If The Pullback In Metals Is Now Here’s The Levels To Watch
Jordan Roy-Byrne, Founder of The Daily Gold shares the levels we should be watching as metals investors if the pullback we have all been waiting for is here. As long as gold and stocks limit the downside the bullish argument remains.
Click here to visit Jordan’s site for more metals commentary.
Investing is alway about measuring risk versus reward. Currently, the risk to investors is a correction over the next couple of months followed by a rally into year end which culminates in a total return which is LESS than where you are today………..per the above article…
SLV:GLD ratio daily chart refuses to break down, at least so far today. It’s still maintaining cloud support, which is bullish.
OTOH, cycle theory is saying you would be an absolute sucker to buy at these levels as an intermediate correction is already overdue.
Compare the current move to what we had in 2002:
http://schrts.co/PGKUXerK
I am going to play the devil’s advocate. Cycle theory is based on time between troughs, not price per se. For simplicity, lets just say daily cycles are about 25-30 days trough to trough and weekly (aka intermediate cycles) are generally about 25-30 weeks trough to trough.
In 2002, it appears to me that first intermediate cycle lasted 36 weeks, with a peak coming on week 28. A long cycle for sure, but within normal limits.
Arguably we just got a similar peak last week, on week 27. A swing high this late in the cycle almost always marks the intermediate high. Could $gold run higher yet, and then simply correct for fewer weeks? I suppose, but cycle theory suggests its a low probability bet, and even if gold manages to make a new high, it will likely come right back down to today’s level or lower at the next weekly cycle low. Put another way, the likelihood that we get some sort of massive breakout above last weeks peak, and never come back to today’s level on the next correction, is extremely low.
It is also notable that the intermediate cycle immediately after the one shown on your chart peaked on week 27 and made the low on week 36, so 9 weeks of corrective action. That’s pretty amazing.
If we were to also have a similar correction (8-9 weeks) that would mean you should expect the intermediate cycle low in gold to occur in the 3rd or 4th full week in April.
The miners just aren’t acting like they’re going to fall very much and the weekly MACD is a long way from selling. It is possible that the miners go mostly sideways for the period you mentioned while gold corrects, but I still think the uptrend is more likely to extend. We’ll probably know by the end of next week which scenario it will be.
On ISVLF, it looks like a beautiful bull flag has formed. Today it bounced of the 38.2% fibanacci retracement level. Seems like it could easily go down to the 50% which is around $0.225 with strong support at $0.22. There is also the potential for an inverse head and shoulder forming with this downstroke being the start of the right shoulder. If that plays out, it looks like it could be a few more weaks before it heads up again. Of course all of this is IMHO.
ISVLF has significant speedline support at .23:
http://schrts.co/EWMczEYE
Nice! It seems like the miners are holding up pretty well despite gold weakening. Maybe a positive divergence will develop. Do you have a current weekly chart of GDX versus GLD you could share?
Notice that that support consists of two perfectly superimposed speedlines that share the same high but use different lows.
That is pretty interesting. I assume that strengthens the support at that level. Looks like it could be pretty close to turning and today just might be the short term bottom to take it up one last leg before an intermediate correction. I am not buying here, but if the last squirt higher comes, I will use it to lighten up a bit more.
I’m with you on all of that. 🧐
Doc could be right…………………down we go……….. again.
Then we get the doldrums……..those are fun.
That does not bode well for new money moving into miners.
Tomorrow is friday tho, and miners often change direction on fridays.
Doc called for a decline into the spring over a month ago —just before gold gained $70 and the miners added 20%. And that call came a month after another top-call.
It’s been a long slog in the precious metals miners for those who aren’t good at catching short-term swings.
But my experience is that when most are beyond sceptical and bored out of their gourds, that’s when a big move catches most surprised and unprepared. E.g. oil in the years before its 2014 crash.
I posted this for the Irish……while we wait…..and out of our gourds……. 🙂
Jordan, focus on things that dont rely on metal prices.
Wouldnt that be oil?
IPT is at Fibonacci fan support:
http://schrts.co/euikkdcs
How did you draw that secondary fan. It doesn’t make much sense to me.
The blue lines are “speedlines” or speed resistance lines and the gray lines are the Fibonacci fan. Both tools are based on the April high and the November low so the blue obscures the gray between those points.
Got it. Thanks. USAS and Dolly Varden are looking good right not. As you mentioned previously USAS is trailing ISVLF by a little bit from a chart perspective and it looks like a good time to add to USAS. What say you?
It is not particularly strong yet but that can change very quickly so I agree that it’s a good time to add. It looks better if one is buying for a longer term hold – maybe 9 months or more in this case.
Volume looks very positive:
http://schrts.co/YbqhMrad
At the moment, it is stuck at Weinstein’s 30 week MA and the weekly oscillators look good…
http://schrts.co/yrutBTrT
Some resistance levels:
http://schrts.co/PKwtuiDb
That last chart gives me a bit of pause. Do you see it going down to test the lows are just a sideways grind for a while?
I actually think it can reach the fork resistance before going sideways/down for awhile.
The volume indicates accumulation and the accumulation/distribution line has put in a double bottom…
http://schrts.co/DtwDgQZQ
The miners have been rallying for 6 months now. No way in hell I would be adding here. Sitting tight with an established position, which is what I am willing to do, could even be considered by some as dumb.
I’m ready to give back 50% of the recent gains, but I doubt most people would be.
USAS was falling for four of the last six months and has the potential to move up even if the sector in general is in for a consolidation. It’s little bit like IPT going up 120% between 12/17 and 4/18 while its peers did no better than 10-20%.
Now if the sector is in for a “crash and burn” sort of intermediate decline, then USAS will probably not hold up. The odds of that are extremely low in my opinion.
I don’t have a clue how this will play out. I am just going by history.
As I have said, the 20 and 50 WMAs are extremely realistic and conservative targets for an intermediate correction. If gold hits $1365 or even lower, I have absolutely no idea where the miners will be.
I think IPT could easily drop to .27 or lower and still look bullish. Plus, the weekly Ichimoku cloud strongly suggests it will be May before it has a chance of breaking out above .40. Between not and then, who knows where the hell it will go.
I would love a super spike above resistance. But that is nothing but a fantasy in the short run IMO. Last week almost certainly marked the cycle high and based on history it could be 2 months before the final low is struck.
You were too bearish two months ago and maybe I am now too bullish, but I think there’s way too much strength in the market for a low to take two months.
I have a target of $2.60 on USAS. You probably think I am loco, but I think there is a good chance it will get there in my opinion.
Trust me, I don’t want another 8 weeks of selling and/or whipsaws. Who knows, maybe we get the mythical sideways consolidation and/or the final low is struck in a week or two. But like I said, that is expecting way too much and you are setting yourself up for disappointment if gold gets hammered, as it typically does.
I am dumb enough to hold through what I expect could be a very serious retracement, but I sure as hell won’t add here. That is literally textbook greed at the absolute worst time. Just do like Livermore, be right and sit tight and buy the dips (real dips). Again, could I be wrong and look like a fool tomorrow as silver shoots up $5? Sure.
Don’t get me wrong, I am not adding here. I considered it given my target, but it has run a little bit (although lagging the others) so I am just holding like you. Best to you and good luck.
Yeah I have been looking at the accumulation/distribution and the onbalance volume which both look good. The weekly is very overbought on the RSI, but the monthly is just coming out of being oversold. I have a big enough position for now so I think I will just watch for now.
SLV:GLD currently below cloud support now. We will see how it goes at the close. It’s not necessarily the end of the world, but in no way is it bullish action.
It ain’t purty no more.
Hey Spanky – How is the cloud looking after the close?
It looks like it literally closed right on the lower border, or maybe 1-2 cents below the border if you squint, after dropping below that level intraday. So IMO it still looks good/bullish. But it is hanging on by a thread IMO and just needs a push over the cliff.
Flat borders of clouds shouldn’t be easy to penetrate and break below, but it does happen on strong impulse type moves. The cloud structure for the ratio is bullish, as it has been for GDX, GLD and even SLV. But it has been acting the weakest of the bunch. Maybe that changes tomorrow and we launch to the moon in the ratio and the metals.
Thanks for the update. Tomorrow should be interesting given it is week end and month end. USAS closed at it’s high today, but volume was uninspiring. I think it could pop tomorrow, but we will see.
I am just assuming the top is in and expecting the worst. If it goes higher, hey great.
A large gap down and reversal with a positive close in the ratio would be about the weaseliest thing the banksters could do tomorrow.
OTOH, just a nice straight reaming without lube that goes lower and lower throughout the day is also a distinct possibility. What I can virtually guarantee is we won’t start the day with a gap up from the open. No way.
Oops, today was month end. We we still have week end to look forward to!
I am going to attempt to refrain from checking my account every minute and worrying. It is what it is at this point. I am confident that GDX and GLD have seen marked major lows (as I have been saying for months now. Specifically it was Nov. 30 that convinced me the bull was back.
Would it suck if my silver miners broke to new lows at this point? Absolutely, but I am fairly confident that they too have seen the worst (yes, famous last words and I probably have jinxed the sector now). I hope the correction isn’t too vicious, but who am I kidding, you have to be prepared for 50-60% correction even during a raging bull. I’ve held my miners for close to 3.5 years now and at this point I should be able to hold through any correction and just trust in my thesis. Adios for now.
Nearby supports:
http://schrts.co/GbiRImJF
What would those supports equate to for $Silver?
The 50 week MA is 15.49 and the 38.2% Fib retracement is 15.30.
Thanks.
Bear Tracks……
https://www.zerohedge.com/news/2019-02-28/sell-today-risk-vs-fomo