It also looks better than stocks (GLD priced in SPY):
http://stockcharts.com/h-sc/ui?s=GLD:SPY&p=W&yr=2&mn=11&dy=28&id=p14442550972&a=389025806

It seems to me that when everyone abandons an asset and don’t see any driver for for that asset class, that this is precisely when there can be an unique upside surprise, especially when technicals indicate a strong likelihood of something happening. This usually accelerates the pop up on the very front end due to a short squeeze as Rick so often correctly points out. During a short squeeze the news and fundamentals aren’t as big of a driver as the need to unwind positions before their neighbor does, so the squeeze itself becomes the driver.

There have been a ton of times over the last few years where there were huge fundamental drivers that should have moved Gold up and nothing happened, or gold actually fell, and many sat around scratching their heads in confusion. As has been mentioned on this show by most of the commentators, the fundamentals don’t seem to be affecting gold. So, this is inversely true that sometimes an asset or security will take off and there doesn’t seem to be a good fundamental reason why. Sure, people and news anchors go sifting over news looking for a scapegoat that nobody saw coming as their alibi, but the Global Marketplace doesn’t care with Goldman or JPMorgan or CNBC thinks should happen.

Case in point. A month ago in early-mid January, when people were getting a little bearish due to the dip in Gold , there were a few people (including me) that technically felt gold should break the 1280 level, but there was no real reason for it other than technical analysis, and the sentiment wasn’t that hot. Then from out of nowhere, the Swiss announced they were going to unpeg their currency from the Euro, and Canada and Australia announced surprise rate cuts. Everyone that was short ducked for cover, there was a short squeeze, and most of the people that track gold missed the trade. Then a week later when everyone got bullish, Gold topped and a number of technical traders called for a correction even in the face of all the Europe nonsense. People didn’t see gold falling much, but when it fell on the very day of the news that most thought would be bullish for the metals, and has come all the way down to a precise target on Friday and today, “nobody saw that move down coming” and they got confused.

In effect, this market has been ignoring the fundamentals in the general stock market indexes (DOW, NASDAQ, and S&P) for years , and that is also true for many commodities. This puts the game in the hands of technical analysis and sentiment indicators. Technically gold is due to bottom very soon and then bounce up, and with sentiment slipping again and becoming bearish, it is the perfect time to put in the low and then pop “surprising” people once again.

At this point there is not a fundamental driver for the bounce up, but it is, nonetheless, uncanny how these new events seem to come from out of nowhere, that don’t always even add up, but they become the justification for the technical move that was expected. So, I don’t think we will see the driver until it is too late and the move has been made.

The jury is still out on whether we bottomed on Friday (today Tues had gold trading right back down to the exact same range as Friday again, but then bounced again for the second time from around the 1232 level). Tomorrow (Wed) could be a contender if we haven’t already seen it. The bottom rarely comes out and rings a bell to let you know it just happened, but it seems like we are in the neighborhood.

I do agree with Chris’s comments that when the main stream media and retail investors flock back to Gold, that it will be a “safer” time to enter the space and “limit losses”, but it will also limit gains. 15-30% of the move up will have happened by that point, and the remainder will be fighting to get orders filled at higher and higher prices once it is self evident.

I don’t think buying gold/silver or select mining companies around these levels is “Being the Hero” and, while I normally agree with the majority of what Chris T. has to talk about, I disagree that people risk losing 80-90% of their money, like they would have in the fall from 1900 gold and inflated valuations on the miners with terrible cost controls in 2011. Today, the miners have already had the huge 80-90% haircut, have reduced capital expenditures, worked for over 3 years on containing cost, and Gold has fallen quite a bit from its high.

We are at an inflection point where gold could reverse the 3 1/2 year Bear market soon if the leg up can take out 1347 and specifically 1382. I am starting to have my doubts as days keep on ticking by, and it seems the move up will still happen very soon, but it will likely be more muted after 1250-1240 failed to hold.

This means that is becoming more likely that we pop up briefly for 1-2 weeks (for no reason other than just technical) and then we grind down into the late spring/early summer and put in the final bottom along with the rest of the commodity sector.

Arthur Schopenhauer, the German philosopher pointed out that when any great idea comes to fruition it goes through 3 stages:
1) The idea is ridiculed or scoffed at
2) Next the idea is strongly opposed, and sometimes violently opposed
3) The idea suddenly becomes self-evident

This is how most of the technically forecast models are received by people that feel their opinions or fundamentals are challenged by the analysis. If they feel the world is in tension and gold should go up, but the technicals point to downside pressure. They laugh, they scoff, the get angry, they pound on the table, and then when the move down happens they are so “confused” or there must be manipulation. Then when they don’t see any hope for gold and get bearish or jaded, but things appear technically like they should go up, they laugh at this, they scoff at the “gold bug” that was a “gold bear” in the prior downward call, they get angry at the message (or more often the messenger and they miss the message), and then when gold goes up they are “confused” but there is never manipulation on the way up : – ) ….just some news event that people grasp for to look for the meaning of the move.

They miss the point the whole way along, and when they do enter the marketplace, it is much later in the cycle and while definitely safer, it is less lucrative. It does really depend on someone’s time horizons and particular criteria for investing. Buying when there is doubt or blood in the streets, when nobody cares about the investment is called buying low. When mainstreet retail investors flock into an asset class, that is called sell into the strength or “selling high”. If you wait for everyone and their cab driver to get positive on gold again (you’re a little late to the party at that point). That’s called buying $45-$49 silver in 2011. Woops!

This week should end on a more frisky note than the last 2 days of doldrums.

Cory, when msn catches on, will be the time to EXIT…………

Thanks Matthew!

Yep. I still see 186 and then 181 as two support areas for HUI which would be back-testing that trend line. It is bullish that it broke above the trend line recently, and lends more credence to a nice rebound up for a week or two when gold bounces.

Those two tickers look attractive at these levels. Thanks CT! Will check ’em out.

owning cyber security stocks is like working for the govt……………jmho………….