

USERX
Userx generated a new 35-39 buy index inside the ongoing 92-96 true bull market. For the bull to stay alive price needs to be above 9.35 by the 12th November (35-39) and be above 9.88 by the 15th January (92-96).

In order to maintain the 881-885 buy (important because it is showing a very
long term border between a bull and a bear) it needs to be above 10.28 by the 5th February 2020.

If my theory is correct that gold is carving out a gigantic shallow pan pattern then the upcoming targets are 10.28, 13.75 and ultimately 22.11 (Dec 2010 top). Based on symmetry that final top should be approximately 2 years and 2 months away from a period when we achieve 10.28. That would be around 2021 Christmas time.

HUI 

Same as USERX

XAU

Same as USERX

GDX

Slightly different, it is about to generate a double buy 16-20 and 35-39.

GDXJ

same as USERX

GLD

same as USERX

UUP - dollar

The dollar is still in the bull market but the touch of the 2008 top at 27.19 turned out to be poisonous. The chart still looks weak so, if we are starting a new rally in gold, maybe we should see a test of the 92-96 echo. I wouldn't be long the dollar here.

TLT - 20y bonds

TLT is looking similar to gold. It should buy the 35-39 inside an ongoing (197 days) 92-96 bull market.

SandP

It is not too late for a turn around but this chart definitely looks like a breakout. While a danger of producing a triple sell seems gone we cannot say that this chart is completely fixed. A new 16-20 buy followed by further lower price can generate a dangerous double sell, 35-39 and 92-96.  We will see what happens. I will monitor the transport index to see if this rally produces new high and consequently mitigates the Dow Theory problem discussed in the last update. The whole setup looks promising especially considering the 218-222 index.

XGD - Australian Gold Index

Australian Gold barely missed a 92-96 sell. A small down day on Monday would still produce the sell. For the last two weeks while USA golds have been surging the Aussie golds were dropping. This finally reversed the trend where the Aussie market was leading. This rare situation was due to gold and the US dollar rallying together causing a boost in Australian gold shares performance. The decoupling between gold and the USD, if it is finally happening, should cause the Aussie gold market to lag, as it normally would. 

If my reading of the signals and index positioning of the last few weeks is correct and new medium term trends were established we should see gold, bonds and general market rising while the dollar is struggling.

Long and strong here.

Best luck to everyone!