Gold Watch

The overnight session was active for gold.  The GCZ20, December futures contract traded between a high of 1,917.90, and a low of 1881.80, a 36-point range, nearly 2%.

Gold is now off the lows and testing its overnight highs.

From a regular session standpoint, we’ll be watching the 179.43, GLD level covered in the last update.

If that high is penetrated it does not mean that gold will continue on higher immediately. 

It would mean that probability is now about even to greater, higher prices are ahead.

From the Junior Mining index, the GDXJ standpoint, there’s a Fibonacci level located at approximately 56.80.

Looking at the big picture, the short squeeze in bonds looks like it’s getting underway in earnest.    

There was just one more downward thrust that was not able to penetrate the TLT, 156.75 lows from the week of October 19th

The overnight move higher in bonds was a serious hit to the shorts. It’s now time to see if this move feeds on itself … higher.

These dynamics, the dollar, gold, interest rates, the four-standard-deviation-short in bonds are all operating simultaneously.

We’re sitting in the background and quietly observing everything. 

The choice at this point (not advice, not a recommendation) is to sneak into a significant short position on the Junior Miner index, GDXJ (via JDST).

We’ll see how it works out.  Obviously GLD and the 179.43 high, is being watched closely.

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.

What’s wrong with this picture?

The good part about danger point areas is, price action does not need to go far to confirm or negate the trade.

We’re at that point now with precious metals and more specifically, the junior mining sector, GDXJ.

A brief search for YouTube “gold higher”, turns up the list below. 

The amount of bullish biased videos is easy to find.  Everybody’s doing it.

Gold To Explode

Embrace The Dip

Growing Debt, Gold higher

Ray Dalio, Gold Price Up

Expect $2,500 Gold Price

Peter Grandich, 100% In On Mining Stocks

Silver Price Will See Explosion

Silver, Time To Buy is Now

How High Will Silver Go?

$36 Silver By End Of 2020

Who wants to hear that a favorite investment or market is heading lower?  

Getting to the chart of GDXJ and what’s wrong; it’s obvious.  

There’s a huge non-confirmation.  

The gold tracking fund, GLD is back at or near all time highs and yet GDXJ (the junior sector), is down -58.8%.

There is no way to paint this in a positive light.  Down nearly 60% is massive. 

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.

Either way, the last report on the sector stepped through the current price action.  We’re at the danger point for GDXJ.

A move higher in the coming week will put a dent in (or negate) the bearish scenario and a move lower will help to confirm.

Stay tuned

Charts by StockCharts

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.

Newmont: Wedge Breakout

The entire precious metals sector may be about to take an unexpected hit.

Prior updates have discussed the Newmont (NEM) bearish divergence and reversal.  This update shows a rising wedge breakout to the downside.

Using standard analysis techniques on the chart below, we get a measured move to the vicinity of 47 for NEM.

A decline of that magnitude, a drop of over 22%, may be the catalyst for a whole other bearish scenario.

Just based on empirical observation and analysis generally available (YouTube, et al), it’s pretty safe to say that no-one is prepared for a significant decline.

Well, almost no-one.  As reported back in late September, the only YouTube analyst (that was located) proposing the idea of a decline was Sajad, in this report.

Charts by StockCharts

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.

Step by Step: Shorting GDXJ

Let’s walk through the junior gold miner’s index (GDXJ), reversal one step at a time.

The following discussion refers to the five number points on the daily chart below, with an expandable version of that chart here.

Before we start … the stage was already set over the weekend with the ‘Newmont’ update.  We showed that it’s in reversal.

The junior index (GDXJ) does not look obvious at this point.  In the markets things (usually) never look clear-cut at the exact inflection point.

Let’s begin:

First, the gold miners have been in an uptrend along with the rest of the markets since the recent bottom in March of this year.


Data Point No. 1

Price action penetrates deep below established support with the second largest down volume shown on the chart.  This can be interpreted as either a shake-out or the beginning of distribution.

The next day has a reversal bar that closes right at the support level.  Volume is heavy, but not as heavy as the prior down session.

The day after that, the inside day, is the first indication that something’s wrong.  If this index is really in a screaming bull market it’s not going to allow anyone to get aboard comfortably. 

The following days show price action laboring to move higher until the next down-thrust.

Data Point No. 2

The down thrust pushed just below the support level shown and closed lower.  Again, the next day is a tight range inside day … instead of a sharp move higher.

This action is more indication there’s not enough demand to push prices immediately higher.

Note:  When price action penetrates support, it sets up what’s called a Wyckoff ‘spring condition’.  It’s a market set-up where prices are expected to rise dramatically.

Instead of dramatic, it took four trading days for GDXJ to rise into the next data point.

Data Point No. 3

We’re at previous resistance and we can see price action stall. It then retraces back to the 57-area (black dashed line), and made another attempt at an upside breakout.

That attempt only lasts one day before we begin a decline into the next data point

Data Point No. 4

Price action pushes below the previous minor support at the 57-area and forms a reversal bar … which was yesterday.  That brings us to today.

Data Point No. 5

Another attempt to breakout higher results in what looks like at this point, a failed attempt.

This is the danger point.

Price action closed off the high of the day.  This indicates there’s not enough demand to keep the close at higher levels.

It’s at this location, a short position was opened (not advice, not a recommendation) via JDST with a stop near the day’s low (for JDST).

It’s a tight stop.

The expectation is for price action in GDXJ to decline from these levels.

We’ve shown how there is not enough demand to drive price higher.  The cacophony of so called hyper-inflation ‘experts’, is all part of the picture.

If everyone’s long silver/gold miners … who’s left to buy?

Charts by StockCharts

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.

Preparing For Gold Hysteria

Fotosearch_k44766586-1For there to be a lasting blow‑off capitulation up‑thrust (and reversal downward) in gold, the stage needs to be set.

Reports like the one at this link help to set the stage for investor panic.

Personally, I appreciate Greg Hunter’s weekly wrap up and have watched it for years.  Mr. Hunter was an investigative reporter, unique in his style and ideas … as is typical of someone with an edge or focused capabilities, he found himself on the receiving end of a corporate pink slip; or as he put it, ‘We have chosen not to renew your contract’.

On the flip side and by definition, Mr. Hunter’s guests are part of the masses; they are in the public eye.  In that case, their ideas are public and mainstream.  In the final outcome, the total of all mainstream and public (trading) ideas must result in loss.

Will this time be different?  Will gold and silver see a blow‑out move to the upside and keep on going?  Certainly, it could happen.  Anything can happen.

As has been reported previously, sentiment indicators do not favor a long term sustainable upside move.  There is too much bullishness.

What’s more likely, is some kind of penetration above known resistance with the attendant mass hysteria about “This is it!”

If and when that happens, we’ll be on the sidelines monitoring volume and price action … with an eye on going short.  If so, we’ll be positioned for a potentially dénouement down move in the precious metals and mining shares.

For technical research and analysis of the precious metals and other sectors, please visit our parent site at ten-trading.com