There are no words to describe the Carnage  that Precious Metals Stocks have suffered for the last 12 years. There is no consoling those who have invested in this sector , many who have literally lost their life’s savings as they watch this horror unfold in utter disbelief .

The best way to gauge this complete evisceration of Precious Metals Investors is to follow the HUI:GOLD Ratio .

This ratio compares the most widely followed PM Mining Index . the HUI …Numerator

with the Price of Gold …Denominator

This Ratio is widely followed by PM Analysts, many  who have been calling for it to bottom since it entered its bear market in…get this…2003 !

Yes 2003 !

Rambus has documented the fall of this ratio ever since he began this website and has just tonight posted an update showing it has actually  broken out of a small consolidation pattern this past week and is now BELOW where it was at the beginning of the Late Great Gold Bull Market in 2001 .

………………………………..

Excerpt from Rambus Chartology Weekend Report June 21 2015.

“Next I would like to update you on the long term HUI:GOLD ratio chart we’ve been following that shows this ratio has finally broken below major long term support, going all the way back to the 2000 low. I have literally waited several years for this ratio chart to break .13 and it finally has. The little H&S consolidation pattern that formed right on the S&R rail has been the key in looking for this ratio to break to new all time lows”

Please take a moment to let this stunning chart sink in .

Especially if you have been holding PM Stocks with the view that this ratio cannot possibly go any lower  or if you have been bottom fishing in this god forsaken sector .

The price of the Major PM Mining Stocks, as represented by the HUI:GOLD Ratio , is BELOW where it was when gold was trading at $250 , 15 years ago.

And in spite of all the analysts saying this was absolutely impossible , this Incredible Ratio is breaking down yet again to new all time lows .

The Mind Boggles .

Fullgoldcrown (For Rambus Chartology)

This Weekend Report will probably be one of the most important posts I’ve made in quite some time. It will require 3 parts to fully present this scenario .

I’m going to try and lay out a game plan on how this possible last impulse move down may play out in time and price. One thing I can guarantee you is that there will be no bell going off at the bottom when it finally materializes. The volatility will most likely be very extreme with huge swings back and fourth as the last of the bears sell out to the new bulls. How long that process will play out is anyone’s guess. It may take several months or longer until we see some type of reversal pattern form.

Normally after a hard move down the first bounce off of initial support will be the strongest. It’s like dropping a super ball, the first bounce will be the highest with the subsequent bounces losing steam until it finally comes to rest. These bounces will produce some type of reversal pattern that we should be able to recognize which most likely will be a double bottom or inverse H&S bottom.

Today, in part one, I would like to look at the HUI, the precious metals stock index, for clues on how this last impulse move may play out in time and price. I’m saying last impulse move down but there in no way to know 100% for sure if that is true. This next impulse move down is based on what the chart patterns are suggesting today along with some of the individual precious metals stocks. When you add everything up it becomes clear that at a minimum we’ve been in the next impulse move down since the May high at the 185 area. I’m going to use the HUI as a proxy for the rest of the PM stock indexes as it’s leading the way lower.

First I want to look at the short term two hour charts and move out to the longer term charts to try and put everything in perspective and paint a picture of how I think things may play out based on the Chartology at this time. We’ll definitely need to keep an open mind and adapt to changes that the market may throw at us.

When looking at these short term charts the November low from last year was a most important low as many of the individual precious metals stocks and precious metals stock indexes show that low as being the first reversal point in a bigger consolidation pattern. This consolidation phase has gone on now for 7 1/2 months. When the last impulse declined into that November low there was no way to know how or which type of consolidation pattern may build out. All we could do is watch the price action for clues on what may develop. This first 2 hour chart for the HUI shows most of the smaller consolidation patterns that formed since the November low. It’s easy now to look back in hindsight to see how things unfolded but it’s much harder in real time to know 100% for sure what you’re seeing is correct as chart patterns can morph into bigger patterns.

Some of you may remember the 5 point blue triangle reversal pattern that ended up being the head of, at that time, a small H&S top labeled #1. There was a nice reverse symmetry decline into the March low which now is the armpit of a much bigger H&S pattern #2. You can see how laborious the right shoulder was during its formation as the original blue dashed rising wedge morphed into the bigger rising wedge which eventually built out the right shoulder. I showed you how the HUI may do a ping pong move in the apex of the blue dashed rising wedge and also how the apex may hold resistance. Looking back in hindsight that’s is what happened and why we started to get short the Kamikaze Stocks. The first big clue we got is when the price action gapped  below the bottom rail of the blue rising wedge. From there you can see the little red rising bear flag that formed right on top of the neckline. Then the price action gapped below the neckline with one clean backtest so far. I wish I could rule out no more backtests to the 164 area but it’s still possible at this point in time. The main thing is we have a clean line in the sand at the 164 area to keep a close eye on.

This next 2 hour chart for the HUI I’m going to use for illustration purposes and call it a four point triangle consolidation pattern. They’re basically both consolidation patterns with the same outcome.

This next chart is a 2 year daily look at the HUI which shows the combo H&S / triangle pattern we just looked at above with the blue triangle consolidation pattern that led to the last impulse move down once the bottom rail was broken to the downside. Since the November low from last year the HUI has built out this blue triangle/H&S consolidation pattern.

To say the last two years in the PM complex has been tough would be an understatement as traditional chart patterns have morphed into bigger patterns. Longer term members may remember this blue 8 point Diamond consolidation pattern that chopped around for almost a year and a half before it finally broke to the downside in the last impulse move down. Starting at the 5th reversal point you can see the blue triangle, that I showed on the chart above, which finally ended the Diamond. The last impulse move down started at reversal point #8 and ended at the all important November low last year. Hear I have the H&S consolidation pattern in place but it could also be a triangle consolidation pattern that is just now starting to break down. Note how many times the bottom rail or NL has been touched over the last seven months or so. This is an important breaking taking place right here and now.

Before we move on the the longer term charts I would like to show you the first impulse move down we caught back in December of 2012. The big S at the top of the chart represents the top of the right shoulder for the massive H&S top. That right shoulder high was an unconventional 5 point red bearish falling wedge which is a reversal pattern. When the pattern broke down we took our first short position on the backtest to the underside of the red falling wedge as shown by the black arrow. That short trade started out very slowly as shown by another unconventional blue falling flag which took a good three months to build out.

At the time I was using the 50 dma as our sell/stop. You can see how well it worked in holding resistance which the HUI couldn’t break. Finally the blue falling flag broke to the downside with a nice clean backtest to the underside of the bottom rail. The HUI declined sharply until the start of the conventional red bearish rising wedge which took about a month to complete. The black arrow in late July of 2013 shows where the HUI gapped above the 50 dma where we finally exited our Kamikaze position. The reason I’m showing you this trade is to show you that it will not be a cake walk during this next impulse move down. There are going to be some small consolidation patterns that form along the way with some very wide swings in the price action that will scare the pants off of you. They call it short covering rallies. They will only last for a few days but be prepared for them.

This next weekly chart for the HUI is one we’ve been following very closely that shows the double trendline downtrend channel. The outer dashed trendline has held resistance three times now so we know it’s hot. You can see the lower rail of the bottom triangle cracked this week to the downside. This is the point where we could see a backtest to the underside of the lower triangle before the move lower takes off. Note the impulse move down from the upper blue triangle. There was no backtest when that bottom rail was broken. The pink shaded areas measures time and price based on the first big impulse move down as shown by the blue arrows.

When I first built this chart I was using the last reversal point in the upper blue triangle as the starting point for the second impulse move down. At the time the smaller lower blue triangle hadn’t formed yet which may change the price objective as shown by the blue arrows. I’ll show you what I mean in a moment.

As I’ve shown you on the charts above this has been a rather unconventional trading range, for a lack of better words. This next weekly chart for the HUI I’ve never posted before until today. I’ve been looking at this next possibility for some time trying to explain this big trading range which I would view as very complex. I have shown you in the past how two smaller chart patterns can build out a bigger pattern which is not at all uncommon. If we fuse the two blue triangles together we get, what most chartists would call, an unconventional bearish falling wedge.

The weekly chart below shows how the falling wedge fits into the big picture. I’ve made two price objectives based on the impulse method as shown by the blue arrows and the breakout to breakout method. The breakout to breakout method starts with the breakout from the massive H&S top to the first reversal point in the black falling wedge. Take that measurement and add it to the breakout from the black falling wedge to get your price objective. If the black bearish falling wedge plays out then we’ve only completed four weeks of this next impulse move down as shown by the blue arrow at reversal point #4.

Before you write off this possibility I will show you another bearish falling wedge that played out during the 2008 crash.

This next weekly chart for the HUI takes in the H&S top that built out in 2007 and the 2008 crash that ensued when the breakout from the neckline took place. Like our most recent massive multi year H&S top, which is a double H&S top, the 2007/2008 H&S was also a double H&S top. The first leg down the HUI formed a little red bear flag halfway pattern which when it completed marked the first reversal point in the big blue bearish falling wedge.

If you’re an adrenalin junkie, as Sir Parabolic Chuck ,at the Chartology Forum says he is, you would have been in 7th heaven. Note how many points were in the first reversal point within the blue bearish falling wedge in about two weeks time. Then the second reversal point to the downside that was bigger than the first reversal point which again took about two weeks. The 3rd reversal point took less that a week to complete and then the fourth reversal point signaled the blue falling wedge was complete when the price action broke below the bottom blue rail. Note the clean breakout and backtest of the bottom rail of the blue bearish falling wedge. It was perfect Chartology. After the backtest was completed it only took four days for the HUI to reach its ultimate low around the 150 area.

The initial bounce off of the bottom was roughly 75 points from about 150 to 225 in about two weeks time. Just think about that for a minute. All I can say is be careful of what you wish for. The HUI then decline back down to the 160 area in just over a weeks time forming the second low. From the second low the HUI rallied almost 100 points in less than two weeks time where it finally ran out of gas and fell back. At the time I was looking for the double bottom hump to hold support but as you can see the price action traded below that area for about a week before the HUI left, what I’m calling a 2 1/2 point double, bottom for good. The HUI basically doubled in about 2 months time from 150 to 300 before you could blink and eye. Previews of coming attractions?

Below is a monthly chart that shows how the current bearish falling wedge would look as a stand alone pattern.

Next I would like to show you a few long term charts looking for clues on what is happening from a different angle. This monthly chart for the HUI shows three fanlines that start at the bear market low in 2000. Note how fanline #2 splits the two triangles with the blue one on top and the red one below. Perfect Chartology. What is also apparent on this very long term chart that shows the entire history for the HUI is the bull market that started in 2000 built out a massive blue bearish rising wedge. Note the big breakout in April of 2013 that so many were calling manipulation at the time. I viewed that big move down as a breakout from two important trendlines. The first was the breakout from that massive H&S top that few believed was possible at the time. The second breakout broke below the bottom rail of the massive rising wedge pattern. From a Chartology perspective that’s exactly what you want to see when two important trendlines give way.

This next chart is a weekly line chart for the HUI which helped confirm for me when the HUI was breaking out from that massive H&S top in 2013. Note how fan line #1 formed when the HUI broke below the neckline and the dashed uptrend rail which had been in place at the time in 2008, green circle. The exact same thing happened when the massive H&S top broke down in 2013 again at the neckline and fan line #2. You can see the small H&S top that has been forming since fan line #3 gave way late last year. If you changed this chart to a bar chart you would see the head backtested the underside of fan line #2 right on the money.

Next I would like to show you a couple of ratio charts. The first ratio chart compares the HUI to GLD. Here you can see the H&S top that has formed since the November low from last year.

This very long term weekly chart for the HUI:GLD ratio shows the H&S top, on the chart above, is sitting right on a very important support line that goes all the way back to the 2000 bear market low at .13 or so.

This last chart for tonight shows the HUI:SPX ratio that shows the HUI under performing the SPX and has now broken the neckline to the downside.

From a Charology perspective the HUI is not looking very healthy in here. We could see a little backing and filling over the next week or so but nothing of significance. In part 2 (for subscribers) we’ll look at the precious metals themselves and look for more clues on a time and price objective. In part 3 I’ll show you many precious metals stocks that should also give us a big heads up on when to look for a possible important bottom to start building out. I really believe we’ve started this next important impulse move down that may take up to four more months to play out so we still have some time left to get our shopping list together on which precious metals stocks we’ll want to own once this Grueling Bear Market comes to an end. Mercy !

We will be calling on the Good Knights and Ladies at the Chartology Forum Round Table to prepare the list  based on their wide array of knowledge in the Precious Metals Stocks.

All the best…Rambus

This long term daily line chart for the HUI shows it’s now, quietly and unassumingly, approaching that all important 2008 crash low again at the 150 area. This is a good illustration of what I mean when I talk about how a stock will often times build a consolidation pattern just above, just below or right on top of an important trendline before it’s broken. Since the all important low last November the HUI has been carving out this H&S / triangle consolidation pattern right on the brown shaded S&R zone. This consolidation phase is giving the HUI the energy it’s going to need to break to new lows below 150. The setup is there.

In this Weekend Report I would like to show you an in depth look at some of the more important currencies on the planet to see where we’re at in the big picture and how they may affect the price of gold. In general when a currency (other than the US Dollar) is headed lower the price of gold tends to rise and just the opposite happens when a currency rises . So following the different currencies is important.

With the US dollar being the most important currency we’ll start there.

The first weekly chart for the US dollar shows the blue 5 point rectangle, at the bottom of the chart, that launched the US dollar on a near parabolic move higher. The rally finally ran out of gas in March of this year and has been consolidating those gains made over the last year or so. We are at a place where I would like to see a bigger consolidation pattern forming . Bigger than any other consolidation pattern since the last reversal point on the blue 5 point rectangle  pattern at the bottom of the chart. As you can see, at the top of the chart, the US dollar has been chopping out an expanding falling wedge since the March high. There have been three completed reversal points so far with the possible 4th one in progress right now.

A break of the top rail would be very constructive in completing the potential blue expanding falling wedge which I would then view as a halfway pattern to the upside. The other scenario would be that many times a chart pattern can morph into a bigger consolidation pattern. In this case reversal point #1 would still be the first reversal point in a bigger consolidation pattern but the most recent low labeled #4 would just be the second reversal point with a third one to form somewhere around the highs and then one more leg down to create the 4th reversal point. The pieces of the puzzle are coming together but we still need to see a few more pieces to complete the picture. The bottom line is that a solid breakout to new highs above the first reversal point would be extremely bullish for the US dollar and not so good for the PM complex and commodities in general.

This next long term chart for the US dollar I first showed you when it backtested the top rail of the massive bullish falling wedge as shown by the little brown box. What this implies is that the low, on the weekly chart above, is the low for this correction even if the current pattern morphs into a bigger consolidation pattern. It will still be a consolidation pattern but just a bigger consolidation pattern.

If the blue expand falling wedge fails to breakout and this pattern morphs into a bigger consolidation pattern, the monthly chart below shows you how it may look in the big picture. Regardless of which pattern eventually wins out you can see how this is a perfect area for some type of halfway consolidation pattern to build out. A halfway pattern in this area would show a price objective up to the old highs around the 120 area.

The next chart is a long term monthly combo chart that has the US dollar on top and gold on the bottom. The US dollar shows a huge rounding bottom that is reversing symmetry to the upside as shown by the blue arrows. How it came down is how it’s going back up. As you can see the US dollar is at its first important area of resistance based on the black dashed horizontal line at 98.65 which extends to the high made back in July of 2003. That little congestion area took about 4 months to compete before the price action started to break down again. We’re currently in our fourth month of consolidating the first leg up.

The gold chart at the bottom shows it just chopping around the bottom of its nearly 2 year consolidation pattern. Gold has held up pretty well based on the near vertical rally the dollar had over the last year or so. At this point, if the US dollar does in fact breaks out to new highs for this move, I think it will put enough pressure on gold will finally break below its nearly two year bottom trendline and begin its next impulse move down.

Below is weekly combo chart that has the US dollar on top and gold on the bottom which shows more clarity. The chart on top shows the US dollar has corrected 38% of its big move off of the March low from last year which is another reason why I think we’ve seen the low. The only real question is how long the consolidation phase will last?

The gold chart on the bottom shows a pretty well defined two year falling wedge. This chart also shows you the brown shaded support and resistance zone, between 1000 and 1035 or so, where anyone who is bearish on gold is looking for the Bear Market to end. However  As I’ve shown you in other similar charts for gold, this nearly two year consolidation has a much lower price objective than 1000 . What we may see is a strong bounce off of the brown shaded S&R zone which would then backtest the bottom rail of the two year six point falling wedge and then one last big move down to end the bear market. It’s just speculation at this point but there will most likely be some buyers around the 1000 area that will offer initial support. At any rate things are starting to get interesting.

Next lets look at some long term charts for some of the more important currencies on the planet. Most of these currencies have built out massive topping patterns we looked at when they began their first impulse move down last year.

First the Chartology of the Other “Dollars”

The CAD, Canadian Dollar, built out a massive H&S top which broke down late last year. This chart shows you several good examples of what I’m referring to when I say it’s usually a bullish or bearish setup, in this case bearish, when you see a smaller consolidation pattern form just above, just below, one on top with one below or in some case right on the important trendline. The Canadian Dollar formed a double H&S top and then formed a red bear flag just below Neckline #1 before it moved lower. In regards to Neckline #2 it built out a small blue bear flag above the neckline and then once the neckline was broken to the downside the Canadian Dollar formed a small red bearish falling wedge as the backtest. Like the US dollar the Canadian Dollar is still in the process of building out its current consolidation pattern which so far is taking on the shape of an expanding triangle and is finding some support at the previous recent highs.

Next lets look at the NZD, New Zealand Dollar , which is one of the weaker currencies out there. This chart broke out of a small red bear flag two weeks ago and looks to be headed lower.

The XAD, Australian Dollar, built out a rather complex massive topping pattern with a blue 5 point triangle several pattern. It then went on to form a smaller right shoulder vs the left shoulder but it’s still a shoulder which created a huge H&S top. It formed the little red bearish falling wedge just below the neckline as the backtest which told me the neckline was hot. As you can see the XAD is sitting right on its low from the first impulse move down. It may give us an early heads up if it starts to break down hard.

Any way you slice  them these Other Dollars are getting Smaller versus their big brother .

I wonder if anyone remembers this weekly chart for the XBP, British Pound, when it began to morph from the original blue dashed triangle consolidation pattern? When it became apparent that we had a false breakout to the downside I then drew in the bottom red circle which shows the distance of the false breakout. Generally when you see a false breakout like this the top rail will morph about the same distance as the failed breakout. I just took the bottom red circle and moved it up to the last high in the original blue dashed triangle which gave me a place to look for a high to come in play. That new high ended up being the 4th reversal point in a six year bearish rising wedge. The breakout and backtesting process has been a little sloppy but nothing is broken yet in that regards. At this point I would like to see the price action stay below the bottom blue rail and begin its next impulse move down. If you look real close you can see a small gap that was formed about two weeks ago when the XBP traded below the bottom blue rail.

Next lets look at the euro which has the biggest weighting in the US Dollar Index. This first chart shows an inverse bearish expanding rising wedge vs the bullish expanding falling wedge we looked at on the US dollar chart earlier. Like the US dollar, it still hasn’t completed its fourth reversal point to the downside yet , so the chop continues.

This next chart for the euro shows it built out a very large downtrend channel. The euro found initial support right where you would expect, the bottom rail, where we see an initial pop. The 105 area is a critically important area of support for the euro.

This next long term monthly chart for the euro shows a very large H&S topping pattern which broke below the brown shaded S&R zone. That was a big deal as the odds are very high now that it will reverse its role and act as resistance on any rally attempt. I showed you on the long term chart for the US dollar the big rounding bottom which was testing initial resistance at 98.65 as it was reversing symmetry back up. This monthly chart for the euro shows the exact same thing as it’s finding support at the same relative spot. I left the S&R rail horizontal on the US dollar chart but on the euro chart I drew in a potential neckline based on the reverse symmetry taking place right now. This little counter trend rally maybe forming a small right shoulder similar to the one on the left hand side of the chart. Anyway you slice it that is a massive topping pattern on the euro.

This next chart for the euro I overlaid gold on top of it to see if there is any correlation between the two. As you can see sometimes there is and other times not so much. I remember during the first part of this year was very frustrating when I would look at this chart as the euro wasn’t really going anywhere but gold had a strong rally. Since the first part of May the two have been moving fairly close to each other with gold taking the lead lower.

Now lets look at the XJY, Japanese Yen, which shows it built out a massive double H&S top we’ve been following since the breakout from the smaller H&S top. If you recall the right shoulder was formed by the creation of the blue bearish falling wedge. There was a breakout gap of neckline #2 which I showed was a reverse symmetry gap where one had formed when the Yen was in its bull market, green circles. The Yen maybe giving us the biggest clue that the consolidation phase, that started at the all important November low for the PM complex also, maybe coming to an end. As you can see the Yen broke out of the small red rectangle, with a breakout gap, two weeks ago. This is a very big deal IHMO.

Below is a daily chart where I overlaid gold on top of the yen. Gold in US dollars actually has a stronger correlation to the Yen than to the euro. Again, you can see where gold was much stronger than the yen during the first part of this year which was very frustrating at the time as you know the correlation is generally pretty good. Since May of this year the correlation is back as both are moving lower at the same time.

This next chart I overlaid the HUI on top of the Yen to see the correlation. It’s never perfect but there are times when they move pretty much in lock step to each other as shown since March.

This next long term weekly chart shows the correlation between the Yen and the HUI going back over nine years. This chart looks a little sloppy but it does show the correlation between the two over a long period of time. The HUI in red shows its big H&S top while the yen in black shows its double H&S top. The red arrows shows the armpits for the HUI and the black arrows shows the armpits for the Yen. Looking at the bottom right hand side of the chart you can see the correlation has been pretty good since that all important November low from last year.

With one week of June under its belt this long term monthly chart shows gold down over 18 points so far but the month is young yet.

Lets look at one last chart I’ve been trying to show you on a weekly basis so you can follow along on how gold is behaving on the long term linear scale chart. This week gold finally cracked the bottom rail of the little red rising wedge which is a step in the right direction if you are a Bear .

Looking at all the different currency charts above the NDZ and the Yen are showing most weakness right now with the Australian dollar sitting on support. If the PM complex continues to follow the Yen lower then it looks like they should breakout to the downside fairly soon. I wish we could tell the markets what to do but all we can do is follow their Chartology and hope we’re picking up the  right signals .

.  All the best…Rambus

Below is a 2 hour chart for the HUI that we’ve been following since the all important low from last November. This chart shows you all the Chartology from that November low which I’ve been viewing as a H&S consolidation pattern. So basically the whole correction has been a H&S consolidation pattern within the bear market decline. This is not a reversal pattern but a continuation pattern. After breaking out from the blue morphing rising wedge last week it now appears the HUI is building out a small red bear flag. As you can see the big neckline is fast approaching.

Many times in the past you have heard me mention that a line chart can often times gives you a quicker breakout signal vs a bar chart. Below is a daily line chart for the HUI which shows the price action is testing the neckline. That little red bear flag on the 2 hour chart above is sitting right on the neckline on this daily line chart below. All the indicators are negative with the 20 ema crossing below the 50 ema just recently. It’s possible that this 7 month consolidation phase maybe coming to an end. A good solid breakout through the neckline will confirm the next impulse move down.

In this Weekend Report I would like to show you some old charts, that we’ve not looked for the most part, in a long time. Some of the long term members may remember some of these charts that go all the way back to when we first opened our doors at Rambus Chartology. When you build long term weekly or monthly charts things change very slowly vs the minute charts. What you were thinking several years or longer ago can still be relative to today’s price action. It lets you know if what you were seeing in the charts back then was way off base or if what you were thinking back then was correct or at least fairly close to what the present day’s price action is showing. It forces you to be honest with yourself.

It’s impossible to catch every little twist and turn the markets make on the short term sharts but the long term view can stay consistant for many years. It’s human nature to try and catch every little wiggle the markets make but in reality the big money is made when you can catch the beginning of a major trend and hold on through thick and thin having the confidence in your charts or whatever trading system you’re using to keep you on the right side of the trend. With that said lets look at some old charts.

This first chart is a combo chart that has the $BPGDM on bottom and GDX on the top. The BPGDM measures the gold stocks that are on a buy signal using a point and figure. First lets look at the bottom right hand side of the chart that shows the BPGDM has been falling for the last several weeks. It topped out at 40 and is currently down to 26. This tells us fewer gold stocks are on buy signals vs two weeks ago which isn’t what you want to see in a strong impulse move up. The BPGDM also has a 5dma and an 8dma that gives short term buy and sell signals. When the price action of the BPGDM falls below the faster 5dma and then the 5dma falls below the 8dma you get a sell signal.

Another way I like to use the BPGDM is to look for a divergence when the GDX is close to making an important low. As you can see on the lower chart there can be a divergence where the BPGDM made a lower low back in 2012 while the GDX made a higher low. Just the opposite happened in late 2013 when the GDX made a lower low but the BPGDM made a higher low. It will be interesting to see what these two charts look like when this bear market is finally finished. It wouldn’t surprise me to see the GDX make a positive divergence to the BPGDM similar to what we seen back in 2012.

This next long term chart I built right after the bull market top to look for possible support zones during the bear market. The brown shaded areas are the important support zones I’m paying close attention as those were the highs made on the way up. When the tops of those brown shaded S&R zones were broken to the upside, during the bull market years, they were backtested before the new impulse move up began in earnest. Note the 3rd S&R zone that held initial support during the that last impulse move down in late June of 2013 at 1230. As you can see the price action penetrated that 3rd S&R zone by a little bit but it did hold support. The initial bounce took gold backup to the underside of the 2nd S&R zone at 1435 which held resistance and was the start of this nearly two year consolidation period we find ourselves in presently. What’s important to see is the series of lower lows and lower highs since gold topped out in September of 2011 vs the left side of the chart where gold made higher highs and higher lows during its bull market run.

Next I would like to draw your attention to the 10 month ema which did an outstanding job of holding support during the bull market years. It has done a very good job also during the bear market that started in 2011. Since the high at 1535 over two years ago gold has only manage to close above the 10 month ema just twice by a small margin but then quickly reversed back down the next month. The high for this month, May, was 1232 which is the underside of the brown shaded S&R zone number three and the 10 month ema. The 10 month ema now comes in at 1215 which is about 25 points higher from the close on Friday which was the end of the month so that last bar is now history.

One last note on the chart below which is showing the next brown shaded S&R #4 coming in between 985 and 1034 which maybe a place to look for a small consolidation pattern to develop. Then the potential ultimate low which would come in at the 5th S&R zone between 685 and 725 which could be just a quick spike. We’ll worry about that when the time comes.

Below is another long term chart for gold I first built once the bottom rail of the expanding rising wedge broke down in 2013. There were several things back then that caught my attention. The first thing I was looking for was a backtest to the underside of the bottom rail of the expanding rising wedge which we got. Once that was completed I began to look at the possibility of a H&S top as I was pretty confident that the bull market was over at that time. As you can see, so far, gold has formed a classic H&S top which I’ve been showing you on some other charts where the left shoulder and head form inside the wedge or flag and the right shoulder forms on the backtest to the bottom rail of that wedge or flag. There is another big piece of the puzzle for why I think the H&S top is valid. Again some of our longer term members may remember when I extended the neckline from the H&S consolidation pattern that formed at the 2008 crash low, labeled neckline extension rail on the chart below. Outside of that little spike in January of this year above the big neckline the neckline extension rail is still functioning as resistance. There is one more piece of beautiful Chartology that I’ve been showing you on this chart and that is the neckline from the 2008 crash low also shows the lows for the left and right shoulders during the 2008 H&S consolidation pattern and the exact same angle shows the tops for the left and right shoulders on the massive H&S top. They’re labeled Neckline symmetry rails.

There is one last important aspect of this potential massive H&S top. This H&S top measures out to the 2008 crash low at exactly 685 or about another 42.8% lower. Keep in mind we’ve been watching this pattern develop since 2013 which is going on close to two years now. Its been frustration because of all the sideways chopping action but nothing has or is broken. You’re probably getting tired of hearing me say, it is what it is until it isn’t. Some time in the future we’ll know the outcome but for the time being all we can do is wait and see what takes place over the short term. The very first thing we’ll need to see is gold making a new low for this bear market.

Lets take a quick look at silver that is showing a very big massive H&S top, similar to that of gold, which we’ve been follow for about the same amount of time. It to has some very nice symmetry as shown by the neckline symmetry rail. This potential H&S top has a price objective all the way down to the 6.25 area but there is a brown shaded support and resistance zone that comes in between 7.75 and 8.50 which will be my main price target. If silver can make it down to the brown shaded S&R zone that will be close enough for me. It’s a little hard to see on this chart but silver put in an unbalanced double top as its parabolic move ended in April of 2013.

This next chart I haven’t posted in probably a year and a half if not longer. This is a comparison chart where I compare the HUI and Gold. What this chart shows you is how they tend to breakout together even if one is stronger than the other or they have different chart patterns. The purple vertical dashed lines shows how they broke out of their respective chart patterns at the same time. Back when the HUI was forming its massive double H&S top I was showing gold was also building out a massive double H&S top. Note the green shaded area on the left hand side of the chart that shows the HUI building out a triangle consolidation pattern while gold was building a bullish rising wedge. Even though their chart patterns were different they still broke out at the same time. Also note there are three shoulders on the left side of the head for both the HUI and gold and three shoulders on the right side of their heads. The pink shaded area shows where each had a false breakout to the upside which I labeled as a bear trap once the price action traded below their NL #1. From there each broke below their respective neckline #2 and declined to that important late June low of 2013. From that low they have been chopping out their next consolidation pattern which will be 2 years old this June.

This next chart is a long term weekly look at the HUI to gold ratio chart which goes back a long time. I first showed you this chart back in early 2013 about the time the HUI was breaking below its massive H&S neckline. I remember speculating if we would see the all time low for this ratio at .13 come into play at some point. As you can see the all time low was hit. Now we have another important piece of Chartology we need to recognize. I have shown you many times in the past that when a stock approaches an important support or resistance line there are several ways it can break through that line. Many times a stock will form a consolidation pattern right on top of the trendline or it may break the trendline and form a pattern just below the trendline before it moves lower. Sometimes it can form a pattern on top of the trendling and one below before the impulse move begins. If you look down to the bottom right hand side of the chart you can see a possible H&S consolidation pattern forming with the neckline being tested from above right now. This is a perfect place for some type of consolidation pattern to form if this ratio is headed lower. I know it seems impossible for this ratio to go any lower but if the neckline and the 2000 low made at .13 give way I’m afraid that’s whats going to happen. So far the neckline is holding support.

Below is a long term combo chart that has the HUI to GOLD ratio chart on top and gold on the bottom which shows the HUI to GOLD ratio bull market actually topped out in December of 2003. What this means is, even though the HUI went on to make new all time highs, it never outperformed gold like it did during the initial thrust of the new bull market that began in 2000. This chart shows the clear devastation for those holding the precious metals stocks bought during the early part of the bull market and held on to this day. The ratio actually topped out in late 2003 with gold at 400. There is no way anyone could have known back then, the under performance of the HUI, of what was to take place during the next 11 years or so. The gold chart on the bottom tells the story.

This next ratio chart compares the HUI to Silver which I haven’t shown you in a long time. Again like the HUI to Gold ratio chart above the HUI topped out vs silver in 2003 also. Silver was a $6.00 at the time.

There is one more metal I would like to update you on that we’ve not looked at in some time and that is Platinum. Below is a daily chart that shows Platinum breaking out of the blue rectangle consolidation pattern back in early March of this year. It has made three backtests to the underside of the blue rectangle so far which is still holding resistance.

This long term weekly chart for Platinum shows the small red rectangle, which I showed you on the daily chart above, forming just below the bottom rail of a much bigger blue rectangle consolidation pattern. As I explained to you on the HUI to gold ratio chart that many times a small consolidation pattern will form above, below or right on and important trendline before the impulse move begins in earnest. Here is a perfect example of a small consolidation pattern forming just below an important trendline.

This last long term look at Platinum shows its bull market that began in 1999 and topped out in March of 2008 a full three years ahead of silver and gold. You can see Platinum’s bull market topped out with a double top formation which ended its bull market run. It looks like Platinum closed the month of May at a new multi year low going back to 2008 or so. It had a nice run but all good things must come to an end at some point.

The thing about building long term monthly charts is it shows you what your thinking was in the past when you look back from the  future. They’re like a time capsule with important bits of information about what you were thinking years in the past in some case. The most important thing is to know the direction of the major trend either up or down in which to trade. Trading against the major trend can be very difficult as I can attest to trading the Kamikaze stocks. We had our biggest profit when we shorted the PM stocks in December of 2012 and held on until August of 2013. Since that low the PM complex has been chopping around in a consolidation pattern, for the most part, going nowhere. I guess it’s the challenge in us that makes us think we can out trade the primary trend but in all actuality it’s very hard no matter what trading system you’re using. Going with the major trend will fix your mistakes in time which is just the opposite when you trade against the major trend. When you trade against the major trend and are wrong and don’t get out that’s when your problems really begin. Many a gold bug who held on against the bear market forces can relate to that last sentence. All the best…Rambus

Tonight I would like to show you some really big consolidation patterns in regards to some big cap tech stocks mainly the networking and semiconductors. I have shown you some of these big bases in the past but now I’m going to create a brand new portfolio based just on these big patterns. It definitely won’t be as exciting as  trading in and out all the time as the game plan will be to hold these stocks for a minimum of two years, no trading. This will be an investment portfolio based on these massive consolidation patterns. Big base or consolidation patterns equals big moves.

I’m seeing too many of these big bases breaking out and the stocks moving higher without our participation. This will be a low stress way to make some serious money if you have the discipline to hang on when there is a correction. Think if you had bought some of the better stocks back at the 2009 crash low and held on over these last six years or so. It’s much easier said than done. At any rate I’m going to show you some stocks that I think have a great future regardless of why the stock markets are going to crash and burn any day now. That’s is basically all we’ve heard since the 2009 crash low and here we are now with many stock market indexes making multi year highs.

For most folks I would think that they should have at least a minimum of 50% of their portfolio in some of the better long term stocks. With the stock markets consolidating for long periods of time this will keep you out of trouble trying to catch every twist and turn that is virtually impossible to trade.

The two areas I’m going to focus in on are the semiconductors and the networking areas as I believe they have some catching up to do compared to some other areas of the markets like the biotech and healthcare that have and are still a good place to park some capital.

Lets start by looking at the two indexes the $SOX semiconductor index and the $NWX networking index. I have shown you this long term monthly chart for the SOX several times in the past which is showing us one of those massive consolidation pattern, the 10 year bullish falling wedge. From a Chartology perspective it’s a pretty as it gets. Note the breakout from the black dashed horizontal support and resistance line about a year and a half ago with the backtest from the top which found support during the October low of last year and the quick bounce to the present. Also note the very last bar on the right hand side of the chart which shows the SOX hitting new multi year high this month.

I first showed you this long term monthly chart for the $NWX when it first broke out from that massive 12 year inverse H&S pattern. As you can see it has had a nice backtest to the neckline shortly after breaking out. One of the reasons I like this chart so much is because of the steep decline that occurred after the 2000 peak. There is a good chance we will see some nice reverse symmetry back up over the same area NWX declined after the 2000 top was put in.

I’ve shown you this long term monthly chart for the INDU which I call my, JAW OF LIFE CHART, which so many analysis are calling the JAWS OF DEATH. I have shown you this chart for close to a year and a half and it still just keeps on going up. Big pattern big move. We still have a few more days left of trading in May which may show the INDU making another brand new all time high. This is the reality which few want to accept. Note the spike low to the top rail during the October low last year at 16,000. Picture perfect.

The SPX shows a massive 13 year expanding flat top triangle that broke out in 2013 and hasn’t looked back.

Below is a long term monthly chart for the RUT 2000 which shows a massive 13 year black bullish expanding rising wedge. Note the breakout that created the blue expanding flat top triangle that formed right on top of the black rail of the expanding rising wedge. The backtest in October was pretty strong but looked where it closed the month, right at the top of the monthly bar. Note the last four bars on this monthly chart that shows the breakout and the backtest, this month, to the top blue rail. This is exactly what you want to see from the longer term perspective.

Below is a long term chart for the NDX 100 which is made up of the 100 biggest tech stocks. This chart shows it made a huge ten year triangle consolidation pattern before it broke out to the upside. As you can see it is closing in on its all time highs made back in 2000.

Even some of the European stock markets are getting into the act. Below is a long term monthly chart for the DAX that shows its big 13 year triangle consolidation pattern. Note how the top blue rail held support during the October correction last year.

The FTSE is now just breaking out of a massive 15 rectangle consolidation pattern. Note the smaller red consolidation pattern that has formed just below the top rail of the 15 year rectangle. This is usually a very bullish setup.

Below is a monthly chart for $DRG, pharmaceutical index, that shows it created a massive 12 year bullish falling wedge. As this index is further along in its impulse move vs some of the tech indexes we’ve looked at earlier you can begin to see how the big bullish falling wedge is showing up between the lower impulse move up and the new impulse move up that started at the last reversal point in the blue falling wedge. Think of this chart as a template for some of the indexes we looked at above that are just breaking out of their massive consolidation patterns.

Right now I have about 20 semiconductor and networking stocks that have similar massive consolidation patterns that are and have been in breakout mode for sometime now. I plan on showing you some of these stocks over the next several days that I will put into a new long term portfolio that WILL NOT BE TRADED. This portfolio will be a buy and hold portfolio. With this portfolio I’m going to let the markets work for us and not the other way around. Sit tight and be right. All the best …Rambus

In this Weekend Report I would like to look at the longer term weekly and monthly charts for some of the precious metals stocks. Every time we get a small rally the gold bugs come out of the woodwork trying to explain why this time is different. At some point in time things will be different but I don’t believe that time is now. By focusing in on the longer term charts we can get a better feel for where some of these PM stocks are relative to where they’ve been especially the 2008 crash low which is a milestone since the 2000 bull market began for the PM complex. Even the bear market bottom in 2000 comes into play for some of the weaker precious metals stock, think South African miners.

For most of the PM stocks their correction began late last year in November. Many have been just chopping sideways in a trading range going basically nowhere. A good example of this sideways trading range is a weekly look at ABX. For the last three weeks this big cap PM stock has been hitting the top rail of a potential rectangle consolidation pattern. You can see the top rail is forming just below the bottom of the bearish rising wedge. Also note how much lower ABX is trading vs the 2008 low.

This long term monthly chart shows how ABX is doing a ping pong move between the 2000 low and bottom of the rising wedge. This chart also shows you some nice reverse symmetry when ABX broke off of that massive H&S top.

It’s has been a long time since I showed you this long term monthly chart for ABX where I extended the neckline to the right side of the chart from that massive H&S base that launched the bull market for ABX. That neckline is called a neckline extension rail as shown by the blue arrows.

After completing its H&S top in 2011 AEM has been in a pretty tight falling wedge creating 6 reversal points so far with a possible 7th underway. Again note how the neckline extension rail caught the backtest from the H&S top.

The long term monthly chart for AEM shows the blue falling wedge with the red bear flag being backtested right now. You can see AEM’s huge base that launched its bull market. The blue arrows measures each half of the impulse move up with the right shoulder triangle being the halfway pattern.

Below is a weekly chart for AGQ which is a long etf for silver. It’s been a long time since I posted this chart but from a Chartology perspective it has some really nice chart patterns with the biggest one being the possible H&S top. It’s bull market top was a strongly slanted H&S top.

The weekly chart for ASA shows it built out a 15 month blue rectangle consolidation pattern after breaking down from its big H&S topping pattern. Since the November low from last year it has been chopping out a sideways trading range in red. You can see there was a strong backtest to the bottom rail of the blue rectangle which in cases like this I will wait and see if the center dashed line can hold resistance. So far ASA has been unable to penetrate the blue dashed center line and is now trading back inside the smaller red trading range.

The long term monthly chart for ASA shows it built out a triple bottom to launch its bull market. ASA created a beautiful 10 year uptrend channel that broke down once the H&S top was completed. ASA is also doing a ping pong move between the 2008 low and the bottom rail of the red rectangle.

The monthly chart for AU shows it built out a double H&S top to end its bull market after building out an inverse H&S bottom to start its bull market. AU has been chopping wildly after testing its 2008 and 2000 lows. If it closes the month of May right where its at now it will again be below the 2000 low which tells us that anyone who bought this stock in the last 15 years is pretty much underwater unless they bought on the initial penetration of the 2000 low and even there some are holding loosing positions. This chart shows you just how hard it is to play a counter trend rally in a bear market.

AUY built out several topping patterns to end its bull market. The weekly chart shows the 7 point bearish rising wedge complete with a breakout and backtest. From there it went on to form the blue bearish falling wedge and is now backtesting the red bear flag from below just above the 2008 crash low.

The monthly chart shows a pretty H&S top that reversed its bull market.

The monthly chart for BVN shows it built out a H&S top with a nice reverse symmetry move down toward the 2008 crash low which has been holding support so far going all the way back to 2003.

The monthly chart for CDE shows it built out a double top to reverse its bull market run. The double bottom trendline caught the backtest which ended up being the head of a multiple H&S top. Notice how each neckline was backtested from below once the breakout occurred. This stock is also testing its 2008 crash low.

The weekly chart for ELD.To shows its beautiful H&S top with a nice clean breakout and backtest. Since the breakout from the massive H&S top it has been forming a blue triangle that now has completed six reversal points and is sitting on the bottom rail. A break of the bottom blue rail would most likely lead to a move down to the 2008 low.

The monthly chart for ELD.To shows some nice Chartology as its bull market formed a massive bearish rising wedge. I’ve shown you many times in the past how a wedge of flag can form a H&S pattern. Here you can see the left shoulder and head were formed inside the rising wedge with the right shoulder being formed on the backtest from below.

The weekly chart for EXK shows its massive H&S top but has held up better than most PM stocks. Even thou it has held up better it still has a long ways to go to reach its price objective which would be the 2008 crash low around .70 or so.

The weekly chart for FCX shows it has broken down from a massive triangle pattern and has just completed a backtest to the underside.

I can make a case for an unbalanced H&S top on the monthly look at FCX. Here you can see it has backtested the neckline. The neckline symmetry rail also shows us the height for the right shoulders. There really isn’t much in the way of support until the 2008 crash low is hit so its very possible that we’ll see some reverse symmetry down once the impulse move gets underway, red arrows.

We’ve been looking at this weekly chart for FNV for several years now and that bottom rail of the rising wedge is still holding resistance. This stock may also be building out an unbalanced H&S top. We won’t know the answer to that question until the neckline is broken to the downside.

This first monthly chart for FNV shows a possible 5 point triangle reversal pattern in play if the bottom rail is broken to the downside. You can see it cracked the bottom rail back in March of this year but managed to claw its way back above the bottom rail negating the breakout for now.

Below is another monthly chart for FNV which shows you how I think it may play out. As it has been one of the stronger PM stocks I can see it creating a very larger trading range or rectangle. FNV has been trading between the top rail and the center dashed line for over a year now. A break of the center dashed line would most likely lead to a move down to the bottom trendline around the 31 area where I would most likely back up the truck.

I’m going to end the Weekend Report right here for the time being as you get the general feeling of why I haven’t been a buyer of PM stocks yet. That point is coming but I think we still have one more leg down to complete this bear market. I hope everyone had a great three day weekend. All the best…Rambus

Below is a combo chart that has gold on top and silver on the bottom. This chart goes back to the bull market top for both gold and silver and the bear market that ensued. Silver topped out in April of 2013 with gold topping out in September of the same year. Their first bear market consolidation patterns were rectangles and both broke down at the same time. From that initial low in June of 2013 they both started to form consolidation patterns and that’s where they parted ways. Silver built out a 15 month 6 point triangle consolidation pattern before it broke down. The bottom rail of the 6 point triangle consolidation pattern has held resistance for nine months or so. The first thing that would get me excited about silver would be if it could take out the apex of the blue triangle above 18.65. Below the apex bearish and above bullish.

As you can see gold is trading almost dead center in the middle of it’s massive 6 point falling wedge. A break of the top rail would be the first thing I would need to see to get bullish on gold.

One last note on this chart below. The vertical dashed lines shows the price action of the two precious metals when the RSI gets over 70. It’s not a perfect gauge but if you see these two trading above their respective RSI above 70 it’s time to watch things very close. If you see the RSI make a double top above 70 get out of Dodge and if you see the RSI get above 80 head for the hills.

Below is a daily chart that shows gold’s most important moving averages. At one point this week gold traded as high as 1232 closing at 1205. At the high this past week gold was trading above 3 of the 4 moving averages but by the close of trading today it’s only trading above one of the moving averages the 50 dma which comes in at 1194. So all the ground gained during the early part of the week was given back by the end of the week.

I would like to update you on gold’s downtrend channel we’ve been following for quite some time now. This week gold came within about 17 points of hitting the 65 wma and the top rail of the downtrend channel. A linear scale chart shows gold did indeed hit the top rail. So far everything is on schedule for gold to break the bottom rail in late June or early July. It is what it is until it isn’t.

I’ve posted this next weekly chart several times in the past for gold that shows every consolidation pattern that formed during gold’s bull market years right up to the present day. I was looking at this chart today at the different sizes of consolidation patterns that have formed since 2000. There is only one other consolidation pattern, that has taken as long as our current bearish falling wedge to developed, and that was the bullish rising wedge that formed back in 2004 and 2005 labeled #1. I put a red rectangle around the blue bullish rising wedge from 2004 and 2005 to measure the width and height or time and price and added it to our current falling wedge. As you can see they’re almost identical in both time and price.

If you look real close at the blue bullish rising wedge #1 you can see a very clean breakout with an nice clean backtest and then the impulse move up began. Also note the little green triangle that formed in the middle of that impulse move up that ended at the beginning of the red triangle. Perfect Chartology. Just for the hell of it, because both wedges are almost exactly the same in time and price, I measured the impulse move from the breakout point on the blue rising wedge #1 to the top of the red triangle. I took that measurement and added to where the breakout may occur on our current bearish falling wedge to see what the price objective be. It turns out to be about 735 which is the low end of where I would expect the final low to come in.

One last thing about this long term weekly look at gold. Notice the thin black rectangles that are exactly the same size numbered one thru five. They show the height for those individual impulse moves. Will we see a similar sized move down if we ever get the next impulse move going?  Sometimes the truth is stranger than fiction. I hope everyone has a great three day weekend. All the best…Rambus