The last time weekly down-thrust energy (Force-Index) was this deep, GDXJ price action ratcheted lower for 16-weeks before a significant reversal.
That reversal took place at support where GDXJ, is now. However, back then (week of October 1st), contact with support was on weakening Force-Index; this time, it’s increasing.
It’s reasonable to expect an attempt to rally in the coming week … but with this much down force, a successful rally is not the high-probability outcome.
Summary:
One possible clue for exit of short position, JDST-22-01, is to look for continued downside action but with divergent (lessening) thrust energy; not advice, not a recommendation.
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.
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.
In a rare (media) event, the answer may be included in the above link.
The analyst in the article is quoted as being “surprised” the actual metal, gold, has not moved appreciably higher as a result of massive ETF inflows.
Since before 1980 when gold reached an all time high (back then) of $850/oz., its’ been ‘inflation, inflation, inflation’.
That Was Then:
It’s been forty-plus years (some would argue more) of non-stop inflation.
At some point, the music stops; we seem to be very close.
Everybody stampeding into gold and related markets (i,e., the miners) appears to be fighting the last war: Inflation.
Where We Are Now:
In Steven Van Metre’s latest update, he presents just how precarious and fragile is, the current market environment.
It’s a short video, just under 13-minutes; it’s worth the time.
The internet’s been the great equalizer and so everyone has access to the same information.
After watching his video (time stamp 6:07), it raises the question as to why anyone, or any financial manager, would want to be long in the equity market (not advice, not a recommendation).
To Be, Or Not To Be, ‘Certified’
Let’s just throw in that ‘certified’ management actually underperforms non-certified peers. At least in the case of the CFA (Chartered Financial Analyst).
In the article above, it even states that ‘experience’ is a deciding factor. Imagine that. 🙂
One has to be smart to pass the certification tests. No doubt. However, ‘smart’ does not equal ‘savvy’.
Taking all of this into account, it’s reasonable to think we’re possibly just one ‘fat-finger’ away …
Gold Finished Testing ?
We’re a few hours from the Fed announcement but the market looks like it’s already made a decision.
The daily chart of gold (GLD) shows all that’s happened since the potential for up-thrust breakout was first presented.
The zoom chart shows price action right at the support/trendline of the terminating wedge.
More importantly, we see that action is below the established resistance line; possibility indicating the test is complete.
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.
First off, we’ll re-post the weekly close chart of Junior Miners, GDXJ as it was then (October 25th, 2020):
The following quotes were also part of that report:
“One way to look at it is, the junior sector does not believe gold (and silver) prices can be sustained at current levels.”
“Or, if they are sustained, there must be something else at work that would prevent them form obtaining a substantial profit.”
Now we know, nearly a year and a half later, that “something else at work”, is what we call The Speck and the Speck-Effect.
Not only that, energy (and money) that’s being diverted to solve non-problems (covered in the last post) may be having an effect as well.
Let’s not forget supply chain problems with no end in sight.
If there ever was a case for Wyckoff analysis, this is it.
Reading price action, making calculated (intuitive) decisions will keep one away from what by now, has become useless prattle from the mainstream sources.
Remember ‘blue skies ahead’?. Seems like it was almost yesterday … oh, wait. 🙂
This garbage-in, garbage-out, is not exclusive to just the financial media.
As Dr. Vernon Colman points out in his video (linked here), it seems to be pervasive in all types of media world-wide.
Junior Miners GDXJ, At Present:
Here’s how the weekly close of the Junior Miners looks today (approximately, mid-session):
Downside Trading Channel(s)
We’ll stay with the weekly GDXJ but zoom in and mark it up:
GDXJ, has been in a well-established down-channel, beginning around late November of 2020.
As shown with the grey dashed-line, there’s a possibility of a new more aggressive channel.
The chart below shows the potential right-side trend line is currently being ‘straddled’ by price action; this can happen when the equity or index is unsure there’s been a change.
If GDXJ really has pivoted more aggressively to the downside, price action will ‘get itself into the channel’ by accelerating sharply lower.
Where’s It Headed?
For this update, we’re going to use the P&F projections for GDXJ. Fibonacci projections (which have a similar target) may be covered in tomorrow’s update … price action depending:
Downside projection is for a drop of approximately – 35% to -50%, from current levels (not advice, not a recommendation).
Summary:
As always, anything can happen. The markets could be rescued yet one more time.
However, at this juncture we’re at least in the established down channel shown above. Price action will let us know if there’s been a decisive acceleration to the downside (grey dashed-line).
Remaining short GDXJ via JDST; labeled as JDST-22-01 (not advice, not a recommendation).
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.
Volatility cauterizes the emotions. It reveals the market extremes and shows each player’s hand; bulls and bears.
With the market just opened we’re going to look at gold’s last man standing: Newmont Mining.
‘Last man standing’ because, except for two equities far down in Senior Miner’s GDX, no one is anywhere near their mid-November highs.
The take on this: The gold market’s thinning out and ready to reverse.
A really big move
It’s easy to get lost and hypnotized with the day-to-day action. However, by pulling back, one sees the potential for a massive short (the market) opportunity (not advice, not a recommendation).
Implosion Effects: Broker Platforms Go Inoperative
Over and again, nearly each time there’s a big down move in the markets, where the Dow may lose 1,000 points or more, brokerage platforms seize up.
It happens so often; it’s probably best to incorporate it into one’s trading approach.
That’s one of the reasons, if not the main reason to work the short side (not advice, not a recommendation).
Newmont’s Short Clues
The volatility has exposed everybody’s hand on both side of the trade. That’s the good part.
We’ll touch on each technical event separately, starting with the unmarked daily chart:
First off, markets that have wide, high-volume bars, tend to come back and test that bar. We see it below:
Next, price action’s got itself into a terminating wedge; a potential bearish reversal pattern:
Then, we have today as Fibonacci Day 34, from the December 2nd, reversal low.
As this post is being created, NEM just made a new daily high; potentially culminating its wedge terminating move.
Big Fish, Little Hook
As Dr. Elder has said concerning stop placement, ‘You can’t catch a big fish with a little hook’.
So, we have GLD, GDX and GDXJ, in a November bull trap (up-thrust), with what looks like two-months of price action to come back and test.
If that assessment’s correct and it took two months just for a test, whatever happens next, may be on the order of years to resolve itself.
From a trade standpoint, it looks like today’s low in JDST, current open position, JDST-22-01, may be a good place for a stop (not advice, not a recommendation).
Newmont, Reversing
After Newmont posted a new daily high, it’s currently trading below yesterday’s close.
Deflation Pivot-Point
We have the usual hysteria in the gold market but this time, deflationary forces may be overtaking the manic gold bulls.
Case in point:
Existing home sales look like they’re rolling over. All kinds of excuses being made about lack of inventory and the imaginary ‘Speck’ with its new variant.
The one thing not imaginary about The Speck, is this report about what’s really going on.
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.
If this is a test of the mid-November up-thrust, things may happen quickly from here on out; with that in mind, it’s important to get it all (technical data) out in the open.
The gold (GLD) chart is similar to the GDX that was discussed in the prior update.
It could be a test of the bull trap from last November.
If that’s indeed the case, and price action reverses lower from here, the downdraft could be more than significant.
Position Change
Instead of lightening-up on the DUST-21-01 position as stated, that position was modified.
The DUST-21-01 was closed out. Then, a position in JDST opened immediately; currently labeled as JDST-22-01, with nearly the same position size.
The gold market appears to be thinning out.
We want to pick the weakest part of the sector for downside potential (not advice, not a recommendation).
The Junior Miners. GDXJ, have been lagging the Seniors GDX, for some time.
Today appeared to be a good opportunity, with everything at extremes, to make the change (not advice, not a recommendation).
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.
There are violent moves today in gold; both gold (GLD) and the miners, GDX.
One could think, maybe rightly so, the whole market, the miners, gold and silver, are kicking off a massive bull run.
On the surface, it looks that way.
Looking deeper, maybe not.
It could be a test of the November ’21, reversal.
Looking at charts of both Newmont and Senior Miners, GDX (we’ll cover gold tomorrow), the prior assessment, the market’s thinning-out applies even more.
Everything possible is being thrown into the last man standing: Newmont.
The violence of these moves is obvious.
Newmont (NEM) and GDX: Daily Charts
We’re going to put the unmarked chart of Newmont (NEM) and GDX directly below. The key takeaway is how far above NEM, is from its mid-November highs.
Then, look at GDX and note, it’s close but well below its mid-November highs.
This market (Senior Miners) continues to thin out … and it’s doing it violently.
Newmont (NEM):
Senior Miners, GDX:
Looking at the marked-up chart of GDX, it’s possible all of the action over the past two months, was to get into position to test the upthrust:
If an up-thrust “test” is the correct way to view this action, with gold (GLD) in a similar position, and if price action can’t hold these levels, the ensuing downside stands to be even more violent.
Run Fast, Or Not At All
Before the end of this session, DUST-21-01, will be reduced to be in compliance with margin requirements.
At mid-session, that reduction would be in the area of 12% of position size (not advice, not a recommendation).
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.
This update proposed we’d get a penetration of support sometime around the upcoming Fed meeting on the 26th of this month.
However, today, TLT price action has moved lower, penetrated support and is resting just below those levels.
Long Bonds (TLT) Weekly
The Weekly chart shows price action hanging just below support levels (blue line).
TLT is at the danger point where risk of going long, is least (not advice, not a recommendation).
My firm has no interest in buying the debt of a bankrupt nation … any nation. So, we’ll stand aside on going long the TLT.
However, we can use this action as a proxy for the overall markets. That is, a strong TLT upside reversal may indicate downward acceleration in the major indices; S&P, Dow, QQQ and on.
Senior Miners, GDX
The daily chart of GDX has posted a new daily low.
This action helps to confirm that GDX remains in the downward trading channel, discussed here and is now continuing to move lower into that channel.
Positioning:
Remaining short GDX via DUST and increasing position size as the market allows (not advice, not a recommendaiton).
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.
The other ‘first lesson’; the short side can be (and usually is) more profitable and faster than, the long side.
Anybody’s whose paying attention at this point, knows that ‘something in the market’s going to pop’.
We, in the serfdom, don’t know what or where it is; just that there’s a sense of an event just off the horizon.
From a personal standpoint, to be holding (or maintaining) long during a market upset is the last place one wants to be (not advice, not a recommendation).
Which brings us to shorting the gold market and more specifically, the Senior Miners, GDX.
Senior Miners, GDX
The weekly chart of GDX shows where we are; the market just opened for the day.
It might not look like much is going on … that is, until we show the trading channel.
The right-side trend-line has been purposely shown as ‘dashed-line’ so that when we zoom-in below, we can clearly see GDX, is at the danger point.
This is the exact location where risk is least (not advice, not a recommendation). We’re right at the trendline.
At this point, price action’s still posting below last week’s GDX high of 32.03
GDX Leveraged Inverse, DUST
Looking at the inverse chart DUST, we’ve just posted a new daily low (new daily high for GDX) while at the same time being at Fibonacci Day 21, from the top of the December 15th reversal/correction.
We’ve already had the ‘first correction’ as shown the trade model below.
The ongoing test of that correction was unexpected but not out of the norm for price action behavior.
If the gold miners, GDX are to reverse and continue lower in their channel, today is a high probability day for that reversal (not advice, not a recommendation).
Let’s review the trade model (checklist) thus far:
The System:
The Set-Up
The ‘test’ or ‘gut-check’
The first ‘correction’
Continuation or Failure
Trend identification
Potential channel(s)
Exit process
Scale out
Full exit
Post trade evaluation
At this juncture, we’re right at No. 4, ‘Continuation or Failure.
A new daily low for GDX and corresponding new high for DUST, shifts probabilities to trade ‘continuation’.
If that happens, we’ll start looking for trendlines, if any.
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.
The gold market, the supposed ‘inflation’ safe haven, has already decided for itself.
That is, GLD ‘blips’ higher just 0.26%. Hardly a screaming bull market.
If the worst inflation in 39-years can’t drive the gold market higher, then we’re taking the contrary view.
We may have just seen the peak of whatever’s being termed inflation.
Demand on many if not all fronts (except, maybe food) looks ready to collapse. The consumer’s tapped out; about to be taxed out as well.
Taxed out of whatever is left of their property … even if it’s stolen property.
Buried in this mainstream article may actually be some truth. ‘Supply chain pressures are easing … shipping rates coming down’.
Of course, they won’t tell why it’s happening.
It’s a double whammy of the consumer being maxed-out and literally dropping out as well.
We’re calling the video in the link, The ‘Speck-Effect’.
Let’s move on and take a look at what the gold market has to say about inflation.
Gold (GLD) Daily Chart
Price action is nowhere near a bull move and remains below significant resistance.
In the expanded chart below, we can see GLD literally banging about below the resistance level.
First, a test. Then a secondary test and now, what looks like a third attempt.
Note, that each subsequent test is at a lower high (thus far).
Senior Miners (GDX)
Price action in the miners, GDX is similar to GLD.
GDX remains below significant resistance.
Each upward attempt appears to be terminating at lower and lower levels.
Newmont (NEM) and DUST-21-01
Price action in Newmont (NEM) continues to look as if the entire market is thinning-out.
If there are this many price-action attempts to throw off market participants whether bulls or bears, one gets the sense the ensuing move (if/when it comes), may be literally off the charts.
Maintaining short via DUST-21-01 (not advice, not a recommendation).
Summary
We’ve just had the worse ‘inflation’ news in 39 – 40 years, depending on the source. Yet, the precious metals markets go nowhere. Therefore:
The ‘inflation narrative’ is false.
Just another lie. Probably no surprise there.
If it was true, then all commodities, gold, silver, corn, grains, oil, coffee, every last one of them, would be in a screaming bull market.
Instead, we’ve got the grains moving higher while precious metals move lower.
It can be shown that gold is now inversely correlated to corn as seen, in this post (in case you missed it).
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.
The Danger Point® 