Gold Set To Rally

GLD, In Spring Position

It’s about an hour before the Sunday futures open and gold (GLD), is in spring position; set to move higher.

The daily chart of GLD below, shows the action for the past three years. The chart following gets closer in to identify the set-up.

Gold (GLD), Daily Chart

Closer in with the spring set-up marked.

We know that empirically, if a spring set-up is viable and in-effect, it has a tendency to go straight into an up-thrust.

The chart below locates a potential up-thrust zone should the price action launch into a spring.

If gold breaks to the upside, be prepared for another round of bull mania hysteria … all the while, the structure of the overall markets continues to fall-away.

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.

The Danger Point®, trade mark: No. 6,505,279

‘Bounce’ Fails … Now, What ?

Get Right … Sit Tight

Yesterday’s upside failure (from Monday’s reversal) tells us it’s a very dangerous market environment.

Several YouTubers (here and here) and maybe more, the leaders anyway, have noted they’re providing good-faith analysis and potential tips, but that does not change the fact, ‘You’re on your own’.

The ‘rebound’ that Maverick discussed (second link, above) may have been on Monday and that’s all there was.

Absolutely nothing against him in any way.

If that was it for a bounce, we’re indeed in a very dangerous (to the downside) situation.

The S&P got itself into a Wyckoff Up-Thrust condition, noted here and shown on the daily chart below.

S&P 500 (SPY), Daily

It’s about midway through today’s session.

We can see SPY price action grinding its way down to support near the 410 – 415, level.

Up-Thrust, headed for ‘Spring’ ?

We already know from empirical observation that markets tend to go from spring to up-thrust.

Does it work the other way around … up-thrust to spring ?

From a personal standpoint, I do not have any data to show that behavior exists.

However, with SPY in its current position (near support) we may be about to see if there’s penetration and then attempts to move higher (i.e., in spring position).

The chart below shows current support.

There would need to be decisive penetration to set up the potential for any kind of sustained rebound.

The blue line is a significant support level.

The grey line just above, is also support, where price action is at the moment.

Penetration of either one sets up a spring.

Real Estate, IYR (Daily)

While the S&P fights it out at support, real estate, IYR is doing the same thing.

The previous post was looking for new highs in the sector.

At that time, it looked to be 50/50, odds of doing so.

Now, we’re right at the danger point.

It won’t take much for price action to confirm a spring or a break to lower levels.

It looks like we’ve already had an up-thrust which seems to point probability lower.

With the overall markets, the S&P at support now and deep oversold, points the opposite way, probability to the upside.

Summary

IYR had a shallow, 38% retrace during yesterday’s session before continuing lower and closing near the low of the day.

As that retrace was completing, a short position was opened via leveraged inverse SRS (SRS-22-01) and the stop set at yesterday’s IYR high of 109.58 (not advice, not a recommendation).

As this post is completing, IYR price action’s laboring to move higher (SRS, lower).

We’ll know soon enough if we’re in a breakdown or a spring.

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.

The Danger Point®, trade mark: No. 6,505,279

Gold Price Action, Blows-Up

Trading The Price … Not The Narrative

The narrative and the price don’t agree; at least at this point.

Over and again, we hear it’s ‘dollar destruction’ and ‘hyperinflation’.

Here is a link to one of the latest pontifications on what ‘inflation’ is doing or is going to do.

After watching that, one is so much better informed. Well, at least we know what the bit-players are saying … each reading from their own (pre-approved) script.

Let’s get back to reality and the price action at hand.

We’ll start with this quote from the last update which references shorting the gold miners using JDST (not advice, not a recommendation).

“However, something that can be done is to use that upward bias to position short at the lowest risk possible.”

That’s exactly what was done during this (past) session; let’s start first with the big picture.

Junior Miners GDXJ, Weekly

As a reminder, and for those who may be new, we’re looking for a particular price pattern that has been shown to repeat over time:

Wyckoff: Spring-to-Up-Thrust

Note in the CAT, example in the link above, price-action up-thrusted and then came right back down to support without any kind of an upward test.

Sometimes, it happens that way.

What’s not known of course, is if GDXJ will respond the same way.

Junior Miners GDXJ, Daily

The chart above is a close-up of the action.

The next chart is leveraged inverse fund JDST. It shows the initial entry of what is labeled trade, JDST-22-02 (not advice, not a recommendation).

Trade entry was just as JDST, price had reached its daily low extreme and was backing off higher (GDXJ, lower); right around 1:14 p.m., EST.

Note the tightness of the stop; just 0.24-points.

Summary

Tomorrow’s action could hit the stop, blow (gap) through the stop or continue upward.

It’s unknown.

What we’ll get for sure, is another data point on what’s really going on with the miners.

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.

The Danger Point®, trade mark: No. 6,505,279

Gold, Way Back To 2009 !

That’s How Far We Have To Go

All the way back to late November 2009, to find a bar that’s remotely similar to the one just posted last week.

Even then, there are key differences.

The reversal during the week of November 30th, 2009 was after a breakout and run-up of about 20%; from the resistance/support area around GLD, @ 100.

Last week’s bar was within a trading range not outside it. Also, we had to wait until this morning’s open to get a new weekly low.

Volume (blow-off) characteristics were similar:

Week-ending 11/30/09, volume 93% higher than the week before; week-ending 3/11/22, volume 43% higher than the week before.

GLD, Weekly Chart

The chart gives us a feel for just how far back we have to go to find similar price action.

The prior update said at this juncture, longer term momentum indicators are pointing higher. Thus, suggesting there will be some kind of upward test either today or this week (Fed meeting?).

Junior Miners GDXJ, Weekly

Earlier this month, this post said to expect GDXJ, to up-thrust in the 48 – 50, area.

That’s exactly where we are now.

GDXJ, back then.

GDXJ, now.

There we have it. The repeating pattern of ‘Spring to Up-thrust’

That does not guarantee a downside reversal. It just shows us price action repeats these behaviors; doing so for decades, if not hundreds of years.

What happens now?

Longer term momentum indicators point higher and give the bias to the upside.

However, something that can be done is to use that upward bias to position short at the lowest risk possible (not advice, not a recommendation).

Positioning via JDST

Junior Miners GDXJ, could come back to test the trendline break shown below starting today, through Wednesday.

If it does, the difference between being correct (about going short) and continued bull side action may be narrowed as much as possible (not advice, not a recommendation).

If that happens, the JDST stop will be very tight.

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.

The Danger Point®, trade mark: No. 6,505,279

Newmont Holds The Key

‘Last Man Standing’

Founded by William Boyce Thompson in 1916, Newmont (NEM) was around over a century ago during Livermore and Wyckoff’s day.

Thompson is center in the photo with President, Warren G. Harding at left.

Wyckoff and Thompson were interconnected.

In Wyckoff’s autobiography, he writes about working for Thompson’s firm (Thompson, Towle & Co.) in 1910.

During that time, he describes no fewer than two stock ‘manipulation’ schemes; one by renowned James R. Keene and the other by Thompson himself during a deal-gone-bad with the Guggenheims.

Also in 1910, Wyckoff published his seminal work: Studies In Tape Reading. If there’s any one book to read concerning how markets work, ‘Studies ..’ is that book.

Wyckoff had first-hand exposure into market operations by the wealthy and super wealthy. More importantly, he saw how those transactions showed themselves on the tape.

Last check, a first edition ‘Studies’ went for around $3,500. A quick search as of this post, turns up nothing currently available.

For those who complain ‘it’s rigged’, to that we can say, ‘it’s always been rigged’.

Determine what those ‘rigging’, are trying to accomplish and you may have a trade.

Now, to the market at hand: Newmont Mining.

It’s the key; the largest cap equity in the Senior Mining Index (GDX).

Newmont, NEM

The daily chart:

For those who have been with this site for a while, you may instantly see the set-up: Spring to Up-Thrust.

The marked-up chart makes it clear.

Moving in a little closer for additional clues:

We can see from the volume itself, there were a huge number of transactions this past Friday.

NEM penetrated long established resistance.

In so doing, it set off a massive number of orders: Buy orders, sell orders, sell-short.

Senior Mining Index: GDX

The other part of the story and the one that weights it to the bears:

While NEM, is at multi-month highs, senior miners GDX, is nowhere near its highs.

Daily chart, GDX:

What does that mean?

It means the market is ‘thinning-out’

The professionals and maybe some investors alike, are abandoning the non-performing lesser cap equities; pouring funds into the last man standing NEM, in hopes that it will keep moving higher.

It’s desperation and signals market weakness.

As always, anything can happen and bulls may somehow take control.

However, from the charts themselves, hyper-stretched major indices coupled with insiders bailing out the most in history, uneducated ‘retail’ willingly stepping up to hold the bag, it does not look good for any bulls … gold or otherwise.

Summary:

We could find ourselves in a situation similar to the oil market in mid-2014 where it spontaneously deflated for eighteen months … nary a blip higher all the way down.

With that, we’re maintaining short via DUST (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279

Set-Ups, that Repeat

Late Session

Wyckoff: ‘Spring to Up-Thrust’

Years ago, while reading one of David Weis’ daily updates, he made a comment to the effect:

‘I can’t count how many times I’ve seen a spring, go straight into an up-thrust’.

His observation stuck with me through the years. Being the engineering type, I naturally wanted to know why.

Why does that market observed phenomenon occur?

Pursuing the question from a data perspective, it became clear that finding an answer, would be a never-ending quest.

I abandoned the ‘data’ idea; but the question lingered.

During that time, observation of the markets proved Weis’ point. Some markets tend to go straight from ‘spring to up-thrust.’

One example that’s taking place now, is CAT:

Another example in the potential set-up phase is LOW:

The reason for the phenomenon remains open. Obviously, the market’s going to go where there are orders.

It’s likely, under the right price action and psychological conditions, when support is penetrated enough (amateur) participants sell and then sell short.

Those undisciplined traders continue to move their stops higher (against their trade) as the the market moves higher; ultimately taking them out at the up-thrust top.

How do I know this? Because that’s exactly what I used to do.

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.