Thursday, 28 November 2013

Rally targets on gold: 1250 and 1240-1244 possible? 2013-11-29

Looking at my charts today, I wonder if there are rally targets on gold: 1250 and 1240-1244.

If the price drifted upwards or sideways to the red line on the chart below which has been resistance recently, the uptrend of the last 2 days would just be a wash rinse and repeat cycle of the last several weeks.

Gold needs to get above $1250 to have a chance at a rally. Strangely or maybe not so strangly, the present rally could just hit $1250 which is also horizontal resistance that precviously was support a number of weeks ago. It seems almost an ideal place for this rally to stop and turn back down.

A break decently above $1251 (especially a daily or weekly close) would be potentially bullish.

Here is my chart:


Gold is a pain to trade, long or short, even though the pattern is quite clear.

Price might intersect the red resistance line tonight 28 November or Friday 29 November so there should be a signal at that point quite soon.

Wednesday, 27 November 2013

Gold compared to CEMIG stock (US:CIG) described in the Biblical Money Code advertisement video

I want to share with you the remarkable similarity between the behaviour of gold and the behaiour of stock of the company CEMIG (US ticker CIG), the Companhia Energ├ętica de Minas Gerais S.A. in Brazil.

I noticed this as I viewed the (very long) video advert from Sean Hyman who is promoting his Biblical Money Code service on kitco.com on Tuesday (yesterday).

He showed CEMIG stock chart from 2012-2013.

The video is too long really - he should cut it by 1/2 or 2/3 - too repetitive but interesting content!

He showed CEMIG stock as an illustration of sentiment extremes at a low, despite what he described as strong fundamental analysis of the stock at the time.

I just looked agog as I saw something that looked identical to the gold chart:

A downtrend off a top (like gold from $1800 to the mid-$1500s) followed by
a tiny bounce in a downtrend (like gold at $1590) followed by
a huge drop (like 12-15 April gold to $1321) followed by
an abortive rally (like gold to 1480) followed by
another downtrend accelerating to a new low (like gold to $1180 on 27-28 June) followed by
a decent rally (like gold from $1180 to $1434 by August) foll.owed by
another decline with a crummy corrective rally in the middle (like gold from late Aug to late Nov 2013), then to where?

To a new low! Followed by
a decent rally (as if gold rallies to above $1434) folowed by
a sharp downmove to yet another new low followed by
a choppy and gradual repair process.
I wonder if this is a model for gold?

The Biblical Money Code advert video is at the link below and it speaks of "looking well into the matter" and also of Biblical ethics with regard to investing and offers what sounds like an interesting service. Have a cup of coffee or tea and a piece of cake handy - it is a really long video!

http://www.moneynews.com/MKTNews/Financial-bible-Hyman/2013/07/08/id/513894/?promo_code=141BA-1

Here are the charts:
 

This was the moment when I sat somewhat aghast at a chart that looked just like gold: 


Dear Sean Hyman: I tried to find an email address for you online to ask if I can use the above chart but I could not find one! If you wish me to remove it, post a comment and I will delete it and use a stockcharts.com somewhere else for a chart instead.

Unfortunately the stockcharts chart is too compressed to show it well:

http://stockcharts.com/freecharts/gallery.html?s=cig

However, CEMIG had a nice recovery after the bear market in 2011/2013 and made it up to the intermediate low from its double top. This might be equivalent to the $1520 level in gold which was the low of late 2011-2012 that was hit a few times. Then the bear market resumed and CEMIG is not near to its bear market low again:

Tuesday, 26 November 2013

Gold charts still bearish 2013-11-26. Gold retook $1251 for a monent on Monday then back down.

Charts for today Monday 25th November 2013 showing inverted Swiss Stairs formation and also the upmove ingold today that threatens to retake $1251. The $1222 low is not surprising, since it is right on the centre line of the downtrending pitchfork that starts in September 2012.

The usual suspects are spouting their usual nonsense about the sellers selling 'uneconomically' in gold by selling largish tranches at a time.

However, they are incorrect. The chart clearly shows a kind of reverse Swiss Stairs formation in gold, except that the flat parts of the stairs are uptrending choppy action.

The sellers are allowing the bulls to take the price up before they sell each tranch. As soon as the price reaches resistance, they sell another lot. Does this imply that there is a very large seller unloading a very large position in tranches?

Fascinatingly, the upsloping lines are exactly parellel to the support line for the late June to August rally from $1180 to $1434.

These lines sees choppy upside action along them.

Every upsloping line in the chart linked from here is a support line that becomes resistance and then there is a markdown. This has been true for all the action since the red arrow at $1376.
These guys are getting a decent price for their gold that they are selling.

However, gold is challenging the key $1251 level right now, this very moment, on Monday 25 November 2013 at 20:25 GMT

 
 
 
Note how the downtrends are getting steeper, fortunately each one is slightly shorter than the last but the point to targets at $1100 and $950:


Trying to put a potential path to $950 on the chart respecting the downtrends and lines of support and resistance:
 

or:



As of Tuesday, gold made it to 1253 then turned straight down again! Not at all surprising.

Kitco confirms the bear market psychology by having the headline:
"Comex Gold Sees Corrective Technical Bounce And Short Covering - Kitco News, Nov 26 2013 8:21AM"
http://www.kitco.com/news/2013-11-26/AM-Kitco-Metals-Roundup-Comex-Gold-Sees-Corrective-Technical-Bounce-And-Short-Covering.html

This is the first time I remember seeing the phrase corrective bounce used, ie a counter trend move in a bear market .

It's all in the US dollar. On that bounce in gold, the US dollar went from going up to going down, now it is going up again and gold has tuend down quite sharply, an unbroken line of seven red 20 minute bars or candles on the chart as I write on Tuesday at 1730 GMT. A couple of minutes later, we get the first blue candle on the 20 min chart for over 2 hours!

I also posted a siilar comment on Korelin Economics Report.





Wednesday, 13 November 2013

Commentary for Korelin Economics Report 2013-11-13

This is my comment on the kereport.com guests' blog for 13 November 2013.

"Things usually look very technically bad and scary at a market bottom but gold's performance this year has been so disappointing. Gary sounds like he has been right on track with his forecasts but we have not broken below 1251 or 1180 just yet. I think we might get a test of about 1190 and if it fails then 1120-25 based upon my own charts. But it's all guesswork really.

Secular bear or cyclical bear? Well, looks more and more like a secular bear to me. A break below $1180 would prove a secular bear market because it would be 39% down in about 2.3 years.

I don't think that gold will be in as long a bear market as the 1980-1999 bear market (about 20 years), but I think is more serious that the little bear market of 1974-76, which actually took 4 years (between 1974 and 1978) to get back to the roughly $200 high before going on up to $850 in the final phase of the bull market

The 1974-78 correction and consolidation was actually a 4 year round trip from 200 to 100 and back to 200. That was equal in length to the first leg of the bull market from 1970/71 until 1974 (which went from $35 to just under $200).

In this cycle, we have had a 10 year bull with some spikes and correction but more or less uninterrupted (as far as year over year increases were concerned it was a 12 year bull from 2001-2012). Let's call it 10 years. I wonder if we are going to have a round trip that might last about the same length, about 10 years from 2011 to 2021 let's say. That is a significant bear market. The low might be $1180 or $1030 but I fear it could be even as far as 3 figures, perhaps $850-900 or even $650-700.

Buyers are going to become more price sensitive as the prices drop. On 2011-2012, a price of $1520 was a bargain, then in April 2013, $1321 was a bargain and in June $1180 was a bargain. As we look now, $5120 was NOT a bargain. I cannot see gold going above $1520 for a long time, because it was massive support turned into resistance. So we need to look at the psychology as the price drops further and for longer. Today's prices for physical gold buyers ($1250-1300) may look expensive next year. People might say ,"$1250 gold? No way!" That is a big danger as we go lower, that could extend the bear market for years to come.

Note that we were in a trading range of $1520-1920 for 18 months. It was bearish because the price spent most of its time at $1600-1650, well into the bottom half of that range. Semi-numismatic coin premiums were also very low, typical of market tops, indicating a bearish prospect. Now we are in a $1120-1520 range perhaps and are again languishing in the lower half of the range. $1520 is a long way away. I am going to do a bit of research into whether semi-numismatic coin premiums are higher now.

I begin to favour a market that acts as Ross Clark of CIBC mentioned on Howestreet.com years ago. It is running at 1/3 the pace of the 1970s market. That would imply at least a 10 year round trip before the gold price gets back to $1920 where it topped in 2011. Similar for silver. Maybe then there might be a bubble phase in to the early 2020s.

So is it time for me to sell? I don't know. Such a long correction could mean that money sitting in gold, silver and PM stocks is not a good investment for me and any money in those things over and above an insurance allocation is not going to result in good investment returns that might be available elsewhere. It would also wear out many others in the space ("wear you out of scare you out" as David Morgan says). That would almost be the most inconvenient set of circumstances and that is what often happens in markets. As Sinclair has said, the people at the top in 1980 were not the same as the people coming in 1970 There was a turnover of investors several times (I think he said about 3 times) over the length of the 1970-80 bull in gold. Such a situation would be a fantastic opportunity for long term well-heeled investors with cash to accumulate stocks in a ravaged industry for a potential fabulous gain sometime in the fairly distant future as the demand comes back in and the supply of precious metals is likely to be hugely curtailed due to lack of investment and development. (Currently, certain market experts are still telling us that mine supply is increasing because of new projects that have been developed during the 2000-2011 bull market). I think it's going to be a really long slog - a 5year round trip at an absolute minimum and perhaps 10 years."

Monday, 11 November 2013

Head and shoulders neckline being challenged. Potential target $1120.

Gold's head and shoulders neckline is being challenged. The potential target is about $1120.

See chart below. Measured on the chart right now, I get a target of $1119.

Rick Ackerman on kereport.com gave this as potential target of $1120 for gold a number of days ago. It may either be from a similar pattern or from the 18 month long $1520-1920 trading range being mirrored on the downside to $1120-1520.

Either way, it is not bullish!

The neckline shown in heavy dashes should act as support because it is a multiple prior support line. If it is broken then look out below. The previous short dashed line has already broken down but came back. False breakdowns are of course possible.

The height of the left and right shoulders above the neckine is about the same. Treating those as the top of a trading range would give a downside target near $1190, almost down to the 28 June low if the neckline fails.


Wednesday, 16 October 2013

S&P 500 hits expected resistance at 1709-1720 at top of downtrend pitchfork and possible pennant 2013-10-17

Thre S&P 500 has hit expected resistance at 1709-1720, actually it popped up to 1720 on the 16th of October to hit the top of the possible downtrend pitchfork and possible pennant. 
 
 
So what now? Something like this?
 
 
I drew the first downmove too steep so that it would reach the downsloping parallel, which is probably too low anyway. But it is just a whimsical notion.
 
The longer term chart shows that all of the uptrends are still intact and marks the pennant:
 

If the S&P is reversed to the downsidefrom this owntrend pitchfok is in action  level, it could mark the point where a pennant is forming and the proposed red downtrend pitchfok is now coming into play There could then be a fight between the bulls and bears: between the long term blue uptrend channel whose support has been slipping a little and this new downtrend slope. I saw this downtrend first described in a coghlancapital free webinar and on the market calls section of his excellent website.

Currently, the very long term (4 year) uptrend marked in orange has shown no slippage - the price bounced twice recently on one of the orange parallels that you can note was previously resistance, just before the first of the recent major highs was made. In fact, that parallel forms the lower line of the green pennant that may be coming in. This parallel is also delineated by a major price high over 2.5 years ago and should therefore be strong support. The parallel beneath it goes back 3 years and has clearly gone from resistance to support over the last year or so.

I love charts! :-)

Gold Point and Figure chart points at possible larget bear pennant and strong resistance 2013-10-17

The Gold Point and Figure chart points at possible large bear pennant and also shows a very strong resistance line that has, as I have mentioned capped the price for 2 months.


Note that we had a rally in the last few days that fell short of resistance line that has held the price for the last 2 months. Actually, we had an intraday move down to $1250 and a move back up intrday to the low 1280s since. However,this is a sign of slippage in the price and is bearish because it may show the start of downside acceleration of the price of gold.

Also, on the candlestick charts, there is slippage every week or so as the uptrend tries to re-assert itself and fails into a downtrend. Support along these lines is always becoming resistance. Also, you can see hints of acceleration of the downtrend, though it has yet to go to the floor of the downtrend channel, which is now below the bottom of this chart:








Monday, 14 October 2013

Nikkei broken out and tested bullish wedge? 2013-10-15

The Nikkei 225 in Japan appears to have broken out of what looks like a bullish wedge pattern for the last few months:


Now the action in the Nikkei in the last 3 years has generally followed the US dollar : Yen rate. In this instanc,e the rate is rising as expected, implying a stronger dollar - and this has usually been BEARISH FOR GOLD!

Gold and silver at key points on bearish heads and shoulders formations 2013-10-15 0251 BST

Well, there has been some further progress in the bearish case for gold and silver last Friday and this Monday.

I have already noted the head and shoulders formations in gold and silver:

http://1000gold.blogspot.co.uk/2013/10/head-and-shoulders-in-silver-hits.html

http://1000gold.blogspot.co.uk/2013/10/more-deterioration-in-gold-chart-and.html

The silver chart has not moved much on Monday but is basically a tiny fraction (about 20 cents) above the neckline of the head and shoulders. The potential target for a downmove is a $15.59 silver price. The only redeeming feature is that the neckline is prior support but then these necklines are always prior support!. We need a bounce at this support just below $21.00, otherwise it is look out below!:


The gold chart also has a nasty head and shoulders. Two possible necklines. The first (small dots) has already broken down. The second (heavier dashes) has breached to the downside and back-tested as I write on the Monday rise and capping of the price at around $1290. The target is $1117:


This would give the gold:silver ratio increasing to a target of 71.6 and the expected underperformance of silver relative to gold on a price smash.

Note the multiple failues in gold to hold onto any kind of uptrend slope, with support becoming resistance on many occasions. Also, gold is threatening to breach 1272 horizontal support from over 2 months ago:





 


Wedge formations on recent rallies in S&P500 2013-10-15

Here are two wedge formations on the S&P500 chart. One might be bullish, the other, larger one might be bearish.

It will be instructive if the price action unfolds as on the first chart and the S&P tops at a lower high, because the large red downtrend pitchfork might come into play, at least for a short while. As of the construction of this chart, the S&P was at prior support and due for a bounce!:


 
However, there is a larger pattern, a rising wedge, which would allow for another new all-time high. In the end, rising wedges are often, though not always bearish:
 

Since I did these charts, the S&P500 has had a sharp rally, because it was due for a bounce. Did it get past 1709 to stay with thin the first wedge and the red pitchfork? Well, 1711 is not conclusive yet, because 1709 was my target just by estimation. It's close, so see if it moves up or down from here. If the market continues up, it would have to top near to 1750 to stay within the larger rising wedge.

Saturday, 12 October 2013

Could the Dow:Gold ratio go close to zero? 2013-10-13

The answer is NOT RIGHT NOW! However, this article is looking much further out, maybe 5 to 10 years, perhaps?

Imagine if hyperinflation happens in the US and/or other countries.

Does the stock market go up a lot in nominal terms? [Yes].
Does the stock market keep up with gold? [No.]
Does the stock market protect your wealth? [No.]

For explanation, please see below:

The Dow: gold ratio has varied from 43:1 to 1:1 in the last 85 years but has become increasingly unstable and has made a huge megaphone pattern. I suggested that this megaphone was an indication and a consequence of the increasing confusion of price and value under a fiat monetary system since the Federal Reserve was created in 1913-1914. The instability began in the 1920s and the first overshoot forming the first peak of the megaphone pattern happened at the stock market peak in 1929.


The previous history of the Dow:gold ratio on the Gold Standard (or bimetallism with gold and silver money) in the period 1800-1913 was in a gentle uptrend with various recessions and 'panics' which caused relatively modest fluctuations compared with those in the 20th Century under varioous bastardisations of the gold standard and irredeemable fiat monetary systems.

I suggested that the pattern looks like a positive feedback oscillation which would catastophically fail as the Tacoma Narrows bridge failed in its resonant oscillation some decades ago.

In 2008, I suggested that a breakdown of the megaphone pattern, which could occur if Dow:Gold went below about 0.7 might lead on a log chart to a ratio of 1:88 (or 0.01136:1). That would be on a measured move of a factor of 61 (43/0.7) equal to the difference between the 43 intersection of the upper line and the 0.7 intersection of the lower line. 0.7/61 is about 1/88th.)

It seems outrageous that an ounce of gold might be worth 88 units of the Dow Jones Industrial Average but I postulated that it might occur in a hyperinflation.

Well I have succeeded in getting some stock market figures for the German Weimar hyperinflation, comparing the currency value and price of gold with the stock market index in Germany for 1914 and November 1923, the latter date when the hyperinflation reached its peak.

The stocks:gold price ratio went from 1.448 to 0.0000003091. Yes, that's right, from 1.4 in 1914 to 3 times 10 to the power of minus seven in November 1923!

 Year     German stock market      Gold price in Reichsmarks        Ratio
1914                 126                                   87                          1.448
1923           26,890,000                  87,000,000,000,000       0.0000003091

I obtained the German stock market figures from a fascinating timeline at :
http://www.nowandfutures.com/us_weimar.html

So basically, the stock market:gold ratio went to zero for all intents and purposes, even though the stock market went up by a factor of 212,000x.

Unfortunately, the currency fell by a factor of 1 trillion against the dollar and therefore by a factor of 1 trillion against gold, since gold was fixed against the US dollar at $20.67 per ounce (the Mark went from 4.2 to the dollar to 4.2 trillion to the dollar). The change in the stocks:gold ration was a factor of about 4.6 million, i.e. gold moved up 4.6 million times as much as German stocks!

So under a US dollar hyperinflation, my target of 0.01136:1 for the Dow:gold ratio could be very conservative!

[Chart courtesy of Nick Laird of www.Sharelynx.com, to whom I wrote for permission to use it in 2008 and received a positive reply. Thanks Nick for a great website.]

My previous articles on this topic are here:

http://1000gold.blogspot.co.uk/2008/06/mega-move-from-dowgold-megaphone-2008.html

http://1000gold.blogspot.co.uk/2008/06/megaphone-top-in-dowgold-ratio-2008-06.html

http://1000gold.blogspot.co.uk/2008/04/chart-hints-at-financial-disintegration.html

Happy reading!


Head and shoulders in silver hits the neckline. 2013-10-13

The Head and Shoulders in silver has hit the necklline. now, will it break down or will it bounce from the neckline, where it has previously found support?

Bob Hoye says the sector is very oversold. I have noticed also that the GDX, GDXJ, HUI and XAU have all made lower lows and have broken the higher highs and higher lows of the recent rally. All bearish action. Gold's head and shoulders is breaking down, especially since Fridays downside action and silver's looks like this:


A breakdown from the neckline, currenly at $21 and a measure move of $25.12-$19.85 = $5.27 (the height of the head and shoulders) would give a target of $15.73 for silver.

I already wrote that the target for the head and shoulders in gold could be about $1180, the same as the 28th June low.

Looking at the silver chart, there have been 4 bounces along the red line and a couple a little above it early on in this rally. The price did bonce on Friday and did not end at the low so it is a slightly hammer shaped candle, though not a convincing hammer candle. We need to see what happens over the next couple of trading days early in this next week to get an idea of whether we have an overslld bounce or whether we are going to get a H&S breakdown to take this bear market to new lows.

It's interesting but gold and silver both have shallo uptrend channels from the 28 June lows that have multiple supports a long the channel floor (like the red line above) if you ignore the domed move in the middle which was a breakout from the channel and a move back into it. That might mean that we might not get head and shoulders breakdowns but just a shallow and gradual uptrend (which accelerated too quickly in August and has not returned to a more 'sensible' uptrend.)

s

Wednesday, 9 October 2013

More deterioration in gold chart and dollar then starts to rally 203-10-10 0357 BST.

The gold chart is looking quite poorly as of now and just at the most inconvenient moment for gold bulls the US dollar starts to rally.

Note the thick upsloping black key pivot line on the chart below, where gold's behaviour changed from having bullish reverse heads and shoulder to bearish heads and shoulders.

The blue line parallel to this was support that held on the August correction at point (1) but gave away in this correction at point (2). Clearly the uptrend was broken there. Worse is that there was a backtest of this blue line and it became resistance:

 
As I mentioned, there was a backtest of this blue line and it became resistance. Live chart as of 04:00 today Support became resistance at point (3):
 
 
Almost the entire uptrend recover rally in gold is now looking like a large bearish head and shoulders formation:
 
 
and the entire recovery rally in silver could also be making a large bearish head and shoulders formation:
 
 
 
 

Monday, 7 October 2013

Head and shoulders in gold and gold at Point and Figure strong resistance. Posted 2013-10-07 1808 BST

Bearish Head and shoulders in gold with the head at $1434, target is about $1180, same as the 28th June low:




Gold at Point and Figure strong resistanc., courtesy of stockcharts.com free charting gallery Vew which is an excellent service:

http://stockcharts.com/freecharts/gallery.html?s=%24GOLD

As I commented on kereport.com just now:

It’s THE THIN RED LINE (or maybe the thick red line).
Point and Figure chart (very old fashioned, traditional type). Point at it and then go figure!
It shows the top at $1800 in September 2012 and the subsequent bear market in gold.


The price is now completely capped by a 45 degree downtrend line and has been since lkast August 2013 (about 5-6 weeks) since price had a high at $1434. Gold is so clearly AT KEY RESISTACE on thisa line and the level or the resistance is falling.
Either it’s going down or it’s going up, folks! ;-)

I would think that to break out above this line would be VERY BULLISH, if it happens. Of course, it has to happen sometime because eventually this line will cross zero.

$1330 is needed to breach the line, $1340 to break above it.






Charting maniac! Some charts of the recent action in gold since August 2013. Posted 2013-10-07

OK, I am going to add a chart here and add some more later if my computer and blogger will let me.

Here is the main one for the weekend just gone. There are some nasty head and shoulders patterns. You may notice a bigger H&S that I have not marked here. It will be on the next posting:

Tuesday, 10 September 2013

Nikkei roars, gold slumps. 2013-09-10

Well, as has been the case fotr the last year, gold in US Dollars and the Nikkei 225 stock index in Japan have been trading approximately opposite to each other.

I am wondering: the catalyst for the start of gold bear market seems to have been the rise in the Japanese Nikkei 225 stpck market which had major lows in 2011, initially in the wake of the earthquake and tsunami.

Then in late 2012, on Abenomics, the Nikkei had a big breakout, more or less as gold broke down September 2012. This continued and the Nikkei spiked up more or less as gold spiked down to its lows is mid-2013.

The recent rally in gold has been somewhat in line with a correction in the Nikkei and now gold is in a downtrend again as the Nikkei took off last week.

The Nikkei more or less is merely a reflection of the US Dollar : Japanese Yen rate. Nikkei up means stronger dollar means gold down.

It’s odd, absolutely not a completely inverse (-100%) correlation of the Nikkei to gold but the major moves have been opposite.

My potetial 12,054 possible target fot eh Nikkei on the basis of the upsloping bearish head and shulders mentioned previously has not been realised. It was good for a tradeable downmove a couple of times but the main downmove has not occurred. Instead, the Nikkei ground sideways to up. The chart formation in hindsight formed what looked like a bullish falling wedge and there has been a big snapbak rally. Meanwhile, during this Nikkei rally, guess what? Gold has resumed its old downtrend slope from earlier in the year (but from a higher level).


Wednesday, 28 August 2013

Can you see and heads and shoulders on this chart? 2013-08-28

Here is an exercise. I looked at the 240 minute candlestick gold chart and turned my computer upside down. Here is the equivalent (no need to turn your computer upside down; I inverted the chart already).

Now see if you can see any head and shoulders formations. Are there ten or twenty?

 
[Update: Now, is this not ironic? This is almost exaxctly the time when the gold chart stopped showing reverse heads and shoulders and changed behaviour to form a large bearish head and shoulders that looks like the above figure, without being inverted!]

Similarities between S&P500 in 2013 and silver in 2011 are no longer really in force - 2013-08-28

In a previous article, I noted similarities between trading in the S&P500 in 2012-2013 and silver from early 2011 as it went on its run up to $50.

http://1000gold.blogspot.com/2013/07/uncanny-similarities-between-s-500-in.html

Those similarites are no longer really in force, unless one views the 1687 peak on the S&P500 in May 2013 as being parallel to the $49.75 top in silver in May 2011.

However, the S&P has now made a higher high on the bounce at 1705 or so and silver made a bounce to $44 after its $50 spike peak.

Interestingly, the May 2013 peak in the S&P500 was a spike high and the new high is a rolling top. The May 2011 peak in silver was a spike top and the subseuqnt bu lower high was a rolling top. So the S&P has exceeded its spike high, unlike silver.

Initially, I was looking at the May 2013 peak in the S&P at 1687 to be parallel to the $31.25 peak in silver at the end of 2010 and the S&P correction to be perhaps like silver's correction to $26.30 or so in January 2011. That would have given the possibility of a massive further run on the S&P500 to around 2200-2400 based on silver's rally from its $26 corrction low to the $50 top, in a power uptrend formation.

The S&P is now looking more like a different kind of formation. In fact, the domed secondary new high at 1705 this month is more like the formaton of a three peaks and a domed house formation that started last year. If this formation is valid, then the S&P500 could go back down to 1039. In fact, gold and silver showed similar patterns in 2010-2012:

http://1000gold.blogspot.co.uk/2013/04/chart-patterns-in-gold-and-silver-h-3.html

Here is the S&P chart and a generic 3 peaks and a domed house diagram:







Wednesday, 21 August 2013

Silver changed from trading opposite to the US stock market to trading in lock step today: 2013-08-21

I noted that silver has gone from trading opposite to the US stock market to trading in lock step with it over the last couple of days, on the eve of the release of the Fed's FOMC Minutes today. The chart shows silver and the S&P500:

 

 

Tuesday, 20 August 2013

As warned on this blog a time ago and again yesterday, the Nikkei 225 has broken to the downside today:

Monday, 19 August 2013

Fascinating setup in the USD-JPY (dollar-yen) and the Nikkei 225 . Potential targets 96.360 and 12054 but indecision remains.

There is currently a fascinating potentially bearish setup in the USD-JPY (dollar-yen) and the Nikkei 225.

[As I mentioned in a previous post:

"Interestingly, both the Japanese Nikkei 225 and the US dollar / Japanese Yen exchange rate (USD/JPY) have similar head and shoulders that have broken down and are being back-tested at the neckline. The Nikkei and USD/JPY charts are practically identical: see some charts in an earlier post. USD/JPY goes down (Japanese Yen strengthens) and Nikkei goes down. I would love to have a figure for the correlation but it looks like it might be 95%!

As mentioned before, the ratio between the Nikkei (measured in JPY) and the 2x bearish Yen ETF (YCS) has been close to constant for the last 3 years. Type $NIKK:YCS into www.stockcharts.com gallery view and see!"]

Anyway, these heads and shoulders on the two charts continue to be tested from the underside. Also, the chart patterns are coiling into the tip of wedge patterns between uptrend and downtrend channels and some uptrending lines have failed. The heads and shoulders are quite dominating looking patterns though and have formed since the Nikkei ended its correction after its crash from the nearly 16,000 high in May.

Note that the downside targets for both are quite close to the late May / early June lows:


The prices are just above some horizontal resistance at present but there are fairly strong downtrends also in play capping the rallies. The upward sloping red lines in each case form the necklines of head and shoulders - these are also capping the rallies at the moment and lead to potential targets are 93.630 for the USDJPY and 12054 for the Nikkei or thereabouts if they are not broken again to the upside!

I have drawn on many more charts but I am getting goggle eyed with them and quite confused. I can't remember if I posted any earlier, perhaps just a couple of daily charts.

Here is an older charts howing the Nikkei H&S more clearly. There has been some trading since it was drawn:

 
... but not much to change the tone:, except that another, smaller right shoulder has formed (see daily chart below), which has not broken down and the price is above a support line which is at 13,500:
 
 
So the fates of the Nikkei and the Yen are not yet decided!
 
As of right now, the S&P 500 and Dow 30 Industrials have not really bounced or continued their downward move - we have Doji candlesticks on the charts and gold and silver have moved down a bit today but not much.

Saturday, 17 August 2013

Peak technology? My comment for Korelin Economics Report today 2013-08-17

I commented on Al Korelin's weekend show where there was a brief discussion on the fall in the standard of living inthe Western World.

http://www.kereport.com/2013/08/17/political-discussions-economic-commentary-jim-widdifield-man-making-difference/

Rick Ackerman is sounding like Harry S Dent on the demographic makeup and falling standard of living in the USA, Europe and Japan.
 
Rick is right, I think. The same applies to Europe in a big way, including the UK. Baby boomers have to work till they're 90 as Rick says bit will there be any jobs for them? I think not, at least at any wage level people would find acceptable today.

The standard of living in the West will fall in a way that is shocking. Jim Willie describes it as the de-industrialised 3rd world (like Detroit), a very prescient comment. I look to the possibility of a 10 fold movement in Western currencies versus Eastern Asian currencies at some time, to re-balance the world’s trade. Think of the dollar as 50 Philippines Pesos moving down to five. (In 1903, A Philippines Paso was a dollar sized silver coin, struck on dollar blanks at the Denver Mint, so they were 1:1 in 1903. These movements can happen.)

Personally, I feel that we may have reached Peak Healthcare and Peak Technology.

Just from the memory and hard disk size of computers on sale in the last 4 years, the increase has slowed. Moore's law is failing I think, no longer doubling every 1.5-2 years as has been true since 1990. Micro technology and nanotechnology have been great and made many of the wonderful gizmos that Rick has mentioned but it will reach important limits determined by physics in its current form. People were talking of optical computers as the next stage in the 1980s at British companies where I was involved but these have not materialised.

I personally think that 'ordinary' or macro technology actually peaked 40 years ago partly because America reached peak oil in 1970 (and went off the gold standard). Think of transport as the best example.

Macro technology has not progressed in any meaningful way since 1970. The USA went to the moon from 1969-72; never been there since. Space Shuttle was a failure and is retired.

In 1977, you could go from London to NYC in 3 hours at Mach 2.0 in Concorde for 700 a GBP fare. Concorde is not retired after one accident. Now you go at less than Mach 1.0. Supersonic public flight is over.

In astronomy and technology books in the 1970s, you had illustrations of moon bases, trips to Mars and hypersonic international public transport, expected to be in place by 1985-2000. None have been achieved.

I visited Wright-Patterson Air Force Base Museum in 1983 on a trip to the USA. I saw the YF-12, built in 1962, the prototype of the amazing Lockheed SR71 Blackbird spyplane. A Mach 3 plane from 1962! This aircraft is also retired, as far as we know.

The museum also had the Valkyrie, the other most awesome plane I have ever seen. It looked like a parked white swan. A Mach 3 bomber from 1966. We don't have one of those in 2013!

In all these ways, we have gone backwards. Most technology progress since then has been in fuel saving technology, because we reached peak energy a while ago. Micro and nanotechnology is also a sympton of this because these new gizmos, iPhones etc are very small and do a lot, for the energy they take to make and use.

If we get to the end of Moore's law, then we are really in trouble, because both macro and micro technology will have peaked, just as we are at the top of a gigantic credit bubble.

Oh, I forgot. We were on the verge of nuclear fusion power 40 years ago. We still are. No fusion power stations in sight! We are about as far from that as we were in 1973.

I would say ignore all the BS that is talked about the singularity and how we are at the edge of some kind of transformation in our lives due to advancing technology and the continuation of Moore's law. Forget it. There will be advances in this and that but we will need a fundamental new advance to move this forward. For a start, we need to make nuclear fusion power work soon or we are screwed.

Revision Monday 19 August 2pm BST:

You know, I think I overdosed on doom and gloom just there. I went out for a lovely walk on Sunday afternoon (yesterday) after a delicious dinner at a good friend's house. We went to Wicksteed Park in Kettering, Northamptonshire. The sun was out and fluffy clouds were in the sky. There must have been someone who had an accident or was taken ill as we were there, because the Nothamptonshire and Warwickshire yellow helicopter ambulance circled and landed, much to everyone's surprise. It was so cool to see the thing take off and land at such close range. In the end, a 4-wheeled ambulance (without wings) carried the patient away and the helicopter left with its paramedics and doctor on board and no patient. Many people took pictures and waved as they left. (I didn't have my camera of course! Duh!). The yellow whirlybird took a look at us and ascended slightly in reverse into the blue sky, lifted by an invisible force . Absolutely fantastic. Life is for living, isn't it?
 

Friday, 16 August 2013

Reverse Heads and Shoulders abundant in gold. 2013-08-16

Right, so on Friday I thought there might be a pullback in gold and a bounce in the stock markets.

However, the bounces in the conventional US stock markets were anaemic to say the least and gold was fairly strong and actually closed a little higher, perhaps turning its latest resistance line into support.

Stock markets: Dow 30 and S&P 500:
 



Gold has an abundance of reverse head and shoulders formations. I have marked in 11 of them:
  

Note the orange neckline of number 8. The neckline has broken out to the upside and has backtested it as support just before the upmove at the end of the week.

Thursday, 15 August 2013

Gold over $1360, silver at $23 on fall in US dollar.

Following the fall in the US stock markets on Thursday, we see that gold took an increase in price and silver continued to spike higher.

Gold has now exceeded its earlier post-crash high of $1350 by approximately $18 as I write, presently at a price of $1367.50 in 'overnight 'Asian trading. (Of course, it is actually daytime is Asia!)

The dollar had a fairly bad day, falling from 93.9 to 92.6 cents against the Swiss Franc. The US dollar index or USDX is at 81.17, lower down from 81.55 overnight and its high today which was around 81.90. The Euro rallied from $1.3220 to 1.3351, more than a cent.

The Nikkei continues to trade paralel to the Dollar/Yen rate as usual, fairly flat on Thursday night at 13,637 on the Nikkei and 97.43 Yen to the US dollar.

I nailed the downmove in the Dow and S&P500 in last night's post! ;-) 2013-08-15 1527 BST UK Time

This is my attempted learning experience in calling directions and targets in gold and the stock markets. I had some success today.

In last night's post, I forecast trouble for the Dow and S&P 500 coming imminently.

Well, I switched on today (in the afternoon - dear me, I am lazy) and there has been a decent fall in both indices, with both reaching or almost reaching their initial targets. The following chart shows the potential downside targets:


The first target zone on the Dow has already been reached at the red circle on the upsloping parallel. There is a second potential target at the lower parallel, which is drawn from the June low.

For the S&P, I drew in a red downtrend pitchfork and the price has nearly reached its lower parallel (top red circle). There is also a possibility of a target on a slightly lower upsloping parallel (middle circle), which soon meets the new downtrend channel. There is also a lower target on the bottom parallel (bottom red circle) which comes from the June low.

There is a possibility of a bounce from the first target in each case, which is close to where we are as I took the screen shot a few minutes ago.

A breakdown from the red downsloping trend channel in the S&P would be pretty bearish.

I could have drawn a similar downtrend channel on the Dow chart but the target for that would be somewhere near the one I have drawn anyway.

I have done this now. Interestingly the uptrend parallels and downtrend parallels meet at the point where the price has stopped. I think such a location marks a good target for a move:


It will be interesting to see if prices bounce from the bases of the red downtrends now. Perhaps there could be a modest bounce to the red centre lines and a further fall to the lower targets shown in the first chart?

Interestingly, both the Japanese Nikkei 225 and the US dollar / Japanese Yen exchange rate (USD/JPY) have similar head and shoulders that have broken down and are being back-tested at the neckline. The Nikkei and USD/JPY charts are practically identical: see some charts in an earlier post. USD/JPY goes down (Japanese Yen strengthens) and Nikkei goes down. I would love to have a figure for the correlation but it looks like it might be 95%!

As mentioned before, the ratio between the Nikkei (measured in JPY) and the 2x bearish Yen ETF (YCS) has been close to constant for the last 3 years. Type $NIKK:YCS into www.stockcharts.com gallery view and see!

By the way, gold is doing nothing interesting today, nor silver. They have had a nice run up and maybe they need a rest.


Wednesday, 14 August 2013

Ugly charts in Dow 30 and S&P 500? 2013-08-15

Fairly ugly charts are emerging in the Dow and the S&P500. Dow looks worse right now because supports from July appear to have broken down. Both have head and shoulders formations.

Dow 30:


S&P 500:


The Head and Shoulders on the S&P500 has a neckline at 1680-1687, near the prior high of 1687 (orange line). Price has broken down through that line just now. Dow does not look better inthat respect.

Monday, 12 August 2013

This is satire. In no way is it meant to represent the truth! Queen visited BoE Gold vault. 2013-08-12

 
This is satire. In no way is it meant to represent the truth! The Queen visited the BoE Gold vault some time ago.
 
If anyone knows the British satirical magazine Private Eye, these are the kind of things that tend to go on the cover of it, with speech bubbles. Here we go:
 
 

Gold in green zone. Will pullback happen to test uptrend soon? 2013-08-12

There have been some really great calls from Rick Ackerman and Doc Richard Postma on this market over the past few months; absolutely top class and objective. They are to be found on the Al Korelin Economics Report www.kereport.com!

Don't give up resources as your foundation for your show Al. You have the right people and the right subject matter right now!

Guess what? Gold has gone over 1000 Euros today, at 1004 EUR. From an EU perspective (German, say) that is probably an important psychological level.

Gold is breaking out of the downtrend channel nicely. I like Rick’s $1428.80 target. It is practically equal to the important top in gold in late 2010. I never liked that top. It was a quadruple top with the last high of the four being lower. It looked like a rollover or some kind of distribution but the correction went to only $1309 before going above $1500 then to $1920. It was all a bit too much too soon and with 20:20 hindsight, it was indeed that!

I wonder if gold will take a pullback soon. This is a strong upmove. A pullback would confound some people and ditch a few of the momentum crowd who might be piling on here. Maybe abut a $25 pullback now or from a slightly higher level of about $1350 or $1360 would look neat. Gold seems to be slicing through resistance at the moment, a little fast maybe.

There is a lovely new uptrend channel forming that is parallel to the move from the $1180 low:


Ranting Andy Hoffman is also worth a listen: "Ranting Andy Hoffman - Back from China" on www.financialservivalnetwork.com today.

Here is my green zone chart: