I would like to start this Weekend Report by looking at the HUI:SPX ratio chart I posted late Friday night that shows a time objective out to October of this year. If both the time and price elements play out according to this ratio chart then the HUI should be close to a major bottom making a round trip from bull market to bear market and back to a bull market again against the SPX. There doesn’t have to be a V bottom as good bottoms take time to build out. Next I would like to show you a slightly different way to use these rectangles to show a price and time objectives. These rectangles measures each impulse leg with a halfway pattern in the middle. Sometimes they can work out extremely well but the main point to take away from these charts is it gives you a place to start looking for the move to end. Below is a weekly chart for the COMPQ that showed you where to begin looking for a top during the tech bubble in 2000. This was an extremely bullish setup as the halfway pattern was a bullish rising flag. The red rectangles measures each leg of the final blow phase in that bull market. Below is a monthly chart for the INDU which shows a similar setup to the chart above but this time it was the rally phase off of the 2003 crash low. As you can see the INDU formed a blue bullish rising wedge as its halfway pattern that gave me a place to look for a top of some kind to start forming in 2007 as shown by the red rectangles that are exactly the same size. As you know that top ended up being the top that led to the 2008 – 2009 crash low. The next chart that shows how these rectangles can measure time and price is the weekly chart for silver that shows the parabolic move to its bull market high in April of 2011. Here you can see how the 2 blue rectangles measured each half of the impulse move up separated by the red bullish rising flag. Again it gave me a place to start looking a for some kind of top to begin forming. I also used the BO to BO method which came in just a tad higher at 47.65 or so. Time wise it showed April as the month for the high. Now I would like to come full circle and put this technique into practice by looking at a long term weekly chart for gold in log scale. If you recall the HUI:SPX ratio chart showed a bottom in October of this year. The time and price rectangles on the COMPQ and INDU showed each half of their impulse move up was separated by a bullish rising flag and wedge, respectively, which told us the move was very strong. Gold has yet to break down out of its possible bearish falling wedge but until gold can trade back above the 1305 area a bearish falling wedge is what I”m labeling this chart pattern with the last reversal point being at 1305. The black rectangles measures each half of the impulse move down as shown by the blue arrows. The lower black rectangle shows us a price objective down to the 850 area that should occur sometime in October of this year. If the bearish falling wedge breaks out close to where I have it labeled the BO to BO method would also give us a price target down to the 850 area. Just to give you an idea of where I think we’re at look at the top blue arrow at 1800 and count down about 5 weeks or so. There is still a lot of work gold has to do to reach it price objective but if the 1305 is the last reversal point in the falling wedge then we are in about as close to the high as you can get. It’s now all about watching the price action to make sure nothing important has changed. Lets now take a weekly look at silver again this time going back to 2007 which shows a H&S consolidation pattern similar to the one gold formed back then which launched its final parabolic run. On the left hand side of the chart you can see the H&S bottom with the right shoulder being the blue bullish rising wedge. The H&S called for a price objective up to the 45.34 area which coincides pretty close to the red rectangles price and time objectives with the red bullish rising flag forming at the halfway point. You may have noticed that once these time and price rectangle patterns complete there is usually a big trend reversal that takes place. This is a very important clue to know in advance as we should be able take advantage of the situation as we see the price entering into the price objective. Silver has been leading to the downside as it broke out of its blue triangle halfway pattern last September and had a backtest move that ended about 5 weeks ago. It will be interesting to see how this one plays out as it is so far ahead of gold and the PM stocks. Now lets focus in on the GDXJ and some of the different chart patterns I’ve been showing starting with this 2 hour chart that shows the double H&S top and the brown shaded area I showed as a possible bull trap between the neckline symmetry rail and just above NL1. This possible H&S top is starting to become pretty unbalanced so the price action needs to break below NL2 and get the show on the road. Below is another 2 hour chart pattern that shows the 5 point blue bearish expanding rising wedge. Below is a daily chart I posted a week or so ago that shows how similar the two tops are as shown by the red circles. These patterns don’t have to play out exactly but you can see what happened to the higher topping pattern after it broke below the horizontal support line. About 2 weeks later there was a backtest to the underside which would have scared off most folks invested in JDST. The GDXJ is currently sitting on the black dashed S&R line which it needs to break to the downside so we can move on to the next leg lower. Also you can see I’ve labeled the rally off of the November low as an expanding triangle which is different from the big cap PM stock indexes as they show a clear double bottom. This tells me the GDXJ has been weaker than the big caps and will probably make a lower low first. We shall see. The next daily chart for GDXJ shows our two double H&S tops and the blue expanding triangle. If the blue expanding triangle plays out as a halfway pattern to the downside then GDXJ should see some type of bottom in May of this year around the 14.70 area where it could start to build out another small consolidation pattern. Again there is a lot of work to be done by GDXJ to get this next impulse move going but the pieces of the puzzle are starting to come together. First we need to see the lower neckline broken to the downside. For longer term subscribers you may recall buying a bunch of JDST just before the neckline gave way on the higher H&S top. We did get whipsawed on the backtest but we got right back in again and rode that impulse move down. This last chart for the GDXJ is a weekly look where I took the liberties to change the lower consolidation pattern that started to form in 2013. I have shown you many times in the past how a chart pattern can have what I call a false symmetry breakout of the top and bottom rails. Here you can see the two red circles, one on top and the other below, which if you erase them you would get a very symmetrical 6 point rectangle consolidation pattern. As you can see the rally off of the November low has fallen just shy of reaching the bottom rail, of what I’m labeling as a 6 point rectangle consolidation pattern for now, as the backtest. If the rectangle plays out as a halfway pattern to the downside you can see the brown shaded area at the bottom of the chart that has two price objectives using the impulse method, blue arrows, and the breakout to breakout method. Interesting times. Next I would like to show you some of the different stock markets as many are breaking out to new all time highs. The first one is a daily chart of the COMPQ that shows the blue rectangle consolidation pattern that broke to the upside seven days ago with a breakout gap and no backtest so far. You can see I have two price objectives at the top of the chart. The blue one is how I would measure the blue rectangle has a halfway pattern as shown by the blue arrows. The lower black price objective is its all time highs made back in 2000. Normally when you see such an important high like this a stock will initially find resistance at the old high. Even in a strong market there will be a lot of sellers at that point. This should be a good guide to take some profits off the table. Hopefully we may see a small consolidation pattern form just below the all time high at 5132 before the COMPQ breaks out to new all time highs. Below is a monthly chart for the COMPQ that shows you where the old all time high at 5132 comes into play. Even though I think the COMPQ is going to rally much higher we just have to overcome the old high and get it behind us. Actually most of the other stock market indexes are all ready breaking out to new all time highs. The NDX 100 shows an interesting price objective up to the 4808 area which is the old all time high for this index of the 100 biggest tech stocks. Below is the monthly chart for the NDX 100 which shows where the old high comes into play at 4816. The daily chart for the RUT 2000 shows it breaking out above the top rail of the massive blue expanding triangle. I just tweaked the top rail a bit. Note the spike high just before the top rail was touched 2 weeks ago and sold off. That’s is typical on the initial hit. After the backtest to the top rail of the blue rectangle it then rallied up and through the top rail of the expanding triangle. Note the last bar on this chart which I’m now labeling as the backtest to the top rail of the blue expanding triangle. Until the weakness last Friday morning I had the top rail just a bit higher but seeing the low on Friday shows me where to the backtest actually occurred. We shall see if this is the correct position now for the top rail on any further backtesting. The weekly chart shows you just how important this year long expanding triangle is to the bigger picture. This is what a bull market looks like. The daily chart for the SOX index shows it breaking out of an expanding bull flag. A backtest would come at the top rail around the 690 area. The monthly chart for the SOX shows its now trading at new multi year high going all the way back to the early 2000’s. I think this is going to be a sector that is going to play catchup with the other tech indexes. This should bring everyone up to speed on the PM complex and the US Stock Markets. There are a lot of positive things happening right now if you’re long the stock markets and short the PM complex. Nothing goes straight up or down. It’s usually two steps forward and one step backward until you get where you’re going. A longer term time horizon is best suited for most investors even though the short term swings can catch us off guard sometimes. For those members who are working on the mechanical trading system keep up the good work. Perseverance will pay off in the end. As Sir Fully likes to say, all for one and one for all, for all the knights and ladies of the roundtable. All the best…Rambus

There seems to be something happening in the commodities complex over the last 2 weeks or so. I’m starting to see many small inverse H&S bottoms forming in some of the different commodities. Below is a daily chart for the CRB index that doesn’t show today’s price action on it until the end of the day. As you can see the right shoulder is just about finished building out and with the strong showing in most commodities there is a good chance the neckline maybe tested today.

Yesterday I showed you this weekly chart for the XLB, basic materials index, that shows a big triangle that is breaking out.

Below is a daily chart for GNX which shows it’s making a series of higher highs and higher lows for the first time in a long while.

The next chart for the GNX is a long term daily look that shows the big multi year triangle that led to our most recent low once the bottom rail was broken to the downside. Remember that little blue bearish falling flag we looked at when it was building out? At this point I’m viewing this potential counter trend rally in commodities as a bear market rally. After a waterfall decline like this a 38% retrace would be healthy to keep the bear market alive in commodities

Below is a daily chart for oil we’ve been following that shows a possible inverse H&S bottom without today’s price action on this chart. If oil holds its gains from today the neckline should be coming into play.

This daily chart for DWTI which is a 3 X short oil etf shows a very large H&S top which is testing the neckline today.

The daily chart for SLX which is a steel etf looks like it broke out of an inverse H&S bottom today. I’m going to look at some of the basic materials stocks in more depth in the Weekend Report. This area of the markets may need a breather before heading lower.

So far this week the PM complex has come under some selling pressure and is testing some very important support and resistance lines. Is this the start of the long awaited impulse move down to new lows for this sector? Lets look at some charts and see where we are in the short to longer term perspective.

The first chart tonight is a daily look at gold that shows a triangle reversal pattern that formed at the last high. This is not a textbook example of a triangle reversal pattern but when you look at the price action it makes sense. Note the big long bar that was made four days ago when gold broke below the bottom rail and the increase in volume. When I see a big long bar or a gap of an important trendline I always take notice as one or both of these events can take place during a breakout. On the very short term the 5 ema crossed below the 8 ema just before the breakout. This chart also shows the PSAR has been on a sell signal for several weeks now.

This longer term daily chart for gold shows several chart patterns we’ve been following for clues to help guide us through this correction within the bear market. The first pattern is the blue bearish expanding rising wedge which so far is THE consolidation pattern for this counter trend rally off of the November low. Gold still has to break below the bottom rail to confirm this pattern. The second formation we’ve been following is the possible inverse H&S bottom which maybe negated today. We still need a few more days to see if the neckline can hold support or not. Also today gold closed below the 50 dma for the first time in awhile.

Lets look at gold from a slightly different perspective by looking a a daily line chart. There are several important clues to watch for. The line chart shows the price action is much closer to the bottom rail of the blue expanding rising wedge which will most likely show the breakout before the bar chart. Next notice how the apex worked as resistance on this last rally up to the 1300 area. I’ve shown you many instances where the apex of a triangle can be strong support or resistance depending on which way the price action is moving. All the energy from the top and bottom trendlines is focused out into the apex so it becomes very important to watch the price action for either an end around the apex move or to see if it work as support or resistance. The last bit of information on this chart shows how the brown shaded support and resistance zone, between 1240 and 1250, has reversed its role several times. Gold is now trading between support, bottom blue rail of the expanding rising wedge and overhead resistance at the brown shaded S&R zone.

This next chart for gold we’ve been following shows the four most important daily moving averages of which today’s price action finally closed below the 50 dma. It’s not earth shattering but it’s nice to see gold trading below all the moving averages again.

This next chart for gold shows the big 19 month trading range that has taken on the shape of a falling wedge. Last week I showed you how I tweaked the top rail to touch the last reversal point at 1305 which is now my line in the sand. You can see how the 1240 area has been reversing its role from support to resistance several times in the last eight months or so. Gold still has a lot of work to do yet to complete this consolidation pattern but it’s working in the right direction. With 19 months under its belt, time wise, this pattern could very well be mature. A break of the bottom blue rail will confirm the completion of this big consolidation pattern.

Last week I showed you this updated weekly gold chart that shows the parallel downtrend channel with our 19 month falling wedge consolidation pattern. Note the first impulse move down out of the blue rectangle labeled with the blue arrows with a number one. That first impulse move down started at 1800 and declined all the way down to 1150 or so. Until something changes I’m viewing our most recent high at 1305 as the start of the second impulse move down that has the price objectives down at the bottom of the chart. If you study that first impulse move down you will see it had a sharp decline followed buy about six weeks of sideways price action. You need to mentally prepare yourself for this type of price action once we have confirmation that we are in the second impulse move down that very well may mark the end this bear market.

This next chart is a combo chart with gold on top and silver on the bottom. The thin red dashed vertical lines shows how a top comes in when the RSI gets up between 70 and 80 since the bear market began in 2011. It’s easy to see how much weaker silver has been compared to gold as silver broke down below its bottom rail last September and has just completed a backtest.

Lets look at one last chart for gold that shows a possible more bullish outcome than the weekly chart above. This monthly chart shows the three seven month time cycles that have governed gold since the bull market began in 2001. The red circle shows how gold backtested the bottom blue rail of the expanding rising wedge in January of this year. So far the month of February shows gold declining from that backtest last month which tells us that bottom rail is still hot. The more bullish outcome would be if gold only corrects back down to the bottom rail of the blue expanding falling wedge. Time wise gold is going to have to start a near vertical move down if the March time frame is still in play which would bring gold down to the 890 area or the bottom rail of the blue expanding falling wedge.

Now lets look at the HUI as a proxy for the rest of the PM stock indexes. Below is a 2 hour chart that shows we finally got a little conformation that the possible 5 point triangle we’ve been following has finally broken below the bottom rail this week accompanied by a small gap.

The daily chart shows the 5 point blue triangle reversal pattern that broke below the bottom rail on Tuesday of this week with a little follow through today. It’s still possible we get a backtest to the underside of the bottom rail at 195 or so.

All four horsemen have crossed strongly to the downside now.

Below is a daily line chart that shows the 3 point double bottom that led to the most recent rally phase off of the November low. Note the little multi top that formed over the last several weeks that is actually the triangle on the bar chart. This is just a different perspective.

In the past I’ve shown you how gold, silver and the PM stock indexes can top out and bottom out fairly close together. They also tend to make similar chart patterns. On the second chart of this post I showed you how gold has been building out a potential bearish expanding rising wedge. We maybe seeing the same pattern forming on the HUI as shown by the chart below. The pieces of the puzzle are stating to come together. These types of patterns are extremely difficult to spot in real time but if you can spot one early enough they can be very rewarding. I think gold is giving us a big clue.

I still view this next chart as the most important chart for the PM stock indexes. Below is a weekly look at the HUI’s downtrend channel we’ve been following since the price objective of the double bottom was hit at 212 which also coincides with the top rail of the downtrend channel. Note how similar our current setup is to the one that occurred back in late 2012 and 2013. Back in 2012 the HUI built out a small double bottom which is almost exactly the same size as our current double bottom. The important area of support back in 2013 was the neckline of the massive H&S top. Our current major support line would be the 2008 low where the HUI built its double bottom off of. We could very well be at the same point as the blue arrow at the top of the chart, as in, you are here.

I would like to quickly update a few charts from this weekends report. The first chart is the daily look at the CRB index that is still building out a possible inverse H&S bottom. Until the price action can break above the neckline it’s just a potential inverse H&s bottom.

The daily oil chart shows it’s still working on a potential right shoulder.

The GASO chart shows it to is still working on a potential right shoulder.

SCO is a 3 X short oil etf that is testing the neckline symmetry rail. Again the neckline has to be broken to the downside to complete this possible H&S top. All the best…Rambus

Tonight I would like to look at the precious metals complex and see how things are moving along. Consolidating would be an understatement. The PM complex has been in a very large consolidation pattern going all the way back to the June 2012 low where the HUI, GLD and SLV all bottomed together. From that low all three have been chopping in a falling type pattern making lower lows and lower highs. The combo chart below shows the three distinct  but slightly different 18 month consolidation patterns starting at the June of 2013 low. The top chart shows the HUI that has yet to put in a 6th reversal point in it’s big consolidation pattern. It doesn’t have to have a 6th reversal point as it already has enough but if it does the top rail would come in around the 240 area. If you look at the last four weekly bars you can see the closing price for each week are very close to each other meaning there has been very little headway being made either up or down aggravating the bulls and bears alike. Also the 18 month consolidation pattern is expanding unlike GLD which is falling and contracting and SLV which has a triangle. The GLD chart in the middle shows the price action touching the top rail completing the last reversal point number six and falling away. SLV on the bottom chart has been clearly the weakest of the three as it broke out of its triangle in September of last year. Three weeks ago SLV paid a visit to the bottom rail of its triangle as a backtest and is falling away. So we have the HUI in no mans land right now with GLD finding resistance at the top rail of its falling wedge and SLV finding resistance at the bottom rail of its triangle consolidation pattern during the backtest three weeks ago. This combo chart gives you a good overview of where we’re at and where we’ve been. Now I would like to do an in depth report on the HUI starting with the 2 hour chart, in linear scale, and focus on what we have in place at the moment. The first chart pattern is the double bottom that started to form in November of last year with the second bottom coming in late December. I’ve measured the double bottom price objective using the black arrows. Just measure the distance of the first two black arrows and add that distance to the breakout point on the double bottom which gives us a price target to 212 which the HUI has achieved. Since the first reversal point the HUI has been chopping out the blue triangle. At this point we still don’t know if it’s going to be a consolidation pattern to the upside or a 5 point reversal triangle to the downside. If the HUI breaks out to the upside then I would have to view the blue triangle as a consolidation pattern which would be a halfway pattern. To get the price objective we would measure the distance from the breakout from the double bottom trendline to the first reversal point in the blue triangle. We then take that distance and add it to the breakout of the blue triangle which would give us a price objective up to the 238 area or the top of the falling expanding wedge I showed you on the combo chart above. If that is what the markets want to give us then we’ll take it but first we have to see the breakout of the blue triangle. The four horsemen are still all crossed to the downside. If the HUI is going to get to the 240 area then it has some overhead resistance it’s going to have to deal with first. Below is a weekly chart for the HUI that shows some fanlines made off the 2008 crash low. The HUI is currently testing fanline #4 with the bottom rail of the blue triangle just overhead at 220. The red circles shows where the backtests took place in the past which is common with fanlines. Now I would like to show you some fanlines that began at the 2000 bear market low. Fanline #1 showed up when the 2008 H&S top broke down. Fanline #2 came into play when the massive H&S top gave way in 2011. Fanline #3 gave way last September when the blue triangle broke down. A backtest to the underside of fanline #3 would come in around the 220 area, green circles. Below is another weekly chart for the HUI that shows a downtrend channel that the HUI is currently testing from below. Below is a slightly different look at the downtrend channel that I originally showed you about 4 or 5  months or so ago. It’s what they call a double downtrend channel where you have an outside trendline, dashed, on both sides of the main downtrend channel. As you can see the HUI is now in its third week of testing the outer black dashed trendline from below. The higher pink shaded area shows the first impulse move down in time and price. I’ve added the lower pink shaded area, which is exactly the same size as the higher one, that may show us where to look for the ultimate low in November of this year. Now I would like to show you some long term charts so you can see where the HUI has been and where it may go in the future. This next chart for the HUI shows its entire history going all the way back to 1995. Note the huge bottom that formed in the late 1990’s that gave the HUI the energy to have a 10 year bull market. You can see the smaller blue triangle consolidation patterns that formed during the bull market years. Next you can see the beautiful and symmetrical H&S top that reversed the 10 year bull market that has led to our most recent low. Note how much different the chart looks when you compare the left side bull market years to the right side bear market years. Below is a monthly candlestick chart that shows you when you’re in an impulse move either up or down. When you see a string of white candle, all in a row, you know your in an impulse move up and when you see a string of black candle you know your in an impulse move down. When you see a mixture of black and white candle you know your probably in a consolidation zone as the present picture shows. Lets look at one last long term monthly chart for the HUI that shows the bull market took on the shape of a rising wedge. Note the breakout in April of 2013 that took out the neckline of the massive H&S top and also took out the bottom rail of the rising wedge in one big long bar. That’s been almost two years ago already. There is little doubt that we’re in a bear market it’s just that these consolidation and backtesting phases can be long drawn out affairs. As you can see during the bull market years the same thing happened going up. A bull market is much easier to trade because one can hold on to your stocks if you didn’t catch the exact low, which nobody does, and wait for the next leg up to get you back in the game. So we wait for further clues to help guide us in this never ending quest to slay the PM Dragon . All the best…Rambus

Five days ago silver broke out of an inverse H&S bottom that has temporarily reversed the downtrend. I measured the more conservative price objective using the higher low instead of the Swiss spike low which comes in around the 19.80 area on the log chart. It will be interesting to see if the Swiss spike low will be the ultimate low for the bear market or just a short to intermediate low. Sometimes big trends can end with one last shake out of the weak hands similar to the Swiss spike low.

Below is a two year chart for silver that shows its big triangle consolidation pattern that did a little morphing before it finally broke down in September of last year as shown by the red circles. Since the breakout silver has built out an inverse H&S bottom and is now in rally mode. As you can see on the chart below silver is approaching two very important trendlines from the big blue triangle consolidation pattern. The price objective of that inverse H&S bottom comes in around the 19.50 area which is slightly above the apex. One thing we need to keep in mind is that the inverse H&S bottom is a reversal pattern that can reverse a downtrend. It’s way too early yet to think about a reversal of the bear market but if silver can ever trade above the apex of the blue triangle that would be the first step in the right direction.

This long term weekly chart for silver shows it bouncing off of the next lower support line at 14.65 with the Swiss spike low. Now it’s entering into the brown shaded support and resistance zone which is just over head. Bottom line is silver has to have more buyers than sellers to overcome which looks like strong resistance overhead.

This next long term weekly chart for silver shows the parabolic rally phase into the April 2011 top which ended the bull market. From the bull market top silver has been trading in a parallel down trend channel for almost four years now which is a pretty lengthy move in one direction. Again it’s up to the bulls to reverse this downtrend channel in a similar fashion to the way they did back in 2008 crash low. You can see the price objective to the 50 area in 2011 using two different patterns. The inverse H&S bottom had a price target up to 45.75 and the red expanding triangle halfway pattern had a price objective up to 50. Impulse moves like that are mush easier to trade than these big 18 month consolidation patterns.

This last chart for silver is a 40 year look that shows its bull market top in 1980 and the decline that followed and the long drawn out sideways trading range that went on for many years. There is actually some very nice symmetry on the left and right side of the chart as shown by the big necklines. We’ve been following a potential very large H&S top where the price action broke below the neckline about six months ago. It’s now attempting to backtest the neckline to the 19.60 area which will be critical resistance. At least you have some perspective of where silver was in the past and how it relates to the present which is important to know.

In the Weekend Report we’ll take a good hard look at some of the Kamikaze stocks to try and gain some insight on what is taking place right now with these volatile stocks.  All the best…Rambus

I believe today marked a breakout on the PM stock indexes and Gold which have different reversal patterns. Below is the combo chart we’ve been following that has the HUI on top and GLD on the bottom. As you can see the HUI broke above its double bottom trendline today while GLD broke above its neckline. Both reversal patterns have a price objective back up to the top rails of their 18 month consolidation patterns. I’m still viewing this rally off of the November low as a counter trend rally within the bear market. Instead of having just four reversal points it looks like we’ll see at least six to complete their respective consolidation patterns. A serious break above the top rail of the 18 month consolidation would then call into question the validity of the bear market.

Below is a weekly chart for GDM that shows its 18 month blue bearish expanding falling wedge. The double bottom has a price objective up to the 700 area which coincides with the top rail. Our line in the sand is now the double bottom trendline. Above is bullish and below is bearish. Note the price action at reversal point #4. If you recall we went short on the breakout of that black dashed horizontal trendline using JDST and DUST. You can see the string of black candles that accompanied that decline. This week is just getting started but we have two white candles in place so far.

Lets now look under the Hood to see what is running these indexes starting with one of the big ones ABX. The monthly chart shows where the neckline extension rail may come into play if we get this counter trend rally to the upside.

The weekly chart for GG shows it trying to breakout from a small double bottom. It could backtest the bottom rail of the blue bearish rising wedge again.

NEM is another big cap PM stocks that is breaking out above a small double bottom.

It looks like FCX is in the process of backtesting the neckline from an unbalanced H&S top.

EXK looks like it to is in the process of backtesting its potential multi year neckline.

AEM is showing some strength after breaking out from its double bottom and is now breaking above the bottom blue rail of a 6 point expanding bear flag.

ASA is showing some strength by closing back above the bottom rail of a well defined rectangle.

IAG hit the bottom rail of its blue rectangle but sold off on the initial hit. One to keep an eye on.

NGD is attempting to backtest its multi year neckline.

PAAS is showing a potential small double bottom within the major downtrend channel.

SA is still chopping around in a big one year loose rectangle.

ELD.TO is trading inside the blue triangle which is located just below the big neckline.

HL is still chopping around below its big H&S neckline.

GFI is showing some relative strength by breaking above its double bottom trendline.

HMY is another South African producer that is looking strong on a relative basis.

FNV is still trading below the bottom rail of the huge rising channel. Maybe it will backtest the bottom black rail again for the 5th time if the PM stock remain buoyant.

RGLD is still chopping around inside a rising wedge creating a possible 5th reversal point.

SLW is trading back inside the blue triangle which is part of a bigger consolidation pattern an expanding falling wedge.

I’ll keep a close eye on these stocks and others for clues to see how high they may move. Right now it’s still a mixed bag with some looking more bullish than others. The top rail of the expanding falling wedge, on the GDM chart above, will tell the tale if or when we get there.  All the best…Rambus

Tonight I would like to touch on several different areas in regards to our trades we have going right now. First lets look at the INDU and some of the reasons I went short yesterday. The daily chart shows a rising wedge in which the price action closed below the bottom rail yesterday. Today’s bounce was a little stronger than what I was hoping for closing above the bottom rail of the falling wedge. There is also another and I believe stronger chart pattern in play and that is a possible double top. As you can see on the rising wedge, reversal point #4 is higher than reversal point #2. When you look at the RSI, at the top of the chart, you can see a big negative divergence. The same holds true with the MACD at the bottom of the chart. The blue histogram is still negative and the slo sto is falling. The 50 dma comes in just above at 17,632 so all these indicators are negative.

The four horsemen are all negative at this time.

Next I would like to expand on the possible double top scenario and how it may play out if indeed that is what we’re seeing. Below is the down to up volume chart that shows you a clear picture of the possible double top with the negative divergence on the far right hand side of the chart. There is also the black dashed S&R line that is made from the previous tops that has been working as support.

This next chart is a long term daily look that shows the expanding rising wedge we’ve been following that has now had two false breakouts through the top rail. Monday’s decline put the price action below the now dashed original rail and I move the top rail up to connect the December 2013 high and our most recent two highs made in November and December of this year. For the time being I’ve labeled the pattern as a morphing expanding rising wedge until we get more confirmation one way or the other.

If the double top plays out the price objective would be down to the 16,100 area as shown by the black arrows. That is an important number in the big scheme of things which I will show you after this next chart.

The very long term monthly chart for the INDU shows the expanding triangle that I call the JAWS OF LIFE. If the INDU is putting in a double top and the price objective for that double top is around the 16,100 area then that would be another backtest to the top rail of the expanding triangle which I have at 16,150. So putting all the pieces of the puzzle together I can see another small correction down to the 16,100 to 16,150 area that doesn’t hurt the major uptrend that has been in place since 2009. This is how I’m seeing the setup right now.

Next lets look at the weekly chart for gold that shows the price action since the bull market high at 1923. I want to focus in on the top black rail of the falling wedge and this weeks price action. Notice the thin brown shaded support and resistance zone that comes in between the 1225 and 1240. As you can see the high this week has been up to 1223 which is touching the top rail of the black falling wedge. So gold is now trading at resistance until proven otherwise.

Lets take a quick look at the HUI that has been bouncing between the potential top rail of a bear flag and the top rail of a triangle. What’s important about this area is that we need to see a fourth reversal point to finish up a consolidation pattern. As of today the solid top rail is holding resistance which is critical to begin a move down to at least the bottom of the potential bear flag. The fourth reversal point won’t be complete until the price action touches the bottom rail so there is still a lot of work to do yet with the HUI. As I’ve shown you in the past this area is critical as a halfway spot to the lower price targets.

Let’s put the potential bear flag in perspective and look at another long term daily chart for the HUI. Again the possible red bear flag won’t be complete until the bottom rail is hit.

Previously I showed you a possible triangle that was forming in the major downtrend channel in the HUI. I’ve now changed it to the potential red bear flag. Notice how the price action is getting closer to the top solid rail of the downtrend channel. It can get there from trading sideways or by moving higher or a combination of the two. I’m still viewing this pattern as a halfway pattern to the downside. As you can see there is still a large time component left which needs to be fulfilled to reach the bottom price objectives.

Now lets take a look at the daily oil chart that has been doing pretty good for us so far. Three days ago oil broke out of a small red bearish falling wedge which is the third and possible last consolidation pattern to form in this downtrend. A possible backtest would come in around the 51.50 area. If this little red bearish falling wedge plays out it will give us a price objective down to the 35 area which is the top of the old trading range.

Below is a long term daily chart that shows the massive top that oil broke out from to get this kind of move down. Once that big S&R line broke all the pent up energy was released and this is what we got.

This long term monthly candlestick chart for oil shows it’s now in its seventh month of decline.

This last chart for oil shows its total history and the the big trading range between 10 and 40 dollars. The brown shaded support and resistance zone, between 35 and 40, is what I’m shooting for.

Moving on to natural gas lets look at the daily chart and see what it maybe showing us. After breaking out from the small double top, bouncing off of the S&R line which caused a backtest to the underside of the double top hump, natural gas finally broke out and moved lower. Natural gas has been bouncing around for the last week and a half or so as shown by the red horizontal lines. It maybe trying to build out a small consolidation pattern between 2.81 and 3.15.

Looking at the weekly chart we can see natural gas has broken down out of a very large and symmetrical H&S top. It took roughly 2 1/2 years to build out that large H&S top so this move down is just getting started on a relative basis. Big pattern big move.

Below is a monthly candlestick chart for natural gas that shows just one black candle so far in this decline. You can also see the H&S top from the chart above.

Lets look at one last chart for tonight which is a long term weekly chart for the US dollar. As you can see the blue bullish rising wedge, that has formed in the middle of a possible new uptrend channel, is still plugging along to the upside. If things keep moving up for the US dollar the top rail, of the now possible uptrend channel, would be touched around the 98 area depending on where it gets hit and how soon. Just something to keep an eye on. All the best…Rambus

Below is a gold chart I worked on this weekend. It has a lot of information on it to digest. First thing to note is the top rail of the black falling wedge. As you can see the top rail comes in around the 1215 to 1220 area. Not that it means anything but the two black rectangles are exactly the same size that measures time and price for the rectangle on top and our current triangle below. If our current triangle plays out as a halfway pattern, I have it measured using the BO to BO and the impulse method with the price objectives at the bottom of the chart. I think we could see a small halfway pattern form during the second impulse move down before the actual price targets are hit. The very bottom price objective is the 2008 crash low at 685 which looks like it would hit the bottom rail in October. Something to watch when the bottom rail gives way.

I have followed these moving averages on gold for many years and consider these to be the most important ones.

Gold’s 18 month daily line chart showing the triangle consolidation pattern.

All the best in 2015

Rambus

http://rambus1.com/

I have a busy night ahead but I just wanted to post a few long term charts to show you the relative nature of a chart pattern. I know most of you know that the bigger the consolidation or reversal pattern the bigger move to expect. If one is looking at a minute chart and see’s a triangle the move is relative to that time frame. On the other end of the spectrum when you see a big reversal pattern, that takes a year or longer to complete, then you know the move is not going to be a flash in the pan. When looking at a big impulse move from the monthly perspective I like to use the black and white candlesticks that will general confirm the impulse move your are expecting or are currently in.

Lets start with the US dollar which broke out of its huge base four months ago already. It’s hard to believe because we had to wait at least a year, since recognizing that big base, for the breakout to occur. You can see a string of six white candles, all in a row, telling us this is an important impulse move taking place. Also note the size of that big base. That is a huge base that tells us the US dollar is in a bull market that is going to last for quite awhile.

To give you an idea of what happened in a similar move for the US dollar we can look at a 20 year monthly chart that shows a fractal base that was made back in the 1980’s and 1990’s which took about three years to reach its bull market peak at 120 in 2001 or so once the support and resistance rail was broken to the upside.

Before we leave the US dollar there is one more chart I would like to update that I showed you about a month or so ago where the US dollar could be doubling the size of its uptrend channel. I believe the dollar was just cracking the mid black dashed trendline. I said I would like to see some confirmation of the center dashed mid line if it got backtested from above and held. You can see the backtest was a little strong but held beautifully so far.

For those that think the US dollar isn’t affecting the commodities lets take a look at a monthly chart of oil using the black and white candles. We counted six white candles on the US dollar which is also the number of back candles on oil. Coincidence? Again keep in mind the size of that huge topping pattern on oil which tells us to expect a big move down which we’re getting.

If you recall I showed you this monthly chart for GASO when it broke below the bottom rail of the blue 5 point rectangle reversal pattern. Count the number of black candles. I also showed you how the red arrows may show us some reverse symmetry to the downside relative to the way GASO went up. We’re at a spot where we could some consolidation take place but until we do follow the price action.

Lets take a look at the CRB commodities index and see how the US dollar is affecting it. Here you can see the CRB index has built out an unbalanced H&S top and now has six black candles, in a row, to the downside. That unbalanced H&S top is about 5 years in the making so we know the move still has a ways to go yet before it burns itself out.

Below is a long term weekly chart for gold that I haven’t posted in probably close to a year or so which shows all the beautiful consolidation patterns that gold made during its bull market. This weekly chart also shows the black and white candles that accompanied the bull and bear impulse moves. During the bull market years, once one of the consolidation patterns broke out you can see the string of white candles that formed the impulse move. Where you see a black candle in the impulse move up there is a small consolidation pattern that shows up on the daily chart. Note the sting of black candles that formed during gold’s first leg down in its new bear market. If you look real close you’ll see one small white candle that formed just before gold broke below its big rectangle consolidation pattern back in April of 2013. As you can see since gold started it latest consolidation pattern, about 18 months ago, there is a mix of black and white candles that tells us the impulse move hasn’t begun yet but when it does we’ll see a string of black candles just like the first impulse move down off of the rectangle high. One last note on this weekly chart below. Notice the blue expanding falling wedge that formed as part of a complex bottom back in 2008. I think there is a good chance that we may see the final low for gold when it touches the bottom rail of the much bigger black expanding falling wedge which could turn out to be a huge halfway pattern in the secular bull market. Just something to think about right now. There is still a lot of work to do yet.

Below is a beautiful monthly chart for gold that we’ve been following for well over a year or so. This is the chart where I extended the neckline from the 2008 crash H&S consolidation pattern to the far right hand side of the chart, think reverse symmetry, labeled neckline extension rail. Note the last bar on this chart which shows gold backtested the neckline from below again this month. December marks the third month now that gold has been trading below that neckline.

Lets look at one more chart for natural gas that shows the big H&S top that broke down last week. Keep in mind the relative size of that big H&S top that shows you this move down in natural gas isn’t going to be a flash in the pan type of move. It took over two years to build out that H&S top and the impulse move isn’t going to end in one or two weeks or months. It’s all relative.

I want to wish everyone a Merry Christmas and a happy holiday season. I also want to thank everyone who has joined Rambus Chartology. I want to thank Sir Fullgoldcrown, Audept and my wife, who takes care of the Pay Pal accounts, because without these folks there would not be a Rambus Chartology. All the best…Rambus.