T3 Live

Golds Big Back-test?


Yesterday many signal reversal bars were left on the precious metals miners.

There were Gilligan buy signals all around.

PAAS and GDXJ both left Gilligans.

This is a strategy I created to help define Selling Climaxes. It is a gap to a new 60 day low with a close at/near session highs.

Follow through is key.

A GLD weekly from the September 2011 all-time high shows the rally from last December’s 100 low to the early July high at 131.

The rally was precisely 270 degrees. In 7 months. This is the 7th week from the last pivot high in GLD.

The promise of a full 360 degree advance would have been satisfied at 144.

Instead, GLD got obliterated to 107 on the heels of a strong dollar.

In the process sentiment has become more bearish than at last years lows courtesy of the largest consecutive 6 week plumb line drop since the 2011 high.

If the above weekly were an intraday 10 min chart, it would be easy to visualize that a bullish back-test of the breakout level was on the table.  However, the carnage over the previous 6 weeks into year end has seen gold and miners thrown out the window as money managers don’t want to show it on their books.

Those who loved gold over 1200 hate it below 1200.

But has the narrative regarding owning gold really changed?

Is the dollar as sound as it seems or is it the biggest short in the world as offered in recent reports?

Look at a really big picture chart of the dollar and tell me what the trend is?

On the Square of 9 Wheel, 107 (GLD) is square last week. So last week may have satisfied a time/price square-out or balance point at the inflection point of a back-test of the breakout point.

A daily gold from last December shows the last 6 weeks plumb line drop following the election after a Bull Trap on a short-lived spike over a right shoulder.

A few things to consider:

1140 is straight across and opposite yesterday, December 20,  at the same time a Head & Shoulders topping pattern has been satisfied.

Note the undercut of a Live Angle connecting bottoms from last spring.

The presumption is gold must recapture this line around 1165 to be in a strong position.

If gold has traced out a major higher low (like the pullback in the SPX in 2010?) then it should shine in 2017.

Is there anyone looking for gold and the miners to have a better 2017 than the first half of 2016?

I doubt it, but that’s how markets work.

Line drive moves require a back-test to establish a base.

An advance in gold miners now will be met with distrust. Rallies will be sold which should perpetuate a wall of worry bull run …if an advance starts.

The market has done its job of discrediting the breakout in early 2016.

See Square of 9 here showing the 270 degree advance in GLD from 100 to 131 in 2016 and how last week’s 107 presumed back-test low is square mid-December.

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