I didn’t get a chance to post this longer term daily chart for DWTI as things are moving so fast right now. This chart shows the big picture which I wasn’t able to show you on the 2 hour chart just a few minutes ago.

Below is a long term monthly chart for $WTIC which shows the blue bearish falling wedge as a possible part of an A B C decline, black arrows. This would be a more conservative price objective.

Below is a 30 year look at oil which shows how the bearish falling wedge fits into the very big picture. As you can see the price action is hitting new multi year lows now. Also notice how the blue falling wedge has formed just below the bottom rail of the major uptrend channel which is usually a bearish setup.

Below is a log scale chart for $WTIC which shows the H&S consolidation pattern has a price objective down to the 22.24 area.

Below is a linear scale chart for oil’s H&S consolidation pattern which has a price objective down to the 13.15 area. It seems impossible but we’ll just have to keep following the price action for more clues.

Below is a 10 year chart which shows the parabolic rise and the parabolic decline. I used the linear scale chart to measure the H&S top which gave me a price objective down to 35 which at the time seemed impossible whereas the log scale measurement was higher.

Today I would like to take a look at the PM complex as there are some interesting charts building out. Please don’t confuse this report with what Sir Spock, Sir Norvast and others are doing at the Chartology Forum as they’re looking for undervalued PM stocks that will be ready to buy when the time is right. In some cases the time might be now as a few of the PM stocks are holding support. In the vast majority of the cases though, excluding some of the Australian and a few South African PM stocks, most are still under pressure. So for some folks who like to get in a little early and have the patience to wait for the bear market to exhaust itself, one can start picking up a few shares of their favorite PM stocks and see what happens. There won’t be a bell go off at the bottom I can assure you of that.

This first chart is a combo chart which has Gold, Silver and five different PM stock indexes, big and small caps on it, to help give you a feel for where we stand right now in regards to the bear market that began in 2011. These charts don’t have any patterns on them just a few simple black dashed horizontal support and resistance lines. The vertical dashed line shows the 2008 crash low and how the PM stock indexes are all trading below that important low while gold and silver are trading well above it. The red dashed horizontal line shows the 2008 crash low. Looking at all these chart objectively it’s hard to see any type of bottoming action taking place yet. The very first thing we would need to see is the price action take out the first overhead resistance lines to even consider that a bottom is building out. There is no law that says it can’t start tomorrow but with a few of the PM stock indexes breaking down to new bear market lows there is alot of work to do for this sector to start looking bullish. Keep in mind I’m not talking about the Australian PM stocks or even a few of the South Africa gold mining stocks which are showing a little strength in here, but the general big picture which is still very negative.

A quick look at the $BPGDM shows it’s on a sell signal as the price action is trading below the 5 day ma and the 5 day ma is trading below the 8 day ma.

It has been quite a long time since we last looked at this long term chart for the $CDNX, which is basically a small cap Canadian stock index which is made up of precious metals and other small resource companies. This small cap index had one of the biggest bull runs during the earlier part of the bull market in the PM complex. It was the first to top out in 2007 with a huge, I labeled it whatever you want to call the formation inside the blue box, anything you’d like. I remember at the time the bull market was still going strong and what ended up forming  inside the blue rectangle, had several different patterns. The big give away that the pattern would break to the downside was the small red triangle that formed on the right side of the blue top. That red triangle broke down first and then shortly afterwards the big blue trendline gave way. There was no way to know back then the magnitude of the 2008 crash or even that the blue trading range would be the actual bull market high which formed several years before the rest of the PM stock indexes. I think we’re seeing something similar in the stock markets right now with the Russel 2000 and micro caps leading the way down. Small caps, in any sector is where the extra cash will go in a bull market and exit first during a bear market.

There are several H&S consolidation patterns that are forming on some of the PM stock indexes. The $XAU is the leader breaking below its neckline last week. Below is a three year weekly chart which shows the blue eight point Diamond with the H&S consolidation patterns just below it and our most recent H&S consolidation pattern which has a price objective down to the 32.05 area.

The 30 year monthly chart for the $XAU shows it built out a massive 5 point bearish rising wedge and is currently sitting right on the all time low. Note how the two blue consolidation patterns formed one above the bottom rail of the five point rising wedge and one consolidation pattern just below. This usually sets up a bearish scenario which so far is playing out.

It’s been awhile since we last looked at this long term weekly chart for the HUI which shows it’s double rail bear market downtrend channel.

The long term monthly chart for the HUI shows the fanlines it has made since the bear market low in 2000. Normally when the third fanline breaks the pattern is complete.

Sometimes the markets will do something that makes you go WOW. This next chart is a weekly bar chart which shows all the bear market rallies were the same exact height on a percentage basis as shown by the blue arrows on log scale.

Not to be out done by the bulls the HUI bears have created two major legs down that were the same length as shown by the black arrows. If this next impulse move down matches the previous two then the price objective would be down to the 54.45 area. It will be interesting.

The short term weekly chart for the GDX shows it’s trading right at the neckline of the lower H&S consolidation pattern. A break below the neckline will complete the H&S consolidation which would give us a price objective down to the 9.78 area.

So there you have it . Not exactly the best time to be a bull in this disintegrating forsaken sector . But as always we watch the charts for clues .

Since the markets are closed in the US tomorrow I’ll do a part two for the Weekend Report as there is so much to look at right now. For US members enjoy the day off monday. All the best…Rambus

DGAZ 2-4-16. I’m going to place a sell/stop at 14.89 just below the S&R line and the 50 and 20 ema’s on the daily line chart.

DGAZ weekly:

Below is a two hour chart for the UNG, US natural gas fund, which got a bounce off the low and has been in a small trading for the last since late December. I’m calling this pattern a 5 point bearish expanding rising wedge reversal pattern. As we need the trend has been up I needed to see a reversal pattern form with an odd number of reversal points which this pattern now has. The top rail isn’t as clean as I like to see but it’s the essence of the pattern which is important. The blue trendlines represents a possible trading range that may develop consolidating the first massive impulse move down.

Below is a weekly chart for $NATGAS which I’ve been showing which shows the triple H&S top. As you can see the neckline #2 price objective was reached when we got our current counter trend rally back up to neckline #3 at 2.46. We have a pretty clean line in the sand using neckline #3. Above it will be bullish and below bearish.

Based on the two charts above I’m gong to take an initial small position and buy 1000 shares at the market at 13.89 with the sell/stop placed just below the top blue rail at 8.83. This is a very risky and volatile etf to trade so take very small positions. KOLD is a 2 X short natural gas etf. The more conservative members will want to wait and see if DGAZ backtests the top rail at 8.95 to take this trade and keep risk to a minimum.

Excerpt from Tonight’s Wednesday Report

The implications of this 60 year quarterly chart for the CRB index is staggering if it completes this impulse move down which so far has been working out beautifully. Again on this massive time scale you can see an unbalanced H&S top that measures out to just below the major support zone at the bottom of the chart .

Back to the Future Indeed .

The SIL,  Global silver miners etf, is giving us another very important clue that the long awaited breakout we’ve been waiting for is underway.

Today felt like an inflection point in gold and the INDU with both breaking important trendlines. As there is alot of ground to cover tonight lets get right to the charts starting with the daily look at the INDU. Today the INDU finally closed below  the bottom rail of the now seven point bearish falling flag and the double bottom trendline at 16,920. This was a big deal IMHO. We may see a little backing and filling in this general area but today’s move clearly setup a pattern of lower highs and lower lows. Note the six point bearish falling wedge that formed back in July of last year. As it formed below the previous high it needed an even number of reversal points to complete the pattern to the downside. Because our current seven point bearish falling flag formed at the top it needed to have an odd number of reversal points to make a reversal pattern. One last point on the chart below which shows two red arrows one point up and the other pointing down. As you can see the rally out of the low made in October was vertical only taking three days. The red arrow pointing down shows how it’s possible we may see the INDU reverse symmetry back down over the same area as shown by the red arrow pointing up.

Below is a daily line chart for the INDU which shows it closing below the brown shaded support and resistance zone today. Also the 20 ema crossed below the 50 ema giving a sell signal.

This next chart for the INDU is the down to up volume chart which shows when the down volume out paces the up volume in a big way we usually see some capitulation take place and get a bounce. We had a red arrow in November and December which showed some mild capitulation and a small rally. What’s interesting about this chart right now is that the INDU is making a lower low but the down to up volume isn’t showing any capitulation. As long as the INDU can keep declining without any capitulation spikes the further it can fall before we get some type of relief rally.

This next chart is a weekly look which now puts the bearish falling flag in perspective. Up until today that flag could have been a bull flag with upside potential. The breakout to the downside is clearly seen now. I also added a brown shaded support and resistance zone which is made from several important lows. I can’t rule out the possibility that the INDU could be building out a big consolidation pattern as one of several scenarios.

The monthly chart below shows what a possible big trading range might look like with the 3rd reversal point in progress to the downside right now.

This last chart for the INDU is a weekly fractal chart we’ve looked at a couple of times in the past which compares our current topping pattern to the 2007 topping pattern as shown by the purple rectangles. The last time week looked at this chart the INDU was just starting to trade back up to NL#1 which shows the backtest with the S? on it. With the potential bull flag forming below neckline #1, on the daily chart we looked at earlier, I wasn’t quite convinced that the fractal would keep playing out like it has. If you look at the 2007 fractal top you can see it had a backtest to the underside of neckline #1 after breaking out from a failed double bottom. We have the same situation taking place right now with the INDU’s double bottom failing. If this fractal keeps playing out today’s price action closed basically right on top of the double bottom trendline which would put us in a similar position to the 2007 double bottom trendline.

Note the price action of the 30 week ema during the formation of the 2007 top. Once the INDU broke below the double bottom trendline the decline began in earnest taking out neckline #2. The INDU then formed the red bearish rising flag as the backtest to neckline #2 which took roughly eight weeks to complete before the real fireworks took place to the downside. The INDU never again traded back above the 30 week ema until the inverse H&S bottom formed in 2009. Our current topping pattern for 2015 shows the 30 week ema held resistance this week in a similar fashion to the 2007 top. So here the INDU sits resting right on its double bottom trendline just below its 30 week ema. An interesting juncture for sure.

Next lets look at a daily chart for gold which finally showed its hand today. This is just a simple bar chart which shows four support and resistance lines gold made over the last year or so. When you look at the S&R lines just think of the price action as bullish above and bearish below. After flirting with the recent S&R line over the last several days gold finally showed us it was ready to rumble on increasing volume. If we get a backtest to the S&R line it would come in around the 1075 area.

After squeezing pretty close gold closed above the upper BB today which may help in giving us a backtest to the S&R line at 1075.

This next long term daily chart for gold shows its most important moving averages. As you can see when they’re properly aligned they do a good job of showing the big trend either up or down. Today gold broke above the lowest moving average the 50 day. The next important moving average is the 150 day which now comes in at 1122 with the 200 day at 1140. The most important moving average is the 300 day which has only been strongly tested twice since the bear market began and is about 70 points higher. Gold will talk to us by the way it interacts with these four moving averages. Is this, THE BOTTOM, only time will tell as its takes time and alot of work to reverse a major trend.

This next chart is a combo chart we’ve looked at several times recently which shows the CDNX on top, the HUI in the middle and gold on the bottom. The last time I showed you this chart I put a 9? at the last reversal point on the gold chart on the bottom. I remember saying, are we going to get a 9th reversal point for gold,  when it was touching the bottom rail of the blue falling wedge? We can look at that massive falling wedge two ways. I’ve always thought gold would break the bottom rail to the downside to finish off the bear market in one last capitulation move. If I’m wrong and gold completes its 9th reversal point to the upside and breaks out above the top rail of the falling wedge then we would have a 9 point bullish falling wedge reversal pattern. An odd number of reversal points creates a reversal pattern. A strong move above the 8th reversal point would then setup a pattern of higher highs which is the very first thing we need to see to start an uptrend. As you can see so far gold has been unable to do that since the bear market began in 2011. At some point the lowest tick for the bear market will be made but there is no way to know until we can look back in hindsight and actually see it. Is the low at the 9th reversal point THE LOW for gold’s bear market?

Next lets look at a few commodities charts to see if they are telling us anything. Back in the fall I began writing about another possible inflection point taking place within the commodities complex. This long term daily chart for the CRB index shows the last blue triangle which formed and was backtesting the bottom rail when I suggested another inflection point maybe at hand. Today the CRB index made a new low for its bear market that began in 2011.

This next chart is the 60 year quarterly chart for the CRB index I showed you when the price action was still trading inside the brown shaded S&R zone. It still boggles the mind to think that the CRB index could reverse symmetry all the way down to the 1970’s major support zone. The very first thing I would like to see on the bullish side is a move back above the brown shaded S&R zone. That would be a good start to reversing this bear market.

Below is a weekly chart for $GASO, gasoline, which shows the price action sitting on the bottom rail of a falling wedge at new lows for its bear market.

The monthly chart for GASO shows a long string of black candlesticks, all in a row to the downside, which is showing the strength of this impulse move lower.

This next commodities index I follow is the $GNX which is making a new low today.

The monthly chart for $GNX shows it’s now cracking the 2008 low with a H&S top in place which is the right side of a possible huge double top.

The weekly chart for $NATGAS shows it reached the price objective for H&S #2 and got a big bounce back up to just below neckline #3. So far it has fallen about .10 short of reaching a complete backtest.

As I’m running out of time this last chart for tonight will be a daily look at oil. We’ve been following this chart way before the price action started to form the combo H&S / falling wedge, which I’m calling a consolidation pattern. We’ve discussed this many times in the past. Whenever you see a smaller consolidation pattern form on top of an important trendline, such as the bottom rail of the blue falling wedge / neckline, that is usually a bearish setup. Today oil broke out of the little red bearish rising wedge and stopped at the bottom blue trendline / neckline. It’s very close to breaking out of the very large falling wedge / H&S neckline.

Word  Press is giving me some problems tonight so I’ll post the daily chart for oil when I get things corrected. All the best…Rambus

Got it.

Since gold topped out in 2011 it has been in a confirmed and unrelenting bear market. Since that bull market high in gold the INDU has been outperforming gold in a big way. The first chart I would like to show you is a combo chart which has the INDU:GOLD ratio chart on top and GOLD on the bottom. As you can see both the INDU:GOLD ratio chart on top and GOLD on the bottom reversed direction in 2011 with the ratio chart on top showing the INDU moving in a near parabolic move against gold. Gold on the bottom chart is showing a near parabolic move lower since its 2011 bull market peak. Since October of this year both have hit their respective parabolic trendlines as shown by the blue arrows. If this combo chart continues to play out then we should see the INDU keep outperforming gold going forward. The ratio chart on top shows the price action getting very close to breaking out into new highs and gold is very close to breaking down to new lows since the big reversal took place in 2011. All this chart means is that the INDU should keep outperforming gold until something changes this fact.

The bottom line for PMs is they are in a bear market  and as such cannot be traded from a buy and hold perspective .

However , believe it or not there are other markets that are in confirmed bull phase , where investors / traders have been and will be making a lot of money buying and holding .

Enter Chartology .

This next chart is a 25 year look at the $NDX 100 which shows its bull market rally back in the 1990’s to its current high which is just shy of its all time high at 4816. I’ve shown you this chart several times through the years as the Chartology is very nice. First note the parabolic rise in the 1990’s to its bull market peak in 2000 with the red bullish rising flag as a halfway pattern as shown by the blue arrows. Many parabolic moves end with some type of balanced or unbalanced double top or H&S top.

Next you can see the beautiful symmetrical H&S bottom that formed out toward the apex of the 10 year triangle consolidation pattern. The right shoulder formed on the backtest to the top rail of the 10 year triangle consolidation pattern while the left shoulder and head formed inside the blue triangle. The brown shaded areas shows how symmetrical the left and right shoulders were which launched the new bull market that began at the 2009 crash low.

What I find interesting is that with all the bear market calls taking place right now in the stock markets, when I look at this chart, I see a stock that is very close to breaking out to new all time highs which is a bull market. Granted there are some areas that have most likely seen their bull market highs but there are other areas that haven’t and these areas are where we’ll see the big moves take place going forward, think rotation. What generally happens during a bull market is that the initial strongest sectors will top out first and just trade sideways while the other weaker sectors take their turn at making their bull market runs. This is one reason why the topping process can take so long sometimes.

Tonight I would like to show you a few stocks that have yet to have their bull market moves but are setting up for that possibility. As I’ve shown you in the past one area that I think will do good going forward are the semiconductors. The long term monthly chart for the $SOX shows it broke out of its massive 10 year bullish falling wedge in 2010 which had a small red bull flag form just below the top rail and the blue triangle that formed as the backtest. Note the big support and resistance line that comes in at the 545 area which has been backtested twice. We know that S&R line is very hot so above it is positive and below is bearish. At this point the $SOX would have to double to reach its bull market peak made back in 2000 which tells us this sector is undervalued on a relative basis.

Another area I’ve been showing you that is still undervalued and unloved is the $NWX which has a bullish setup taking place with one consolidation pattern that has formed below the massive 12 year neckline and one that is trying to form above the neckline. Here we have a very clean line is the sand with the 12 year neckline showing us where support is located. Positive above and bearish below.

Another area I’ve been watching which had big moves in the 1990’s were the online brokers. SCHW was one of the first to kick off the bull market in this sector. After building out a blue 5 point triangle reversal pattern as its bull market top SCHW declined into it’s bear market low in 2003 or so. It took a massive 13 year triangle to consolidate that huge bull market in the 1990’s. It finally broke out in 2013 and has been in consolidation mode for the last two years above the top rail.

AMTD is another online broker that built out a beautiful eight year H&S consolidation pattern and is also forming a bullish expanding rising wedge just below its all time highs which actually took place in 1999. I can still remember the excitement when the online brokers were born. It was a game changer for the little guy. NO more huge commission fees each time you made a trade.

Below are a few good looking charts that have been behaving pretty well and are still positive. CRAY built out an eight year unbalanced H&S bottom and had a really nice impulse move up. It consolidated for about a year and has broken out above the top rail of a possible blue bull flag and has had a backtest.

The weekly chart for CRAY shows its bull flag up close and personal.

CUB has been building out a five year six point rectangle consolidation pattern. In big consolidation patterns like this you can see how each reversal point has some type of reversal pattern. Note our most recent touch of the bottom rail has a H&S bottom in place and has broke above the neckline. The red circles shows you what I call a false symmetry breakout. What this means is that the distance of the false breakout below the bottom rail, red circle added to the next high that fails to reach the top rail, are about equal. If you add the red circle to the failure point of the price action to reach the top rail it would be a complete and equal reversal which will be the same as the other reversals.

The daily chart for CUB shows the head as a blue 5 point rectangle reversal pattern with the first H&S bottom complete and the second one is under construction.

BRCM has a beautiful looking long term chart and is making new multi year highs. It broke out of an eleven year black triangle consolidation pattern that had to have five reversal points because it formed below the 2000 top.

I’m going to stop right here for tonight. I just want you to be aware that there are some really big consolidation patterns that have formed since the tech bubble came to an end in 2000. It has taken many years for some of these stock to consolidate those massive gains made back then. I will be posting many more of these types of stocks as I think there is alot of potential in many of them to have really big moves as some are doing right now. All the best…Rambus

Before we look at a bunch more PM stocks tonight I would like to say something about the Kamikaze Stocks. First when I take a position in one of the Kamikaze stocks it’s based on the underlying index. For instance when I take a position long or short in the juniors it’s based on the GDXJ. For the big cap miners it’s based on one of the big cap PM stock indexes such as GDM, HUI or the GDX. The same goes for gold and silver. Believe me I’m fully aware of the depreciating aspect these Kamikaze stocks have over the longer period of time. Some may think it’s a total waste of time looking at the Kamikaze stock but they can gives us some good clues based on their own individually chart patterns.

Let me show you an example of what I mean. Below is a 2 hour chart for DUST going back to July of this year. The first thing I would like you to note are the black dashed support and resistance lines. One thing I learned the hard way is to respect those black dashed S&R lines because when they get broken a big move generally occurs. Sometimes waiting a day or two to pull the trigger can cost you dearly. Up until today our current black dashed S&R was still holding support which I also showed you on the HUI chart earlier today which was holding resistance. DUST was probably about four hour or so ahead of the HUI in respect to the black dashed trendline. When I seen DUST cracking its black dashed S&R line it put me on high alert to keep a close eye on the HUI’s trendline. Knowing what can happen when one of these S&R lines gives way it was time to exit the DUST trade right or wrong.

Next I would like to add some Chartology to the same 2 hour chart for DUST to show you why today was time for me to exit this trade. Generally when I draw in a top rail of a rising channel I like to look for a gap first and then if there is no gap a previous small high or low to start the trendline. DUST had formed a nice gap on the way down so that’s where I started the top trendline of what had been a pretty good looking parallel uptrend channel. As you can see the bottom parallel trendline held support on five separate touches which makes it very important. The price action cracked the bottom black rail of the uptrend channel today which is something I didn’t want to see because of the possible consequences that may transpire.

Until today’s crack of the bottom trendline the corrective decline that began around the 10th of November looked just like a normal correction within an uptrend channel. After finding support at the bottom black trendline DUST broke above the top rail of the blue downtrend channel and began what looked like the next impulse move higher. After a short rally DUST declined again and found support once more on the bottom rail of the black uptrend channel. A second rally attempt was made but it ran out of gas at the previous little high and rolled over testing the bottom black rail of the uptrend channel again. When you’re looking for a strong impulse move, that’s what you want to see, a strong move. Note the strong impulse move in late October of this year that started the uptrend channel.

Here you can see DUST was hesitating and not showing the stuff of a strong impulse move which throws up a red flag to keep a close eye on things. Actually up until today DUST was finding support exactly where I wanted to see it but with the failure to really launch an impulse move it demanded my close attention.

This last chart for DUST now shows you why I had to exit this trade today. Instead of the black parallel uptrend channel with the blue bull flag as the halfway pattern we now may very well have made a six point red bear flag sitting in the middle of the blue downtrend channel. So today’s break of the initial black dashed S&R rail we looked at on the first chart above, the break of the bottom rail of the black uptrend channel and now the breakout of a possible 6 point red bear flag tells me today’s crack is very important and not to be taken it lightly.

Some may think the failure of this trade to workout is a done deal. Sometimes the picture becomes much more clearer when you see a failure like this which now opens up the door for another trade with more clarity. I’ve added the red arrows which shows a price objective down to the October lows around the 11.50 area as shown by the brown shaded price objective zone using the red bear flag as a halfway pattern. Tomorrow is a new day with new opportunities if we can keep an open mind. I’ll have more later on tonight in Part 2 of the PM stocks. All the best…Rambus

HUI 2 hour chart. Is the top rail just cracked or has the HUI broken out above it? Tomorrow we should know the answer to that question.

I was just going over some old charts and came across this one which is a ratio chart that compares the HUI to gold going all the way back to the bear market low that was made back in 2000. I use to show this chart quite a bit when the blue triangle on the right side of the chart broke down. This chart shows you a good example of how weak the HUI has been vs gold. The initial impulse move out of the 2000 bear market low shows the HUI really kicking gold’s butt until late 2003. The ratio then declined into the 2005 low which ended creating a  double top hump. There was no way to know back then that the 2005 low would be a double top hump until much later. From the 2005 double top hump the ratio rallied up to the previous highs made back in 2005 around the .60 area. As hard as the HUI wanted to it couldn’t break through the double top highs and traded sideways until the infamous 2008 crash. From there the HUI rallied back up to the double top hump but could go no further even tho the HUI was making a new bull market high back in 2011. It then formed a blue triangle consolidation pattern just below the double top hump which matched the one that formed during the bull market back in 2002. At the time I labeled them symmetry triangles, one going up and one now coming down in the same place.

You don’t have to be a rocket scientist to see how badly the HUI has under performed gold since the 2011 high.

This ratio  built out a second reverse symmetry pattern at the 2008 crash low. Note the red flat top expanding triangle on the left side of the chart and then coming down the equally small red bearish rising wedge on the right side of the chart. Long term members may remember that I was always looking for ratio to hit .13 to see what would happen there. It was a place where the HUI may start to outperform gold again and the ratio could start to rally but that wasn’t the case. As you can see the ratio built out a small H&S consolidation pattern right on top of the 2000 bear market low and then broke below that all important .13 on the ratio. Now this ratio is building out another possible H&S consolidation pattern just below the 2000 bear market low at .13 or so. Who could have ever imagined back in 2011 or even going all the way back to the late 2003 ratio high that the HUI would under perform gold in such a massive way for such a long period of time? As a matter of fact this chart has had 4 major impulses down , one every year for the last 5 years .  There is still no end in sight yet that this ratio is bottoming out or reversing this grizzly bear market that really took off in 2011 IMHO.