Before we look at the longer term weekly and monthly charts lets review the daily chart for the GDX we’ve been following which shows the rally from the September 2018 low to the February 2019 high. That five month rally looked promising but it failed to deliver a new impulse move higher to break the back of the bear market that has been in place since the 2011 high.

Below is the daily chart for the GDX that showed the potential to change the character of the bear market and set the tone for a new and strong impulse move out of the 2018 low. If you recall there was a lot of chopping action at the 2018 low which didn’t make a whole lot of sense in the beginning but as time passed by a reversal pattern began to show its self which turned out to be that seven point diamond reversal pattern. Since the price action had been declining into the 2018 low we need to see some type of an odd number of reversal points pattern buildout to reverse the downtrend. The reversal pattern we got was the seven point diamond.

After the breakout above the top rail of the seven point diamond the price action had a mediocre rally which topped out at the first reversal point in the blue rectangle, which turned out to be a halfway pattern to the upside. After chopping around for about three weeks the GDX broke out above the top rail of the blue rectangle halfway pattern which ended at the first reversal point in the blue five point triangle reversal pattern top. On the way to the February top the price action formed a small blue flag halfway pattern which measured almost exactly to the February high.

The Chartology still looked pretty good when the 5 point triangle began to buildout. This was a critical area to watch because if the new bull market was really going to take off we should see some type of consolidation pattern buildout and carry prices to a new rally high. The sideways chopping action began on February 20th at reversal point #1. All looked good until April 10th when the GDX failed to make it all the way up to the top rail at reversal point #5. It still was’t the end of the world but a warning flag went up. Many times the last rally during a 5 point reversal pattern will fail to reach the top rail which strongly suggests weakness and in this case it meant the bulls were running out of gas.

Once the price action broke below the bottom rail of the blue 5 point triangle reversal pattern the uptrend off the September 2018 low was officially over. What we ended up with out of the September 2018 low were two reversal patterns with two small considation patterns in between. A true impulse move failed to take hold which was another red flag that the new bull market for the GDX wasn’t ready yet for prime time.

Now we’ll look the exact same chart in which I will put a top and bottom trend line to define the September to February rally phase. What the price action now shows is the black expanding rising wedge which was most likely confirmed at the breakout and backtest point on the bottom rail. What we have is nothing more than a bear market rally in the secular bear market. For some folks it may be a hard pill to swallow but for others it can be an opportunity to play the downside. For those that maybe long the PM stocks they could put on a hedge to protect their losses. There is always a positive element if you know where to look.

Now that we are armed with new information about the September to February bear market rally, how does that fit into the bigger picture? As you know I’ve been looking at the 2016 trading range as a falling wedge formation for quite sometime. I’ve shown you recently how the top rail on the 2016 falling wedge for the HUI is failing to hold support which is not what you want to see if the pattern is valid. When you see a failure like that it  means you have to go back to the drawing board to find out why the pattern is failing. The bearish expanding rising wedge on the daily chart above gives us some very important information we can put on the longer term weekly chart.

Instead of starting my top trendline from the 2016 high I started it from the first reaction high at reversal point #2. From reversal point #2 you can still see that slow and painful chopping action to the downside ending at reversal point #3. The rally that began at the September 2018 low to the February high now gives us a very symmetrical parallel falling flag formation with the blue bearish expanding rising wedge being the 3rd and 4th reversal points. A touch of the bottom rail of the 2016 parallel falling flag at 16.75 will complete the fourth reversal point in what I think could be a halfway pattern to the downside. If that is the case the two plus year parallel falling flag halfway pattern will have a price objective down to the 13.85 area as shown by the blue arrows which shows the impulse measuring technique.

Note the difference between the 2016 impulse move up and our September to February rally phase. That strong impulse move in 2016 shows two small consolidation pattens which is common is strong impulse moves. The September to February rally looks nothing like the 2016 rally but more like a bear market rally inside of a trading range.

Now we need to put the daily and weekly patterns on the charts above on a long term monthly chart to see how they fit into the very big picture. Since the parallel falling flag is forming below the 2016 high it needs just four reversal points to be a consolidation pattern to the downside. As you can see the price objective for the falling flag is down to the 13.85 area which is just a point or so above the 2015 double bottom low.

This last chart is a, What If Chart, that is only speculation right now. I’ve added the two black trednlines which are parallel that could show the 2016 downtrend channel with the blue falling flag being the halfway pattern. We know that big patterns lead to big moves. What if the price action is going to build out a massive double bottom as shown by the red arrows? The Chartology is there for that to happen. It would be a fitting end to the 2011 bear market if we do get a massive double bottom to launch the next secular bull market. We now have the big picture to watch and as long as the price action keeps confirming the big picture it is what it is. Happy Mother’s Day tomorrow and all the best…Rambus

I was going through some old long term charts I haven’t posted in many years to see if there was anything of interest to post tonight. With long term charts things don’t change very fast and the big picture can stay viable for years. I have literally hundreds of charts for the different PM stock indexes that I’ve built through the years that are tucked away in different chart lists that I don’t check very often. It’s always interesting to go through some of those old chart lists, especially with the longer term charts, to see what I was thinking years ago and how relative that big picture looks today.

This first chart is a 12 year weekly chart for the XAU which begins with the 2007 small H&S top that led to the crash in 2008. When I first began to post that potential H&S top nobody and I mean nobody wanted to hear about it. The PM complex had been in a raging bull market up to that time so how could there be a H&S top reversal pattern forming. That 2007 H&S top produced the biggest and most vertical decline in the history of the XAU which caught most PM investors off guard. Luckily for those investors that held on during that massive decline, which would have been near impossible, were treated to a reverse symmetry rally back up over the same area on the way down. That 2008 crash low rally produced marginally new highs which turned out to be a massive H&S top which ended the bull market.

I still remember when the 2011 H&S top completed, the impulse move down from the right shoulder high caused panic in the streets and talk of how the PM complex was being manipulated and how unfair it was. My take was totally different as I could see the Chartology that had built out and the most obvious outcome was a collapse in prices as the price action was breaking down form a massive H&S top which was a perfect setup that ended the bull market and ushered in the new bear market. There was no way to know back in 2011 when the head portion was building out that the new bear market would last as long as it has.

Some folks say the bear market ended in January of 2016 for the PM stocks which technically could still be true but the pain and suffering by the precious metals investors up to this point has been much greater than most would have ever imagined eight years or so ago. When you look at this long term chart below there has only been about a seven month rally in 2016 that gave the PM investors any hope at all the the bear market may be over and a new bull market was beginning. In a few months from now it’s going to be a three full years since the top in August of 2016 was completed. The most recent rally that began in September of last years was not an impulse move to the upside but just a counter trend rally within a consolidation pattern.

What is also striking on this 12 year chart for the XAU is that the current price action is  now approaching the 2008 crash low again around the 62 area. As you can see the 2008 crash low was tested again in 2015 when the XAU built out a small consolidation pattern right on the 2008 crash low trendline. Then came the low for the bear market in January of 2016 which produced the biggest rally of the 2011 bear market. The third touch of the 2008 crash low happened last year in September. As I mentioned earlier the price action is within striking distance of the 2008 crash low for the fourth time as shown by the blue arrow.

Today the XAU closed the week at 68.79 a mere seven points or so off the 2008 crash low. The reality is the PM complex has been one of the toughest areas to trade and make any real profits in the last eight years or so. I was able to catch maybe half of the 2016 rally for a small profit before I sold out and went to cash after I seen a small H&S top building out. Our current rally phase that began in September of last year I was able to catch several months of that rally before exiting all my PM stocks on April first and second for a modest loss. If one doesn’t get in at the absolute low and get out at the very top in these countertrend rallies within a bear market it’s very hard to lock in any meaningful profits. I know there are many PM stock investors that are still hoping the current downtrend is going to reverse pretty soon to relive the pressure that is growing with each passing day. I’ve been down that road and I didn’t like it one bit as hope becomes your best friend and you become trapped with no way out especially if you didn’t get in at the absolute bottom.

This last chart for tonight is a 25 year monthly line chart for the XAU which shows the 2000  to the 2011 bull market as one big bearish rising wedge. The bottom rail of that bearish rising wedge was broken to the downside during the 2013 hard decline. As you can see when the price action bottomed in January of 2016 the XAU retraced 100% of its bull market. After the 2016 rally phase was over and the correction began the price action has built out a two year unbalanced H&S top with a backtest to the neckline in February of this year. Keep in mind this is a monthly line chart so chart patterns can look a bit different but can still be valid. The bottom line is that if the XAU can trade back above its unbalanced H&S neckline that will negate the H&S top but until that happens the Chartology is suggesting lower prices to come. Above the neckline is bullish and below is bearish.

Have a great weekend and all the best…Rambus

When I sold all my precious metals stocks and went to cash back on April 1st and 2nd I mentioned there were two things I was seeing that I didn’t like. The first thing I mentioned was that there were some failing triangles and rising wedges on the shorter term daily charts. The second thing I didn’t like was that many of the PM stocks were failing at the top rail of their 2016 falling wedges or flags. Those were warning signs for me. At this moment I’m neither bullish or bearish the PM complex but neutral. I see some PM stocks holding up rather well while others are declining and breaking important short term support, a mixed bag.

AU was one of the leaders but broke down below its neckline last week and completed a backtest.

AU monthly looking for support possibly at the 12 month ma?

This daily chart for AGI.TO shows the rising wedge which I was expecting to breakout topside if the impulse move was strong but it failed to deliver and broken through the bottom rail completing a bearish rising wedge. The price action has now morphed into a H&S top with the neckline getting backtested today.

This monthly chart shows the 2016 expanding falling wedge is still in play but we need to see the top rail broken to the upside to really get excited.

The last time I posted this chart I asked the question, would the real H&S pattern please standup?

This monthly chart shows a very important price point that ASM is now trading at which is a low risk entry point if anyone is brave enough to take a chance.

BTG H&S top.

The monthly chart for BTO.TO hit the top rail of its trading range but failed to breakout. This is one stock I’ll be interested in when the top rail gives way.

This daily chart for the EDR.TO built out a beautiful rising wedge and all it had to do was breakout above the top rail but it broke down instead which is not what I wanted to see.  Now it has morphed into a small H&S top. Maybe the old neckline can offer some support.

FR.TO builtout a very nice triangle right on the neckline which should have been a bullish setup. There was a false breakout above the top rail but it ended up being bull trap. Now it’s trading below the neckline.

The top rail of its 2016 falling wedge is still holding support at this time but the failure of the neckline to hold support on the backtest is troubling.

AGB.V is another one I’m keeping a close eye on if it can takeout the top rail of its black expanding rising wedge.

PAAS has one ugly daily chart. After breaking down from the 4 point triangle consolidation  pattern the price action has formed a H&S top as the backtest to the bottom rail.

I had high hopes for XGD.TO when it broke out above its S&R line, formed the blue triangle on top and then had a failed breakout of the blue triangle, another bull trap. It’s currently sitting on the original S&R line which needs to hold support.

Changing it up a bit. Today the $XBD, broker and dealer index broke out of its 2018 October H&S bottom to joining the banks.

Below is a daily chart for the $BKX, bank index.

Below is a daily chart for the XLF, financial sector which built out a small bullish rising wedge as the backtest to the neckline. This is what I was looking for on many of the PM stocks I was following but they failed to deliver. You may note the the H&S bottoms on both the PM stocks and the US stock markets look very similar.

On Tuesday of this week I posted this combo chart showing the possible small blue flag forming on the UUP ( US Dollar). This morning the price action gapped above the top rail and is now approaching the top rail of the rising wedge formation. The sixth reversal point will be completed when the top rail is hit. This is where it’s getting interesting. Many investors believe the US dollar is going to go down or collapse which could be the case. On the other hand what if the US dollar breaks out above the top rail of its August rising wedge?

Looking at the HUI on the lower chart doesn’t give me a warm and fuzzing feeling right now. It’s not the prettiest topping pattern I’ve ever seen if indeed that is the case, but the price action over the last two days has broken the bottom rail of the uptrend channel and what I’m calling a S&R line. If you look at the price action above the S&R line you can see a double top with a left and right shoulder but no place to actually label a neckline thus the S&R line.

In regards to a support and resistance line, above is bullish and below is bearish. How the price action interacts with the top rail on the UUP chart is going to give us a major clue on what to expect next for the PM complex. If the top rail holds resistance then the PM complex should find support but if the UUP breaks out above the top rail of the August 2018 rising wedge then the PM complex will have a strong headwind to deal with. Now is not the time to be complacent.

In part two of the Quarterly Report I’m going to update some long term charts for some of the world stock markets. As you will see many have formed massive ten plus year consolidation patterns similar of what we observed in the first installment of the Quarterly Report which are similar in duration to many of the US stock markets. It’s these big multi year consolidation patterns that are strongly suggesting to us that the world as we know it is not coming to an end as so many analysis would like us to believe. For whatever reasons bear market news tends to grab investors attention much more so than bullish news. It has to work that way because if everyone was bullish, that comes at the end of a bull market, there would be no one left to buy. I’ve often said that, “investing in the markets is psychological warfare more than anything else.”

Lets get started by looking at the $AORD, Australian stock market, which built out a ten year triangle consolidation pattern. The top rail was broken to the upside in early 2017 with a small rally and now a strong backtest which found support at the last possible point which is the apex where the top and bottom rails intersect. A move below the apex would be an end around move which would have bearish implications, but until then the bull market remains in place.

The $BSE, India Bombay stock market, has held up very well and is just a few of the markets that are testing their all time highs. It’s like the energizer bunny that just keeps on going and going.

This next world stock market is the $BVSP, Brazilian Stock market, which is one of the strongest in the world right now after completing a perfect breakout and backtest to the top rail of its ten year triangle consolation pattern.

The $CAC, French stock market, is still in the breaking out and backtesting process. The strong backtest was nullified when the price action traded back above the top rail of its 17 year triangle consolidation pattern.

The $DAX, German stock market, broke out from its massive 12 year triangle consolation pattern around the same time many of the US stocks markets in 2013. It’s currently working on a multi year rising wedge formation that is forming above the top rail of its 12 year triangle consolidation pattern which is generally a bullish setup, but won’t be confirmed until the top rail is broken.

The $HSI, Hong Kong stock market, shows a similar setup to many of the stocks markets from around the world. It has formed a ten year triangle consolidation pattern with a strong backtest to the top rail that occurred late last year when the US and other world stock markets experienced the Christmas Eve shakeout move.

The $NIKK, Nikkei stock market, is one of the most important stock markets in the world so it’s always a good to see what it’s doing. The $NIKK originally topped out in the middle of 2015, but has been trading sideways and is building out a rising wedge formation. Note the backtest to the 2016 H&S bottom neckline which showed me a place to draw in the bottom rail of the rising wedge. Most will view the rising wedge as a bearish rising wedge but I’l reserve judgment until I see which trendline gives way. Note the smaller blue bullish rising wedge which formed just below the bigger one.

Next is the $TWII, Taiwan stock market, that has built out one of the longest running consolidation patterns I’ve ever seen which took 30 years to complete. The breakout above the top rail finally took place in May of 2014 with a fairly strong backtest to the top rail doing its job of holding support.

Another very important world stock market is the $SSEC,  Shanghai stock exchange, which has been one of the weaker stock markets, but may be turning the corner. This long term monthly chart shows the major uptrend channel the SSEC has been in since the early 1990’s when it was new to the global scene. When it gets ready to move it doesn’t waste much time. This stock market index like so many we’ve looked at had a false breakout below the bottom rail of its major bull market uptrend channel in late 2018 which now appears to be another false breakout or bear trap. This month the price action closed above the top rail of the blue bullish falling wedge which completely changes the negativity this index has received. Normally when you see a false breakout or bear trap and price action reverses back up to negate the false breakout, you can get a stronger move in the opposite direction and in this case up.

The $TSX, Toronto stock market, has been building out a ten year six point rising wedge formation. It has been attempting to breakout above the top rail for over a year which so far has failed. On the positive side the price action is trading very close to new all time highs. Since this is a commodities related stock index it should have bullish consequences for commodities in general if it can breakout strongly above the top rail.

If the world is going to move forward in regards to what their stock markets are suggesting then the emerging markets should also participate. Below is a long term monthly chart for the VWO, emerging markets. After a strong rally out of its 2009 crash low the VWO has been in consolidation mode for the last six years building out the flat top expanding triangle consolidation pattern. Again, like so many other stock market indexes we’ve looked at, this emerging market etf also experienced a false breakout below the top rail of the expanding falling wedge, but reversed direction leaving behind a bear trap. I’m also viewing the six year flat top expanding triangle consolidation pattern as a halfway pattern as shown by the blue arrows.

This last chart I would like to show you for this part of the Quarterly Report is the VEU, all world stock markets ex the US stock markets. The VEU has been in a nice steady bull market since its 2009 crash low. During the 2015 correction it built out a H&S consolidation pattern on the bottom rail of its 2009 major uptrend channel. Since the 2018 high when the US stock market topped out so did just about every other stock market on the planet. Since that 2018 high the VEU formed the blue flag and broke out above the top rail two full months ago.

What most of the world stock markets above are suggesting to me is that we should expect another leg higher in the secular bull market that began in 2009. Since these are long term monthly charts change comes slowly and we could see some backing and filling, but the big picture shows many of the world stock markets including our own are going to experience another leg up within their secular bull markets.

If the world stock markets are beginning to show some life then some of the underlying sectors within the stock markets should also be showing some positive chart patterns. You can’t have one without the other. As with every bull market there are leading and lagging sectors, but eventually they all generally get their shot at producing their own individual bull market.

If the secular bull market is going to continue then the tech stocks will have to be one of the leading sectors. One area within the tech sector that is giving us a good clue that the markets want to go higher are the semiconductors. They are doing something they haven’t done since their 2000 bull market top.

Below is a long term monthly chart for the $SOX, semiconductor index, that is now breaking out to new all time highs. The Chartology has been picture perfect. Since the 2009 bear market low notice how each impulse leg up is followed by a consolidation period which leads to another impulse leg up. This is a classic example of how a bull market is supposed to look. In the early part of January 2018 when everything was topping out so did the $SOX, but it topped out at its 2000 all time high which was a perfect place to see a consolidation pattern form. Most of the time when an important trendline or in this case the all time high is reached you will see a small consolidation pattern form just below that important area of resistance. Since the SOX has been in a bull market the odds were high that it would breakout to new all time highs which it is now doing.

The consolidation pattern that formed at the all time high was the blue expanding falling wedge which is also showing up on some of the other areas within the markets. It’s still possible we could see a backtest down to the 1350 area but the bulls have now taken back control of the semiconductor index. This area is going to be one of the leading sectors during the next phase of the bull market and is giving us an early warning that the bull market correction since the January 2018 may be coming to an end.

Below is the weekly chart for the SOX which shows a perfect breakout and backtest to the  top rail of the January 2018 bullish expanding falling wedge.

One of the strongest areas within the 2009 bull market has been the biotech stocks. The $BTK, biotechnology sector,  bottomed in 2009 putting it the fourth reversal point in its ten year flat top or ascending triangle. Note how tiny the 2009 decline was compared to most of the stock markets which in many cases traded below their 2002 bear market low. This small decline was showing relative strength which showed itself in the ensuing secular bull market that is still progressing along.

The BTK has been consolidating the previous impulse leg up topping out in August of 2015 building out the nearly four year rising wedge pattern. Most will view this rising wedge as a bearish rising wedge, but since it has been forming in the secular bull market the odds favor an upside breakout. If the price action breaks out below the bottom rail then I’ll be the first one to admit I was wrong.

The weekly chart for the $BTK.

Another area we would like to see perform well is the XHB, homebuilders, which is an integral part of the economy. Here you can see another 2018 bullish expanding falling wedge breaking out and is beginning to move higher after a quick backtest to the top rail last month.

XHB weekly chart with the bullish expanding falling wedge.

Below is the IYR, Real Estate etf, which is breaking out of from its 2016 bullish rising wedge formation in no uncertain terms. A backtest to the top rail is always possible but not necessary.

The weekly chart for the IYR.

Another very important area that needs to be strong during a bull market run is the XLF, financial sector, which is building out its own expanding falling wedge formation within its 2009 bull market uptrend channel.

This weekly chart for the XLF shows a potential very bullish setup with a H&S bottom forming at the last reversal point in the blue expanding falling wedge. I suspect we will most likely see a ping pong move between the neckline and the top rail of the bullish expanding falling wedge before the actual breakout takes hold.

Another area that has done exceedingly well since the 2009 crash low has been the XLV, Health Care sector, which had a four year uninterrupted impulse move into the first reversal point in a growing four plus year rising wedge formation. Again, most will view the 2015 rising wedge formation as a bearish rising wedge, but, “WHAT IF” the rising wedge is a bullish rising wedge? Note the massive 2009 H&S bottom which led to the uninterrupted move into the rising wedge. Big patterns lead to big moves and the XLV has built out a big pattern.

Another area that had a good bull market run out of its 2009 crash low was the XRT, Retail etf. It has been consolidating that first six year bull run forming a large expanding rising wedge formation which could very well be a halfway pattern to the upside.

This last chart I would like to show you tonight is the $XBD, Broker/Dealer index, which is forming its own 2018 expanding falling wedge with the H&S bottom forming at the fourth reversal point which is a very bullish setup.

This completes part two of the Quarterly Report with currencies and commodities to follow. I realize how ridiculous these long term charts are to someone that has been a perma bear for the entire secular bull market that started at the 2009 crash low. How can the markets just keep going up? It makes no sense. That’s why the markets keep going up because they make no rational sense from the bearish perspective.

This greatest bull market of all time is going to come to and end one day and when it does there will be a multi year correction that could last 10 to 15 years or even longer as we saw in gold after its 1980 bull market high. Secular bull markets are rare but I’ve been lucky enough to have lived and traded during the 1980 to the 2000 secular bull market that changed my life forever and now I’m lucky enough to be part of our current secular bull market that began in 2009.

Experiencing one of these secular bull markets in ones lifetime is great but for most investors they will never see it until the end when everyone piles in with reckless abandon. We still haven’t gotten to the IPO stage where stocks that are virtually worthless will be bid up to astronomical prices. The mania phase will come but it’s not here yet that’s what these big chart patterns are suggesting. Maybe after this next big impulse leg up we’ll see the mainia phase and with a little luck we’ll get out in time to enjoy our profits. All the best..Rambus

There is a ratio chart, $Gold:$XAU, we haven’t looked at in quite awhile that has helped us in the past to locate some important turning points for the PM stocks. I’m not going to get into all the details tonight but this ratio chart shows you just how undervalued the $XAU or precious metals stocks in general are to gold itself. From the mid 1980’s to the 2008 GFC crash the horizontal blue line was a good place to buy your gold and silver stocks and when the ratio fell to the red line it was a good place to sell those stocks.

Everything changed dramatically between gold and the gold stocks during that 2008 crash period. The green circle on the XAU shows where the failure occurred. Instead of the ratio dropping down to the red line like it had always done before the ratio broke out above the blue horizontal line in a way it had never done previously. At the time I labeled that initial high as the highest the ratio had ever been in history thinking the price action would decline back into the old trading range between the blue and red lines. As you can see that wasn’t the case at all. Instead of getting back to normal the ratio began to go parabolic to the upside and finally topped out in January of 2016 as shown by the small double top, yellow shaded area. That also marked the bottom for the XAU.

Once the small double top broke down below the 20 year parabolic arc I suggested we could see some reverse symmetry to the downside because the rally into the small double top was so vertical. We did get the reverse symmetry which also showed up on the 2016 rally phase for the XAU and other precious metals stocks. As you can see the ratio lost almost half of its gains in its vertical drop form 24.33 to the initial low at 12.50. The brown shaded area is where I was initially looking for support but the price action fell a little lower before coming to an end.

The ratio threw me a curveball as I was looking for the right shoulder to match the left shoulder in time and price, but it built a bigger 2016 blue rising flag as the XAU has been building out its 2016 bullish falling wedge. We could call the price action above the 12.50  neckline an unbalanced H&S top but I’m looking at the blue rising flag as more of a halfway pattern to the downside which would measure down to the 8.90 area which would be the initial 2008 high on the ratio chart.

Below is a close up weekly chart which shows you more details of the ratio combo chart above. As you can see from the 2016 low on the ratio chart, which was the 2016 high on the XAU, both have been consolidating their previous moves with the ratio building out the rising flag and the XAU building out its 2016 bullish falling wedge. It also looks like the XAU is giving us an early heads up as it has already broken out above the top rail of its 2016 bullish falling wedge and has completed a backtest. The ratio chart on top is approaching the bottom rail of its 2016 rising flag but hasn’t broken through yet. It will be interesting to watch the price action when they both trade to their respective necklines as those necklines are the same necklines we’ve been following on gold’s six year H&S bottom.

The way the ratio chart is setup with the first leg down out of its January 2016 double top all time high being so vertical, it’s very possible we could see a similar move to the downside when the bottom rail of its 2016 bear flag gives way. That also means that the XAU should also see a near vertical move to the upside similar to its 2016 thrust.

Sir Plunger will be doing the Weekend Report so stay tuned for his always fascinating and provocative post. Have a great weekend , happy spring and all  the best…Rambus

With the UUP ( US Dollar ETF) having a fairly large decline today lets update a few charts to see how they’ve been progressing. Back in August of last year the UUP began to build out a rising wedge formation with today’s price action completing the fourth reversal point when the UUP traded down to the bottom trendline. Sometimes when a stock fails to touch the top rail in a well defined pattern like the rising wedge the UUP is showing, it can be a warning sign that the energy just isn’t there and the stock has run out of gas. To complete the rising wedge we need to see the bottom rail give way which should usher in a strong move  for the PM complex and I would think commodities in general.

The last time I showed you this daily chart for the UUP I suggested there was something for both the bulls and bears alike. Since the February 2018 low the UUP has been building out a parallel uptrend channel which I labeled as a new uptrend channel. The UUP can correct all the way down to the bottom rail of the uptrend channel and still be in a bull market. It’s very hard to predict the future but one scenario I could envision is that while the UUP corrects within its 2018 uptrend channel the PM complex can experience a big move to the upside. Whenever the UUP comes into contact with the bottom rail of its uptrend channel that would be a good signal that the PM complex may need to consolidate its recent impulse move which I believe is just getting started. Something we can monitor.

This weekly chart shows the previous two falling wedges which occurred during the last decline with the first one being the blue five point bearish falling wedge reversal pattern. The other falling wedge ended up being a one year bullish black falling wedge. Note the smaller blue five point bullish rising wedge reversal pattern that formed at the 2018 low. Needless to say the UUP likes to form wedges of all kinds.

A couple of weeks ago we looked at this ratio chart which compares gold to the US dollar. At that time the ratio was backtesting the top rail of the small triangle reversal pattern near the bottom of the uptrend channel but failed to make it all the way down, red circle. Again, if the ratio can rally all the way up to the top rail of the rising channel the PM complex should have the wind at their backs.

This next chart is a combo chart which has the SPX on top and GOLD on the bottom. A lot of investors have a misconception about the stock market and gold. Most gold investors believe the stock markets have to crash in order for gold to rally which happens sometimes as shown by the white shaded areas. On the other hand some of GOLD’s biggest rallies have come in tandem with the SPX green shaded areas. Since their 2016 lows the SPX has rallied much stronger than GOLD but gold has also been trending higher. No one knows 100% for sure what’s going to happen in the future but it wouldn’t hurt my feelings to see both the SPX and GOLD rally together like they have done many times before.

Below is a simple weekly ratio chart which compares GOLD to the SPX using the 200 week sma. As you can see there are not many buy and sell signals, but if you get one it pays to follow it for the longer term. Earlier this year the ratio got close to the 200 week sma but failed to breakout above it. Also keep in mind ratio charts can be a bit deceiving at times. For instance both gold and the SPX can rally at the same time, but if the SPX rallies more strongly than gold the ratio will fall. What this ratio is currently telling us is that the SPX has been outperforming gold since the first of the year.

Below is a 50 year chart for the GOLD to SPX ratio using the 200 day sma for long term buy and sell signals. Again, you can see how well it works with very few buy and sell signals and only a few whipsaws over a 50 year period. There are two ways you can look at how the ratio interacts with the 200 week sma. First, when the ratio crosses above or below the 200 week sma you get a buy or sell signal. Also when the 200 week sma moves  from a rising position to a falling position you can get a buy or sell signal. If you get whipsawed always go with what the price action and the 200 week sma are showing you what to do. You may get whipsawed for awhile but the price action and the 200 week sma will always show you the long term trend which is your friend. The next time the ratio crosses back above the 200 week sma we know it will be time for GOLD to outperform SPX for most likely a fairly long period of time.

This next chart is a 10 year weekly ratio charts which compares the HUI to the SPX. In 2011 when the ratio completed the 9th reversal point in its multi year reversal pattern the SPX shed no sympathy on the HUI. This chart shows you a good example of what a bear market looks like with one consolidation pattern forming just below the previous one. Back in late 2015 it looked like the ratio was finally going to reverse direction when the red rectangle reversal pattern formed, but it wasn’t to be. Does the current 2016 falling wedge look familiar to you? That is the same one we are following on the PM stock indexes. This ratio may be seeing the light at the end of the tunnel and it may be time for the HUI to outperform the SPX for awhile. Remember they both can go up but if this ratio is rising the HUI is outperforming the SPX.

This last chart for tonight is another ratio chart going back 45 year which compares gold to silver. When the ratio is rising gold is outperforming silver. When the ratio trades above 80 that is a generally a good time for the precious metals complex as shown by the red dashed vertical lines. What we want to see is for the ratio to drop below 80 which would be another bit of confirmation the rally in the PM complex is alive and well.

We are seeing some signs that the PM complex is trying to bottom in this general area. To really get this beaten down sector back on its feet again I would like to see more confirmation take place on some of these ratio and moving average charts above. The bottom appears to be in place for the PM complex but it’s always nice to see confirming signals from different perspectives to add the frosting to the cake. All the best…Rambus

I know it may have come as a shock to some of you on why I raised some capital by selling a few PM stocks today. Whenever you see a false breakout of any chart pattern and the price action trades below the bottom rail of the original pattern that can setup a bearish situation. It’s like a head fake. The stock forms what looks like a great breakout and maybe even accompanied by a breakout gap. Everything looks fine. Then you get the backtest to confirm the breakout. Sometimes we can see several days of backtesting waiting for the breakout move to begin.

The first sign of trouble is when you see the price action trade below the breakout point or below the top rail in this case the bullish rising wedge. Many times the trade can still be saved if the bottom rail of the rising wedge ends up holding support. Once the bottom rail gives way then red flags start flying that something is amise. Many times when you see a false breakout of a chart pattern you can see a strong move in the opposite direction. Again, its like a head fake that gets you moving in the wrong direction before the real move takes place.

Lets start by looking at a daily chart for AU which built out a very nice looking rising wedge formation complete with a breakout gap above the top rail. AU was one of the leaders and it looked like it was showing the way higher for the PM stocks but after the reversal bar at the top of the chart AU declined back into the rising wedge negating the breakout. All was not lost yet as the bottom rail of the falling wedge could still provide support and save the pattern. Once the bottom rail was lost that put me on high alert to watch the price action very carefully for more deterioration. Monday morning AU opened with a downside gap and today the price action closed below the 50 day ema which strongly suggested to me it was time to get out of this trade.

All is not lost yet however as AU could be in the process of building out some type of consolidation pattern with the first reversal point being the false breakout high. What we need to see next is for a low that would create the second reversal point, another rally followed by one more reversal to the downside to create some type of four point consolidation pattern. Right now there is no way to know what kind of consolidation pattern may form. One important aspect of this daily chart is the one year H&S bottom which should support a much bigger rally than what we’ve seen so far. As you can see the rally out of the August low was very strong so now is as good a time as any to see AU consolidate those gains.

Below is a weekly chart for AU which shows its strong impulse move out of its 2016 bullish falling wedge. Note the blue triangle that formed in the middle of the 2015 bearish falling wedge as a halfway pattern to the downside. As AU was in a strong decline one would have expected the triangle to breakout to the downside. AU is now moving higher so we should expect to see whatever consolidation pattern builds out should breakout to the upside.

BTO.TO also built out a nice looking rising wedge formation but it too failed to take off and should now be forming some type of consolidation pattern on top of its H&S neckline.

I was hoping that the rising wedge was the consolidation pattern that was going to give BTO.TO the energy it needed to finally takeout that massive overhead resistance line that goes all the way back to the 2011 high. There is already the 2016 rectangle that has been forming below the 2011 high. That will be a big deal when BTO.TO finally moves above that massive line in the sand. There are just a few PM stocks that are trading near their all time highs.

XGD.TO is another PM stock that had a false breakout above the top rail of its rising wedge but failed to follow through to the upside.

This long term weekly chart still looks good with the top rail of its 2016 falling wedge and the 30 week ema coming in at 11.25.

The only real question is will we see a complete backtest to the top rail on this long term monthly chart?

The daily chart for GPL shows it has formed a rising wedge above its nine point rectangle reversal pattern. As you can see it has been in backtest mode to the top rail for about a week now with the 200 day sma helping so far with support. As long as the price action can trade above the bottom rail of the blue rising wedge I will hold on to my position.

This weekly chart for GPL shows the problem I’m seeing with many of the PM stocks I follow. Most have put in some type of small reversal pattern at the fourth reversal point within their 2016 falling wedge or downtrend channel. Many have now rallied up to the top rail and are backing off which tells us the top rail is still hot. We had a similar situation back in 2013 when the PM stock were breaking down from their massive 2011 H&S tops. They all didn’t break their necklines at the same time. Back then the weakest PM stocks broke down first with the rest taking their turn until GG I believe, was the last one to finally break below its neckline. In our current setup we should see the strongest PM stocks breakout above the top rail of their 2006 trading range first with the laggards to following behind.

GPL monthly. Close but no cigar just yet.

AR.TO shows a perfect example of the small reversal pattern forming at the bottom of its 2016 falling wedge with a rally up to the top rail. It’s now backing down and hopefully will find support on the neckline before it tries to take out the top rail again.

This long term monthly chart for WPM shows it has broken above its 2016 bullish falling wedge but has another important area of resistance to overcome which is the top rail of the black 2011 expanding falling wedge. We could even see a ping pong move between the blue and black trendlines.

SAND is setup a little differently as it formed a symmetrical triangle as its 2016 consolidation pattern and has broken out above the top rail. Note the small double bottom that formed at the last reversal point.

SAND is currently trading between the top rail of its 2016 triangle consolidation pattern which is the right shoulder of a very large H&S bottom. Here too we may see a ping pong move between the neckline and the top rail of the blue symmetrical triangle.

This weekly chart for AEM shows the price action touching the top rail of its 2016 falling wedge and backing off a bit.

The long term monthly chart for AEM shows the 2016 falling wedge forming inside of the massive 2008 rectangle.

This long term monthly chart for BVN shows the 2016 bullish, RISING WEDGE, forming the right shoulder of a very large H&S bottom.

FNV broke out of its 2016 bull flag and looks to have completed a backtest to the top rail.

FNV has always been one of the leaders when it comes to the precious metals stock. This long term monthly chart is a “WHAT IF” chart. What if this is a massive bullish rising wedge?

RGLD is another precious metals stock that leads the rest of the PM stocks higher. It too has a “WHAT IF” possible bullish rising wedge. Note the blue rectangle that formed at the fourth reversal point.

This long term monthly chart for NEM shows its been building out its 2016 falling wedge but unlike a lot of PM stocks it hasn’t been able to rally up to the top rail and is showing relative weakness.

GG is one of the biggest dogs in the big cap precious metas stocks areas as its still trading below its 2008 low.

What these PM stocks above show is that there are some bright spots within a sea of mediocrity. The leaders will lead the way as they always do and the rest will move when their time is right. I know it feels like one needs to be fully invested but there are going to be many new buy signals when we see the top rails of those 2016 trading ranges begin to give-way. If one is a long term investor then you can sit tight but for most of us mere mortals sitting tight can be very difficult when we see our profits slowly slipping away. I think the name of the game right now is patience and let some of the PM stocks that have had a strong run out of the October low to consolidate those gains. There is nothing I can see right now that calls into question that the next leg up in the bull market that began late last year is in trouble. All the best…Rambus