NGD Update…

For those that are interested in the NGD trade we have our first 100% winner. This week the price action is breaking out above the double bottom hump which is the first milestone. Because the decline was so vertical the odds are high that we could see some reverse symmetry to the upside as shown by the blue arrows. A backtest to the double bottom hump would come in around the 1.30 area.

The daily chart.

Below is the long term weekly chart which shows why I decided to get positioned where I did at .74, the 2008 crash low, which may be creating a very large double bottom or trading range. Also the vertical move down made this trade attractive if the bottom did materialized we could get some nice reverse symmetry to the upside over the same area on the way down.

Late Friday Night Chart…Gold and the SPX

There is a myth shared by many in the precious metals community that in order to have a bull market the stock markets have to crash and burn. There are times when that may be true but that isn’t always the case. Many times PM complex and the stock markets can rally together for extended periods of time and then there are times when they do run inversely to each other.

To show you what I mean below is a 25 year combo chart which has the SPX on top with gold on the bottom. The white shaded areas on this combo chart show when the two are running inversely to each other. The green shaded areas shows when the two are moving in the same direction together. From the 2002 low to the 2011 bull market high in gold they both pretty much moved together. Even during the 2008 – 2009 crash in both the SPX and gold they both declined together with gold bottoming just before the SPX as shown by the blue shaded area. They both then rallied together again into golds 2011 high which began another period of inverse correlation with gold going down and the SPX going up.

That went on until December of 2015 when gold put in its bear market low while the SPX was finishing up its 2015 correction which doesn’t look like much on this chart. From that 2015 low for both the SPX and gold they both have been rallying together to this very day going on over three and a half years now. Presently there doesn’t seem anything on this combo chart to suggest the positive correlation is about to change anytime soon. Enjoy the good times as long as they last. Have a great weekend and all the best…Rambus

Precious Metals Breaking Out

This is a condensed version of Rambus Weekend Report. There are over 20 individual PM stocks individually updated in the full version.

I would like to start out this Weekend Report by looking at a long term monthly chart for the GDX. The multi year bear market actually began in September of 2011 at the head portion of the 3 1/2 year H&S top. The H&S top actually began to form in September of 2009 and ended in February of 2013 when the price action broke below the neckline. From that point the GDX declined for the next three years in its bear market so from a technical perspective the GDX ended its bear market in January of 2016 which marked its all time low.

The rally out of the 2016 low lasted seven months and ended in September of the same year. After a strong impulse move like that one looks for the price action to consolidate its gains before moving higher. There was no way to know at the time what trading range would develop and how long it will take to complete. Now in hindsight we can see the GDX built out the 2016 bullish falling wedge, that we’ve been following for well over a year, which took two years to complete from the August 2016 high to the September 2018 low. It wasn’t until the breakout above the top rail of the 2016 bullish falling wedge and the completion of the backtest two months ago in May that we had significant confirmation that the bear market that began in September of 2011 was officially over.

Now that we know the bear market is officially over depending on what matrix you want to use, calling the 2016 low the beginning of the new bull market or the completion of the backtest to the top rail of the 2016 bullish falling wedge in May of this year the completion, the bottom line is that it’s time to start thinking in bull market terms leaving the bear market logic behind.

After five months of the breaking out and backtesting process out of the way the GDX has ¬†created a new high this month keeping the new uptrend intact. So if we are going to start playing by bull market rules we can now do a measured move to see how high the power of the 2016 bullish falling wedge can take the GDX. The measured move I’m showing on this weekly chart is called an impulse measured move which measures each half of the impulse move with the 2016 falling wedge being the halfway pattern. The first two blue arrows measure the first impulse leg up from the 2016 low to the August 2016 high. The second set of blue arrows on the right side of the 2016 falling wedge measures the second impulse move which has a price objective up to the 43.57 area.

There is also another important area of resistance that might come into play and that is the old neckline from the 2011 H&S top, labeled neckline extension, which will come into play around the 37.50. The bottom line is that the PM complex is in its second impulse leg higher which will look clear as a bell when we look back in hindsight. As I’ve mentioned previously the hardest thing to do during an impulse move is to do, NOTHING.

I’ve spent all weekend updating and annotating all the stock in the, Gold Stocks Portfolio, so you can see how things are coming along. There will be three charts for each PM stock, daily, weekly, and monthly which will show you the reasons I picked these stocks to start with. As this new impulse move continues to move higher I may tweak some of the weaker PM stocks for some that are showing more strength, but for now I’m content to stick with the original portfolio.

When looking at each individual stock, note how the daily shorter term charts will show many small H&S bottoms and double bottoms that have or are forming at the last reversal point in the bigger 2016 patterns. The weekly charts will show you the dominate chart pattern which is the 2016 bullish falling wedge with a few triangles. The long term monthly charts should put the new bull market in perspective with many of the PM stocks building out some very large consolation patterns.

There are many different ways to play the PM stocks. Some investors like to stick to the big cap producers as they will perform well during the bull market but won’t give you the leverage and is a safer play. Some will gravitate toward the Royalty stocks that usually do very well in a bull market as Sir Plunger has done.

As for me, after trading the bull market before the 2008 crash, I found that in a bull market the tide lifts all boats, some higher than others, but in general most get lifted. Even some of the juniors that from a fundamental perspective don’t look that good on paper can still rise with the tide. There is no other place in the markets that offers a chance for leverage to the degree some of the PM juniors will show during their bull market. To get that leverage one has to buy them cheap before they explode higher knocking down your leverage. This strategy is much riskier than buying your safer PM stocks but if you can get several to really take off it will make up the difference for the ones that don’t play out as you expected.

Before I finish I want to make if perfectly clear that we could see a backtest take place on the GDX to the one and a half year old neckline that would come into play around the 23.95 area.

A backtest to the top rail on gold’s 2016 triangle would come into play around the 1345 area.

A backtest to the 6 year golden neckline would come in around the 1345 area.

On the portfolio stocks below I’ve added a blue circle to the monthly charts that shows up in the top right hand corner of the chart, which shows what each stock did for the month of June on a percentage basis. I’ve also got the, Gold Stocks Portfolio, updated on the sidebar, with these stocks to follow. Everything should now be up to date. All the best…Rambus

JNUG 6-30-19 Update: 5 for 1 reverse split on 6-28-19. Daily.

 

JNUG weekly:

JNUG monthly:

NUGT daily:

NUGT weekly:

USLV weekly:

USLV monthly:

Going Forward I will be focusing on the PM Sector , as that is where the greatest potential moves are , following the breakout of many stocks in the PM Complex. Big bases = Big moves.

Of course I may also have a new portfolio of General Market Leveraged positions , as these markets are also on the verge of breakouts.

Interesting and Exciting times for Traders and Investors alike. Stay Tuned.

Late Friday Night Chart…The Gold Market Manipulation Theory

I’ve always said that gold built out one of the most beautiful bull markets of all time between the 2001 low and 2011 high. From a Chartology perspective it just doesn’t get any better. During the bull market years I called this weekly bar chart, “JUST ANOTHER BRICK IN THE WALL, because each consolidation pattern marked another brick in the wall.

The reason I’m posting this chart tonight is because we could be embarking on a similar bull market starting at the 2001 low. Take a minute and put yourself back at the 2001 low not knowing what lies ahead. As gold began to rally the first thing one would look for in a new bull market is a consolidation pattern which gold produced in 2002 that was the blue triangle. Once the price action broke out of that small blue triangle the next impulse began confirming the new bull market. From that point one had to believe in the Chartology that the major trend was up until a new lower low was put in place. As long as each consolidation pattern was followed by an impulse move up the bull market remained intact, rinse and repeat.

When you study the bull market you will see the price action always made a higher low except for the major correction in 2008 which was the blue expanding falling wedge that ¬†led to the crash in the PM complex. That 2008 blue expanding falling wedge doesn’t look like a big deal in the overall bull market but it was a big deal for the PM stocks which took a beating.

If you look real close you can see a small green triangle that formed in the middle of each impulse move up as a halfway pattern. Again classic Chartology. You can also see the thin black rectangles that measured the impulse move on the breakout from the previous large consolidation pattern labeled 1,2,3,4.

The official end of the bull market came when the price action built out the blue 2 1/2 year rectangle consolidation pattern that formed just below the all time high in September of 2011. The breakdown from that blue rectangle ushered in the great decline in 2013 confirming a new bear market had begun in earnest. There was no way to know back then how long or how low the new bear market would go only that a new bear market was in place and it was time to play by bear market rules.

When I look at the Chartology on this chart it shows me a market that is free of manipulation. Gold bugs are known for their manipulation theories on the PM complex but when I see such a beautiful bull market filled with perfect chart patterns this shows me a free market with millions of investors making a decision to either buy or sell gold and gold related assets. Manipulators would have to manipulate currencies as well to get their desired results It would be impossible to manipulate all the major currencies of the world in concert. It’s always nice to have someone or something to blame when the markets don’t go the way we think they should so we create manipulation as the scapegoat. If I thought the PM complex was manipulated there is no way I would trade this area of the markets. It would be a fools game to do so. With that said I won’t bring up the subject again. Have a great weekend and all the best…Rambus

Markets Update…HUI breakout

I have just enough time to post this combo chart for the UUP and the HUI we’ve been following very closely. The HUI is now in day four of the breakout from its bullish expanding falling wedge.

The HUI is now in day 5 of its breakout from the small H&S bottom / right shoulder.

The HUI is now attempting to breakout from its year and a half H&S neckline.

Weekend Report…Reversion to the Mean (Someday)

We are having a big family cookout today so this Weekend Report will be an abbreviated version.

I haven’t posted this combo ratio chart in several years but it was one that we followed very close back in the day. This ratio combo chart has the HUI:GOLD ratio on top with GOLD on the bottom. During the initial rally phase of the PM complex bull market starting back in 2000 the gold stocks kicked gold’s butt for the first three years or so into the December 2003 high on the ratio. Believe it or not that marked the end of the PM stocks outperformance vs gold. It’s been one long term downtrend for the ratio that still hasn’t completely reversed back up in favor of the HUI.

The ratio chart on top produced some very nice chart patterns on the way down including some reverse symmetry as shown by the red arrows. Note the big S&R line that produced the small red bull flag in 2001 and the reverse symmetry red bear flag that formed in 2012 on the way down. When the 2012 bear flag broke to the downside I suggested we could see .13 that was the all time low for the ratio which was also the measured move. You can see the price action undercut .13 during the 2015 – 2016 low which actually marked the all time low for the ratio. From that all time low the ratio began to rally where the HUI outperformed gold during that 2016 impulse move higher.

After that strong impulse move ended in August of 2016 the PM stocks began to underperform gold once again this time building out the 2016 falling wedge that is so prevalent across many of the PM stock indexes and individual PM stocks. It’s now been about 4 1/2 years later when the ratio first hit .13 and this week the ratio closed at .13 or no change. What the ratio does have going for it is the 2016 falling wedge has completed the breakout with the backtest now underway.

One thing we know absolutely 100% for sure is that the HUI is massively undervalued to the price of gold. At some point there has to be a revision to the means where the HUI and PM stocks in general should start to outperform gold in a meaningful way like in the initial first three years of the bull market earlier this century.

Have a great Father’s Day to all the dads out there. All the best…Rambus