Is today the day we find out who’s really in control?
The day where it’s either inflation or deflation?
It’s about 30-minutes before the open.
Pre-market action has gold (GLD), right at the Fibonacci 50% retrace level shown in the 4-Hour chart.
Gold (GLD) 4-Hour
Looking at the chart we see the following:
The up-thrust from November, was an island gap reversal (bearish).
During the Fed announcement (Wednesday, the 15th), price action penetrated weekly lows and set up a spring condition (bullish).
We’re at Fibonacci Day 3, of the spring and current trading at 50% retrace in the pre-market (neutral).
Pre-market trading is at an axis line which also indicated prior resistance on November 30th (bearish).
If price action opens or trades at the 50% level, it would also up-thrust the November 30th print high; therefore, creating a potential reversal condition (bearish).
Summary:
There’s a lot going on in the gold market.
The ‘man on the street’ YouTubers are screaming inflation and the need to “exit the system”.
That’s a great idea (exit). Just exactly how does that work anyway? A topic for another time.
Meanwhile, here we are.
We’re doing what price action’s telling us to do. That is, stay short until proven wrong (not advice, not a recommendation).
That proof, for bulls or bears could come today.
Stay Tuned
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.
Following the corporate media (always a mistake) and YouTuber’s alike (sometimes a mistake), only to find out it’s all been a lie.
Gold (GLD), looks like it’s solidifying its breakaway gap (chart below) and simultaneously confirming a potential trading channel.
In what may be related news, ZeroHedge reports some of the internet is down … again.
Note the websites having problems involve food, payroll services and of course, entertainment.
Separately, the dollar (UUP) just made a new weekly high as its rally continues. In Steven Van Metre’s Sunday Night update (time stamp: 18:01), if the dollar breaks higher above UUP 26 or 27, then “… all the wheels come off ….”
Which brings us to the gold market.
Gold (GLD), Weekly Chart
The chart reviews the recent up-thrust (reversal) that was accompanied by hysterical … bordering on unhinged insane press coverage of an imminent break higher.
Obviously, that didn’t happen.
Zoom version
In addition to the reversal and breakaway gap, there could be a trading channel as well.
That’s a good thing for the bears as it gives a more clear exit area … negation (or break) of that channel (not advice, not a recommendation).
Zoom version
Of course, anything can happen. The Fed announcement is about two hours away.
However, it looks like gold and miners alike, are not waiting around … potentially beginning their decline in earnest.
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.
Today’s trip to the office supply store, had those employees and some customers alike, still putting toilet paper on their face in an attempt to ward off goblins … unseen.
Looking closely, today’s bar pulled away from the right-side trend-line just a bit.
Next, the same chart but on a 4-Hour time-frame
Note how a new (increased angle) trendline can be drawn.
The next chart zooms-in
There have been four, four-hour hits on the new more aggressive downtrend line.
That new line (thus far) is declining at about -94%, on an annualized basis.
Summary
If this is a more aggressive pivot lower, it’s very early in the trend. The next session can easily negate the trend or just as easily, provide confirmation.
Maintaining short via DUST (not advice, not a recommendation).
Stay Tuned
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.
Even after gold and the miners have reversed lower, the press still implores gold to head higher.
Like something out of Moby Dick … even after Ahab is dead, he still beckons.
The above link gives us another report on ‘inflation expectations’ at a new record high.
Near the bottom, the text says that survey respondents expect ‘gold to continue acceleration higher’.
The problem: Gold’s not accelerating and currently, is not going anywhere.
The statement (or belief) is completely false.
Senior Miners, GDX
The short positioning continues (not advice, not a recommendation)
The daily chart of GDX, shows price action hugging the right-side trend-line. Each tap and reversal provides more data on potential direction lower.
With the understanding an exit could be required at any moment, the hits on the right side are being used to increase short positioning (not advice, not a recommendation).
The zoom chart above, shows every short entry, except one, at a lower price (higher for DUST).
Summary:
Today’s ‘expectations’ report was released at 11:12, a.m.
If the day’s narrow-range bar is the best the gold miners can do with such high ‘inflation’, there must be something else more powerful at work (to the downside).
Maintaining short until the market itself says to get out (not advice, not a recommendation).
Stay Tuned
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 there ever was a CPI report to completely break the ‘inflation’ narrative, this was it.
Several articles, here, here, and here, all saying essentially the same thing … skyrocketing ‘inflation’.
If that really was true, why is the 5,000-year-old hedge against inflation (gold) not responding … and even worse, heading lower?
That’s because, it’s all rigged, man !! (cue, Tommy Chong).
Well, it has always been rigged.
Both Wyckoff and Livermore talked about that ‘rigging’ way back in 1921, when Wyckoff interviewed Livermore about his trading methods. Later, in 1922, a series of articles on Livermore was published in Wyckoff’s ‘Magazine of Wall Street’ (a forerunner to Barron’s).
The point is, we’re not interested in who is doing the rigging. That’s what the press tries to find out (a waste of time). The real question is, what are those ‘rigging’ trying to accomplish?
Answer that, and you may have a potential trade set-up.
We’ve got supply chain, controlled-demolition with corresponding asset price inflation; the kicker is, gold and the dollar, say we’re in some kind of monetary deflation.
Senior Miners, GDX Confirming Trend
Price action in the gold market and the miners confirm that (deflation) assessment … for now.
Zoom-in on trend line contacts.
Summary
Based on the articles linked above, if there ever was a data-set release that would launch gold (and the miners) higher, today would be the day … right?
Both Wyckoff and Livermore did not concern themselves with what ‘should’ be happening. They were focused on what ‘is’ happening.
Gold and the miners are (and have been) moving lower.
As yesterday’s post said, we’ll remain short (not advice, not a recommendation) until the market itself says to exit.
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.
… And when you find one, you must use it to its maximum extent.’
That was the admonition from Gerald M. Loeb, in the above titled book.
It’s the exact opposite of ‘diversification’. The professional traders/speculators know this and so focus on a few or just one opportunity.
The months-long bullish hysteria in the gold market, gave an advance clue it might be a significant opportunity; the opportunity for a low-risk trade opposite the crowd (not advice, not a recommendation).
So far, that’s correct.
The gold bulls are trapped. Such events can go on much longer than anyone expects.
With that said, we’re focused exclusively on this market until it falls apart, we exit, or there’s another opportunity.
Now, on to the Senior Miners, GDX
GDX
We’ll get straight to the marked-up chart.
Looking at price action on a closing basis, the past four trading days were a test. The print high was on Tuesday (31.58) and the close high was yesterday (31.49).
The test was on underside resistance and looking at the chart, that underside was also an axis line.
Next, we see at least one trading channel with the possibility of an extension to other channel lines.
If these other channel lines are in-effect … meaning we’re really in the wider channel(s) but it’s not yet verified, that represents some serious downside potential.
Positioning
The past three trading sessions allowed the opportunity to increase the short position via DUST (not advice, not a recommendation).
A previous post said that positioning was essentially complete. However, the market kept providing opportunity to go short.
Market action directs trading action. The total size (via DUST) was increased by about 8.7% (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.
Steven Van Metre, in his Sunday Night Charts (time stamp 12:20), shows the precarious situation of GDX.
There’re about 90-minutes left to go in this session.
It looks like GDX is/has tested underside resistance and down-trend simultaneously. For GDX to break higher, it would have to get through that resistance.
As always, anything can happen but we need to remind ourselves, the gold bulls are already trapped … having bought at the mid-November breakout.
If still holding, they’re now deep in the red.
Under such conditions, each down move serves to set the (bear) hook even more.
If we use this just released article from ZeroHedge, we’re nowhere near any kind of capitulation and upside reversal.
Senior Miners, GDX
The un-marked daily chart
And now …
With zoom
We’re at a confluence of resistance; the downtrend and the underside of price action.
Let’s keep in mind, the overall markets (S&P, Dow, Nasdaq) are still oscillating around their all-time highs. Volatility has increased as the trend appears to be changing.
Gold and the miners are nowhere near all-time highs.
A century ago, Wyckoff showed how to spot markets that would decline the fastest and farthest under bear market conditions (not advice, not a recommendation).
It’s not the high-flyer we’re looking for … no, it’s the laggard.
That’s the one to pick.
It’s already weak and once the buoyancy of the general market evaporates, the bottom may fall out.
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.
That is, unless the current patterns in price action change.
From a professional trader’s standpoint, one has to be on-watch for two things:
First:
Be mentally flexible enough to recognize the trade is falling apart and then exit.
Second:
As Prechter put it years ago, be mentally prepared to accept the huge gain.
At this juncture, what is the chart of GDX, telling us?
Senior Miners (GDX), Daily
The un-marked chart.
Marking-up with Fibonacci time sequence.
Adding-in some trend lines.
Zoom out to show the big picture.
Summary:
From low-close, to high-close, the counter trend move took a Fibonacci 34-days.
In the process, it appears that price action is now moving within a trading channel.
In addition, the counter-trend print high on 11/16/21, was close to a 38%, retrace level (not shown) of the entire move from the peak on 8/5/20, to the 9/29/21 low.
Positioning
The last update detailed how a short position was opened in the miners (not advice, not a recommendation).
At this juncture, price action continues to indicate lower prices ahead.
The short is being maintained.
Stay Tuned
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.
To date, there’ve been 232 transactions in the firm’s main trading account.
Each one has its own story.
The big one for now, is shorting the gold miners GDX, via DUST (not advice, not a recommendation).
We’re going to pull out the ‘card catalog’ on that one and take a brief look.
As a reminder, this post identified the breakout target for gold (GLD), months before it actually happened.
Also, in a prior post, it was discovered the miners had 3:1 downside response to recent down moves in gold.
Therefore, at this point in time, using leveraged inverse fund DUST, at -2X, the miners, gives an estimated, 6:1, market exposure.
Short entries were opened (shown below) once the gold market and miners broke to the upside.
Hysteria First
Those who’ve been here a while, already know part of the short set-up, was the necessary hysteria needed to get nearly everyone on the wrong (bullish) side.
Senior Miners, GDX
Just for reference, the daily chart of GDX, is below.
I suppose it must have been from behind enemy lines, with one of the gold updates warning us about archrival, Russia.
As we can see from the price collapse, the Russians must have found our gold bulls. 🙂
Meanwhile, Back At DUST
The daily chart of leveraged inverse DUST, shows trade entry locations to date (not advice, not a recommendation).
The hourly chart below, gives a closer look.
The next chart is a zoom-in of the entries.
Positioning in this market for now, is essentially complete.
At this point, it’s time to monitor and track for any potential trend reversal or trendline break.
Early Or Late
Years ago, sometime around late 2007, or early 2008, Robert Prechter Jr., said concerning his trades, he tends to be a little bit early.
That implicitly means he might suffer through adverse action including loss-exit, if action goes counter enough.
There’s no perfect entry. Early or late, take your pick.
Fixing Entry Errors
As can be seen on the hourly chart, every trade entry was on a red (declining price) bar.
The risk is, price action will just keep on going red.
The benefit is a big one; I’m not chasing the market.
If I’m chasing, it means I’m not on my game or I never had a game or worse, a coward that can’t pull the trigger on a trade without more ‘confirmation’.
David Weis covers in his video, how to properly get aboard a market that’s already underway.
After the initial entries, DUST banged around the bottom (GDX at the top) for eight trading days.
In retrospect and looking at the chart, the adverse action was not much lower but it did not feel like it at the time.
Because of the months of planning, there was an inference the size of this reversal would be significant.
So far, it is.
In the process of reversing, price action itself has fixed trade entries made a little too early.
Summary
Future updates will show potential trend and/or channel action as well as Fibonacci time correlation.
At this point, the DUST trade is well underway.
A reasonable stop area would be in the vicinity of DUST 19.37 (not advice not a recommendation).
Stay Tuned
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® 