Jul 21, 2015


Update for readers interested in PM/miners... I think now it is the time to load quality gold miners for a furious bear market rally.
- Gold - exhaustion bar, a lot of emotions and media coverage, everybody is expert now writing about gold. All this happens close to an important top/bottom not at the beginning of a trend. Everybody is very smart after the fact.
- Silver - not really impressed... working on it's waves.
- Gold miners - real massacre, trading at prices when gold was 300$. This is irrational behavior and qualify for me as "to shit your pants".

What I see - EW patterns close to finishing the moves, cycles at 40 weeks cycles low, indicators and market breadth at extremes, sentiment and short position at extremes. Everything screams to me expect massive short squeeze.
When the rubber band is stretched too much to one side expect snap back, extremes are followed by mean reversion.
I expect a bottom in the next one week and rally - gold 20%-30% / silver 30%-40% / miners 50%-100% for different shares. Some guys argue that this is the bottom for the bear market in PM. I am not in this camp, I think this will be just a bear market rally which is worth trading and if I am wrong even better:)

Now this does not mean go out and catch the falling knife. Sit down an think a little bit and make a plan. Choose what to trade single shares if you have something on your mind or ETF's. Plan your entry - for example 20% in gold miners speculating for a bottom, after a higher low or lower low with divergences another 20% and when we have confirmation the rest. Or wait for gold/silver to drift lower for a higher low or lower low with divergences and enter with 30% and after confirmation the rest. It depends on your personality as a trader.

My target was 1090 +-10 points. It was hit... I suspect gold will start drifting lower to finish it's wave structure, higher low has lower probability at the moment.

Silver is working on it's waves. For me a corrective move is running since November 2014. I am showing a closer look of silver because even with the scary day yesterday it looks like silver follows it's path perfectly and I will use it as a guide when to expect a bottom.
We have following targets - a=c for X at 14,40 | 5/c/X at 14 | 5 of 5/c/X at 14,30

The last few days and the last wave 5/c/X. I am showing the chart because it has perfect measurements. Even with the plunge 3=1,618x1, I had doubts that we will see wave 4 because of the extreme bearish sentiment yesterday, but for a short time silver was green +0.80%. Obviously even with panic ew works fine and the message is one final move lower to finish the corrective structure which begun in January 2015.

Again panic sell off lasts 5-7 days and it is the same on the weekly chart. We have 5 days on the daily chart and 5 weeks on the weekly chart.
Given the price action yesterday and my qualification for it:) I highly doubt it will continue lower for another two weeks.
Another RSI extreme with massive triple divergence on the weekly chart - the odds are very high that we will see sharp rally higher.
I can not say if it will start bottoming 1-2 weeks or just reverse sharply... that is way you need a plan how to build your position.

1 comment:

  1. Great stuff.
    So far, so correct.
    Keep it up... i'll be checking back again daily :)