Monday Night Charts

Once again I had a crazy week, though I'm happy to say I'm all moved in to my new place (though unfortunately now several work weeks behind) (lesson learned: moving sucks, which is a special case of the general law, everything takes 10X longer than planned). See, I decided to make a contrarian play and buy a condo. That's what contrarian investing is all about, right? Do what seems really counter-intuitive, even retarded to common sense. Since it seems obvious to me that soon (maybe in a few weeks) there's a good chance we'll all be skinning rodents with bowie knives and looking for animal hoof prints full of rainwater to slake our dysentery-driven thirst, what could be a wiser move than buying a well-appointed condo?

Speaking of contrarian indicators, I'm really enjoying the bearishness I perceive on the metals. I saw a comment from our friend Yukon Cornelius the other day, on Turd Ferguson's site, saying, basically, that the fear and dejection even there means it's probably a good time to buy. I agree. So long as these corrections continue to go as they have the past 3 years, with no serious technical damage, they are simply wonderful trading opportunities. Look at weekly gold: i predicted last week that we'd hit $1730 (center of lower channel), which was indeed where we closed the week. Then, had I had time for my typical Sunday preview yesterday, I would've said: it can go either way here, back up or back down to either trend line, but with options expiry on Tuesday, I'm betting on down. (I really would've said that, though if gold had gone up today, I probably wouldn't have told you I was going to say that). Now a continued fall to the bottom of the channel is very likely, although it may not necessarily happen this week. Be prepared for when we get there. This week, it would be around $1630.

On the daily chart, I'm really working in some nice colors, which is something that you must admit sets me apart from others who enjoy popping off about technical analysis.

Here's the interesting thing. The 144 day moving average (pink) is at $1650. So, my best guess is we compromise between the daily and weekly charts, and go down to the purple line this week, maybe tomorrow.

The great news is that the 200 day moving average (gold) (which is nearing $1600), is now at the red dotted line. That red line has been inpenetrable support since Jan 2009. So, if that gets broken, it means something catastrophic has happened, (although the term black swan should be retired because, let's face it, with criminal nihilists like Corzine and venal incompetents like [your senator's name here] running the show, some kind of world-historical catastrophe is a virtual certainty eventually, not some six sigma event or "tail risk" that the idiot savant (idiot saquant?) economists who will have blood on their hands like to talk about. A lot of good people around the world are going to suffer immensely for what? i'll tell you what, so that a bunch of glad-handing shit-eating politicians, effete parasitic bankers, and aspergery egghead economists, simple if not soulless creeps almost to a man, can live their sick dreams.

Here's the $GOLD:$USD chart, which looks like it should bounce off 21 in time for another gold rally.

As far as silver is concerned, it stubbornly refuses to fall out of this channel (on a closing basis) that I presented after the September takedown (actually I had posted the channel months earlier).

This version of the same chart (different trend lines) also shows support at 31.5, and as I mentioned last week, very strong support at $30 (on a closing basis):

But even if it goes down to $26, I'm not worried, because it means we have a descending wedge, which is bullish, and will signify a breakout within months. There is no silver bubble, and we are trading about as low as we can go, barring a cataclysmic deflationary collapse.


Warren James said...

The silver falling wedge looks good, as does the 200 moving average for gold, ditto for the variety of colors in your charts, which does set you apart :) A bit of cheer for the precious metals investors ...

The only one who won't be happy is Wynter Benton, who expected (hoped?) silver to be trading over $45 by November 30 (link). Still room for it in the next week or so, given recent volatility (but I do wonder what the caveat or excuse will be this time).

I concur with your assessment - we are all picking up the cheque for the monetary sins of others. Thanks GM for the charts.

AG said...

Great charts as always!

Anonymous said...

Very nice, GM. I've also been struck by the bearishness on Turd's site, and have frequently found that to be a big glowing 'buy' signal (for gold, anyway). Have just started nibbling again, getting ready to get back some of this year's horrifying losses after a self-imposed two-month absence from the markets... ;-) The closer we get to the 144, the more I'll buy.

I sometimes worry that I have too much faith in the 144, but it's never let me down yet. One day I'll get burned by it, but I don't think that day's just around the corner.

Hey, I know you're really busy, but if you ever fancied turning your magic coloured line analysis to the price of Ag/Au in Euros and GBPs, then I'm sure you'd earn even more grateful fans..!

Just don't start developing a 'god complex' like certain other bloggers... ;-)

The Big Setup said...

WOW the charts couldn't be so WRONG!

Mary said...

thanks for the charts . .I love your charts :-) and comments.

GM Jenkins said...

Thanks, AG and Mary :)

BigSetup, I'm not sure what you're gettign at?

Warren, lol at Wynter Benton. Silver needs to go up 50% in 5 trading days ... good luck with that. I wonder if on Dec 1 when even the most die hard believers have to accept it's a hoax, i wonder if whoever's behind it will go ahead and do the end-of-the-episode Scooby Doo thing explaining how they pulled off such an effective hoax (at least their first time around - they had me fooled). What a lame and sorry sequel. It's like the Star

JdA - I'm glad you're back in the saddle ... the metals will offer you their forgiveness for your momentary lapse of faith, i'm sure (Luke 22:31-32)

As far as the 144 is concerned, I had the same thought. But, I felt that way back in June too when I did the thought experiment extrapolating the 144 linearly to November 21 (i.e. yesterday); that analysis suggested gold would average $1620 till then with the 144 ending up at $1600. Well I was off by $50 (although interestingly it's still moving in the same linear way, just shifted $50 up). This steady 27% increase was commented on by John Embry (he said 26%) - his point being that no real market goes up like that year after year. That was similar to what I wrote in the June 10 post that gold's ascent was a little "too perfect" for me to think a hand wasn't at work managing the ascent. So if that's true, it makes the 144 even more reliable.

GM Jenkins said...

hmm my thought about sequels above got erased somehow. But seriously how bad were those star wars prequels? the source of the intergalactic conflict turned out to be tariffs?! (Jar jar binks, a student of david ricardo, voted against it) Lol. Watching those ruined good childhood memories. it was like looking back and realizing your favorite uncle molested you.

nickt1y said...

Do charts really mean anything in a market that is manipulated by TPTB? Since they use charts does that make TA more powerful?

GM Jenkins said...

nickt1y, I think the point is that even the small silver market is still too big on a global level for even a very powerful cartel to have its way with it without recruiting unwitting helpers. And the help comes from the small and large specs who do, for better or for worse, rely a lot on TA. Then, there's the fact that TA (at least basic TA) does capture a lot of market psychology in symbolic form (but I agree, that aspect of it is less useful when criminals have their thumbs constantly on the scales)