Reaching 10.24 produced a reaction that will result in one of two possible outcomes. The first possible outcome is a double top. Selling the 35-39 echo while on the 92-96 is on the sell (double sell) would be a confirmation that this scenario is in play. At the moment the only way to achieve this is for the 92-96 to sell and then keep falling quickly enough not to buy the 92-96 back before the 35-39 sells. The risk of this happening is in the next 5 days.
The other possible outcome is that the 92-96 stays alive and then buys the 16-20 before it makes an advance. The other version of the same bullish scenario is a 92-96 sell and then an instantaneous 92-96 buy combined with a 16-20 buy for a double buy. The realisation of one of these scenarios would be a confirmation of further bull development.
Based on the current set up and the scenarios above I will maintain my full long position unless the double sell happens. My stop loss, for now, is the 35-39 sell. The moment we have gotten the 16-20 buy or the 92-96/16-20 double buy I will switch back to the 92-96 stop loss. I don't expect a quick rally to overcome the recent high, more likely we should see sideways move to test the resistance and support several times before a break out.
The important levels are 8.91 in the next 5 days and then 9.35 by the 7th of Feb. If we are below USERX 8.91 5 days from now the double sell will happen and stop me out. Otherwise, the 92-96 will be on the buy and the new sell will happen only if we are not above USERX 9.35 by the 7th of Feb.
USERX
USERX reacted to getting close to 10.28 and is now testing support. The classic TA support is down at the green line. Currently, this line runs along with the 35-39 index which is also my stop loss. To hit this stop loss USERX will need a very sharp drop to below 8.91 in the next 5 days. If this doesn't occur then the next critical price is USERX 9.35 which is the tip of the little bump in the first week of February.
HUI, GDX, GDXJ, XAU, GLD and SLV
All these indices are in a similar situation as the USERX, eighter they are about to give a double buy or a 16-20 buy. It would be really powerful if all of them created the signal simultaneously.
XGD Australia
XGD is heading towards the 92-96 buy but it needs at least 200 points more before that would be possible.
Inflation expectation
the 50 mav crossed the 200 mav so the inflation is officially in an uptrend. This is an important support for the gold price.
SandP 500
SandP is in a bull and is accelerating. The total put/call ratio is currently at 0.71 and reading bellow 0.8 is a sell signal for the index. May, July and September reading below 0.8 did produce some downturn but since then there were two signals in December that didn't have any effect. We will see if this is close to some kind of a top.
Transport index
TRAN is finally picking up and is aiming for the new high (red horizontal line above the current price). The new high would eliminate the Dow Jones theory divergence problem. Can it reach the target before the SandP turns around?
PPLT Platinum
Platinum is maintaining its true bull. Platinum is a leading indicator for gold so this is encouraging.
TLT Bonds
TLT just triggered a double sell signal. Last time when it did that in October it fell instantaneously to the lower support which is now giving up if this signal is correct. 221 index is the target. I am still not sure if the gold and bonds have divorced and if this is a good or bad omen for gold. If I had to guess I'd say gold is in a bull set up and bonds in a bear set up, therefore, they should be going opposite ways (good for gold).
UUP Dollar long
UUP has given a strong sell signal that should be the start of the bear market. The approaching 16-20 sell signal should be the shorting point.
Bitcoin
Bitcoin is finally showing signes of life. It bought the 35-39 and 92-96 indices and it could easily transform the setup into a true bull if it can maintain current level until the end of February.
USERX and other gold indices are maintaining bullish position with corroborating evidence from inflation, bonds and dollar charts. What is missing is a satisfactory COT level but it is not crucial since the COT data is not a good timing tool. I suppose it should matter but not yet.
I am 100% long with appropriate stop loss.
Good luck to all.
Branko
