Using The Gold Market Example
First up is the (downside reversal) analysis of the real estate market.
It was wrong; at least for now.
There’s nothing wrong with being wrong … it’s being wrong and staying wrong, that’s the problem.
What appears to be correct so far, is the upside reversal in the bond market.
We’re going to look at another capitulation to get some idea of what to expect if indeed bonds have reversed.
This past April, the gold market (GLD) capitulated on the upside. At the time, it was quickly and correctly identified as a ‘changing of hands’.
Gold (GLD) Capitulation
From a strategic standpoint, gold has not looked back.
Down around 20% (although slightly higher in today’s pre-market), there seems to be no major catalyst to get a similar capitulation reversal.
Using that reversal model and looking at bonds, we’ll use the 3X Leveraged Fund TMF, as the example.
Leveraged funds accentuate market moves, sometimes giving a clearer picture.
Bonds (TLT) 3X Leveraged Bull Fund, TMF
As far as what might be behind a (sustainable) bond reversal, we have this report from Steven Van Metre.
Using The ‘Model’
Note in the GLD reversal, prices went lower for a while and then came back to ‘test’.
Using that, we can expect TLT, TMF, price action to rise for some (unknown) period of time; then come back to ‘test’, before continuing higher (not advice, not a recommendation).
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Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
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