This trade is just for those subscribers that know what they’re doing and have the experience to buy puts or have the ability to sell short. You can use the chart below as your guide. What you do is up to you.

After breaking down out of the bearish rising wedge CDE has been forming an expanding triangle consolidation pattern. The price action is sitting right on the bottom blue rail as we speak. The minimum price objective is to the 15.92 area which is close to the previous lows made back in July and August of last year.

I like to use this chart when I want to know how the HUI is doing compared the the stock markets. It clearly shows that sometimes the HUI is outperforming the SPX in a big way and sometimes the SPX is outperforming the HUI, yellow shaded areas, and sometimes they move together. I would like to focus your attention to the right side of the chart that shows the blue shaded area. The blue shaded area shows how the HUI and the SPX has decoupled starting in November of 2012. How long this divergence goes on is anybodies guess. But it is what it is until it changes.

Lets look at a couple of ratio chart that shows something may be brewing when we compare gold to the COMPQ or the SPX. First lets look at the Gold to COMPQ ratio that is showing that the COMPQ has been outperforming gold for over a year now. There is a potential unbalanced double top in place where the double top trendline is being tested right here and now. You can see gold strongly outperformed the COMPQ during the first 9 years or so before the ratio put in it’s first peak in 2009. It formed a second peak that was slightly higher than the first peak but there was a very large negative divergence on the RSI and MACD indicators. Is this chart now suggesting that it might be time for the stock markets to start outperforming gold in a big way if the double top comes to fruition?

Lets look at the gold to SPX ratio chart that is showing a very similar pattern to the ratio chart above. Here I’m using a line chart that shows the ratio is breaking down from the unbalanced double top. You can see the beautiful inverse H&S bottom that was made back in late 1990’s and early 2000’s that launched the outperformance of gold to the stock markets. Keep in mind a big base leads to a big bull market and a big top leads to a big bear market which this ratio chart clearly shows. Also note the big negative divergences on the RSI and the MACD indicators. The question that has to be asked is the bull market that gold has enjoyed since 2000 compared to the stock markets coming to an end? Stay tuned as things are starting to get interesting.

More at

www.rambus1.com

LIMITED TIME FREE TRIAL

http://rambus1.com/?page_id=10

Below is a combo chart I use to track the HUI and gold as they build out their consolidation patterns. As you can see they generally form the same type of consolidation patterns that breakout at the sametime. Even though gold has performed much stronger than the HUI they still tend to build out the same type of consolidation patterns. Note the two H&S top patterns that formed in 2011, yellow shaded area. They both broke below their respective necklines about the same time, blue shaded area. As you can see they both then broke back above their necklines for a short period of time that looked like the original H&S tops were invalidated. The pink shaded area shows what I now call a bull trap. That little move above the necklines sucked in alot of bulls at the time including me. But once the price action broke below the necklines again the trap was set. Those that have held on hoping for a significant rally are getting further and further in the hole. As you can see on the HUI chart on top, it had one last backtest from below that told us that neckline was still HOT and in play. The price action has been drifting slowly down from that last backtest. If the HUI and gold can ever trade back above those necklines that would be a very bullish setup but until then caution is warranted.

FREE TRIAL
http://rambus1.com/?page_id=10

More at

www.rambus1.com

Below is weekly linear scale line chart for the HUI. What this chart is showing us is that the price action in the HUI is now testing the big neckline this week. I expect alot of chopping around this general area before the real move lower begins. A fight between the bulls and the bears may get brutal at times with some inter day spikes in both directions. Ultimately the bears should win the war when the neckline is divisively broken to the downside as the last bulls will finally retreat to lower ground and setup a new line of support. Notice the H&S price objective that comes in at the 2008 crash low at 169.95. The actual low was about 150 on a bar chart.

The exact same chart above only in bar form. Notice how the price action is now in contact with the big neckline. This is a big deal IMHO.

GDX weekly linear scale line chart.

Below is the same chart above only in bar form. It to is now just testing the big neckline.

The weekly line chart for the XAU that looks like the HUI and GDX. .

XAU weekly bar chart is the exact same chart above showing the initial contact with the big neckline.

The easiest and hardest thing trading this decline, once it starts, will be to ride the trend lower without getting kicked off. Easiest in that you don’t have to do anything but stay in your position. The hardest because it will be very difficult to ride out the volatility. When you look at the charts above it looks easy to ride the move down to the H&S price objectives but when your living through it it’s an altogether different thing. Once below the necklines the volatility will increase dramatically where there could easily be a 100 point swing in the HUI. I expect to see at least one good consolidation pattern form that may show up halfway down to the price objects. Another possibility is there could be a series 2 or 3 smaller consolidation patterns form before the bottom is reached. Its time when one has to get mentally ready for what could be the ride of a lifetime if things work out as expected. The big money will be made by those that can stay with the trend and not panic every time there is a rally. Easier said than done.

Dont miss this opportunity

There is some Potentially Serious Action going on in the PM markets right now

Rambus has been one of the Only Analysts to Diagnose This Stunning Situation

Subscribers have had a heads up on this dramatic unfolding for many months

Join us for a free 10 day Preview

If you have PM Investments : You Sincerely Need to See this work

http://rambus1.com/?page_id=10

In the weekend report we looked at some of the precious metals stock indexes that are showing some massive H&S topping patterns. These type of patterns are distribution patterns and the bigger they are the bigger the move down in time and price. Could these massive topping patterns be the end of the bull market for the precious metals stocks? I think on a one or two year basis these H&S topping patterns could put a big dent in the bull market for the precious metals stocks if the necklines are broken to the downside which remains to be seen yet.

Before we move on to the individual precious metals stocks I want to show you a long term monthly chart of the XAU to give you an idea of what I mean by the end of the precious metals stocks bull market. First, notice the massive 8 year H&S base that was made back in the late 90’s and early 2000’s. It consisted of two smaller H&S bottoms. It was also very symmetrical in nature. If you can visualize turning that big 8 year H&S bottom upside down you would have a massive H&S top. Same principal just in reverse. Now look to the right side of the chart where you can see our big 4 year H&S top. That’s a big top by any standard of measurement. Note how I measured the red triangle that showed me a price objective up to the 214 area that was just a tad higher than the actual H&S top that formed back in 2008. Now using that same measuring technique I’ve measured our current H&S top, using the blue arrows, to show you where the price objective would be. As you can see the price objective would come in at the lows made back in 2001 around the 47.50 area.  What will be the fundamental reasons for such a big move lower? Only time will tell but from a chartists perspective whatever the reasons are they are baked into the H&S top.

In order to have a big move down in the XAU the precious metals stocks need to have some big topping patterns as well. Lets start with AEM that was one of first precious metals stocks to breakdown from it’s H&S top back in the summer of 2011. I’m showing you this one first so you can see how this particular H&S top played out. You can see the large one week bar that accompanied the breakout that often times happens. I can’t recall what the fundamental reason was for the breakout but it was enough to send this stock into a bear market. As you can see it lost nearly 2/3’s of its value before it formed a small inverse H&S bottom that took the price action all the way back up to original neckline that I’ve labeled as the Neckline Extension Rail. As you can see it has now formed another smaller H&S top just below the neckline extension rail signaling the counter trend rally is now over. Keep the big three year H&S top in mind when you look at the charts to follow.

Lets now look at some of the biggest of the big cap precious metals stocks and see what they look like. The first big cap stock I would like to show you is the ABX weekly chart. As I’ve shown you on the PM stock indexes there is some beautiful symmetry going on. You can see the neckline symmetry rail that showed us where to look for a possible high for the right shoulder. Note the little red rectangle that is now just breaking below it’s bottom rail. That should insure a move to the big neckline.

The ABX monthly chart shows our double H&S top along with the 2008 H&S top. Also notice the massive H&S base that launched the bull market.

Another big cap precious metals stock is GG that looks just like any of the precious metals stock indexes. Again very symmetrical in appearance. As you can see it still has several points before it reaches the neckline.

NEM is another big cap precious metals stock that shows the same beautiful symmetry and is now touching the big neckline. It may lead the way lower ahead of ABX and GG.

The monthly chart for NEM is interesting in that the previous H&S top which took about four years to build out and broke down in 2008 is almost identical to our most recent H&S topping pattern. The red arrows shows how I measure for a H&S price objective.

Lets now look at some other precious metals stocks that are breaking down from their own H&S patterns on different time frames. IAG broke down from a smaller H&S top that formed on the daily chart last week. Note the nice symmetry with a blue pattern on the left side of the chart and one on the right side of the chart. Also note the Head portion of the H&S top pattern was an unbalanced H&S top. Unbalanced meaning there was one shoulder on the left side and two shoulders on the right side. Also note the massive breakout gap from the smaller H&S top and a nice breakout gap that accompanied the breakout of the bigger H&S top pattern.

The weekly chart for IAG shows when the distribution began back at the end of 2009 which took on the form of a 7 point bearish rising wedge. I believe if the precious metals stocks were still in a bull market that point #7 on the blue bearish rising wedge would have broken out through the top. As it turned out it broke through the bottom rail confirming lower lows and lower highs which is the definition of a downtrend.

Below is a daily chart of NGD that is loved by most precious metals stock investors. Here to you can see the beautiful symmetry taking place within the H&S top. The neckline symmetry rail shows us where to look for a high for the right shoulder which also corresponds to the last reversal point in the blue bearish rising wedge. Once it broke below the bottom blue rail of the bearish rising wedge it wasted little time trading down to the neckline which it penetrated last Friday. You can see today’s price action had a fairly strong backtest to the neckline but closed right on the neckline.

The weekly look shows the much bigger topping pattern or distribution pattern that began all the way back at the end of 2010. By the time its all said and done I will probably label the big topping pattern as a rounding top.

The monthly chart for NSU.To shows a nice symmetrical H&S top that is not as far along as some of the other topping patterns but you can see all the pieces of the puzzle are in place.

RGLD is in the process of breaking the neckline on the daily chart. Note the smaller H&S top that formed the head portion of the this H&S top.

Lets look at one more precious metals stock before before I call it quits for the night. SA broke down from it’s huge H&S top in October of 2011. You can see since the breakout it has been trading in an expanding downtrend channel that is presently showing a H&S consolidation pattern. A break below the neckline will usher in the next impulse leg down.

I want to leave you with this last chart for the HUI that is a daily look that goes back to the beginning of the bull market. As I have shown you on the charts above symmetry plays a big role in how I view the formation of chart patterns. Alot of times the way a stock moves up will have a direct impact on how a stock will move down when a top is put in. For instance when there is a parabolic move up there isn’t much time to form any consolidation patterns to form so the move down is just as fast or faster than the move up. This happens to a lesser degree in normal uptrend or downtrends in that how a stock goes up is how it will come down. The HUI chart below shows the possible H&S top, possible because the neckline hasn’t been broken yet, and how the move lower may unfold based on the way the rally off the 2008 bottom looks. I call this Reverse Symmetry. The black rectangles equals time and price.

I could go on and show you many more of these topping patterns but I think you get the point here. Everyone is trying to be the first one to call a bottom when in fact they should be calling a top. There are many good chartists out there that are being blinded by the herd and can’t see the forest for the trees. As you can see on many of the charts above one good trendline in the right spot can make the difference between success or failure. There is nothing fancy about the H&S tops in the precious metals stocks. Its all just basic charting that anyone can learn to do. You just have to keep an open mind and be willing to accept change when it presents itself. So the bottom line is: Is this just a cyclical bear in the secular bull market? Or: Is the Fat Lady Singing ? And: What About Gold and Silver ? Stay tuned for further developments. All the best…Rambus

www.rambus1.com

FREE TRIAL

http://rambus1.com/?page_id=10

I just want to show you what I think is happening right now with the HUI. You can see the blue bearish falling flag that actually started out as a bearish falling wedge but morphed into the falling flag. Same bearish setup but the original pattern just morphed alittle bit. This morning the price action gapped below the bottom rail of the red triangle that has formed within the blue bearish falling flag. The price action is now sitting on the bottom blue rail. Its totally possible that we get a backtest to the bottom rail of the red triangle before we move lower. If we do then I’ll take another 1/3 position in the Kamikaze Portfolio with the capital we raised yesterday when we got stopped out of our DSLV trade. The blue arrows shows how I measured the blue bearish falling flag as a halfway pattern that shows the price objective to the previous low made last May. Important note here. That May low is also where the neckline form the big H&S top comes into play. Things are starting to get interesting again after the long chopping action over the last several months or so.

Below is a weekly chart that shows the price action in the red circle that has been backtesting the long black dashed support and resistance rail that goes all the way back to the H&S top in 2008. There is also the uptrend rail made off the 2008 low that is being backtested. The only support rail left is the top blue rail of the small downtrend channel.

Below is a chart I built sometime ago that shows the beautiful symmetry taking place in the big picture for the HUI. This chart shows the possibility of what to expect if the neckline is ever taken out. First things first tho. A move down to the neckline is the next thing we have to see happen before we get to excited about the prospects of the massive H&S top. I actually started thinking about the prospects for the big H&S topping pattern back in December of 2011. When you live through the development of a massively large pattern like this it seems like it takes forever to come to fruition. But as long as it keeps on developing the way that you envision you have to think you might be on the right track until something derails your idea.

EDITOR’S NOTE :
Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .

Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period at www.goldtent.org and now Here at Rambus Chartology since early 2012 .
www.rambus1.com

To review his Work and incredible calls from the 2007-2008 period click on the top right sidebar in the “Wizard of Rambus” ….”What If ?! ”

To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology Form with questions and answers, and learn the Art and Science and Mindset of a Pro Trader you may Join us by subscribing at
www.rambus1.com

We have many subscribers from all over the world who are glad they did as they enjoy the many daily updates and commentaries provided at this exciting new site.

As you will see Rambus (Dave from The Ozark Mtns in Arkansas) has prepared us for this difficult period by being one of the only ones to see and warn about the incredibly debilitating PM smackdown as early as Jan 2 2012 …click on the” HUI Diamond in the Rough” Post in the “Wizard of Rambus” top right

More Recently Rambus called a Bottom in HUI in this post…and has had subscribers on board for a Powerful Run to the Upside
rambus1.com/?p=5651

Followed again by his timely bearish call in this SLV Update which has had us on the sidelines and or short
rambus1.com/?p=8876

BUT
What is he seeing Now ?

You will find Rambus to be a calm humble down home country tutor with an incredible repitoir of all the TA based protocols tempered with his own one of a kind style…simply put…He wants to keep his subscribers on the right side of these crazy volitile and downright dangerous markets
See you at the Rambus Chartology

The first thing I would like to discuss tonight is getting stopped out of our DSLV trade today. I believe it was by about .13 cents. There comes a point when one has to draw a line in the sand no matter how right we may think we are. Its all about preserving capital for the next trade that is most important.

Today was like a double edged sword where we got stopped out of our DSLV trade and on the other hand we got alittle more clarity on the precious metals stocks. How one deals with a trade like DSLV, being so close to working but failing at the last moment, can emotionally get in the way of sound reasoning going forward.

A big mistake alot of investors make is they know they are  right and the market is wrong so they hold on to their losing positions waiting for the market to come around to their point of view. Many times the market never comes around to what one was originally thinking. Think tech bubble in 2000 or the gold price in 1980. Things change all the time and if you don’t change when the markets change you get left holding the bag with nothing in it. Believe me, the markets don’t care one bit about your point of view. The markets are always right no matter what you may think.

When you look at the ratio charts below keep in mind they are relative. For instance when the bull market started in the precious metals complex back in 2001 the HUI was trading at 35 and gold was at 255 that gave a reading of .13 or so. There can be a higher price for the HUI and gold where you can still get a ratio of .13 which is where I think we are headed in the future. The ratio chart does do a good job of telling you which item is outperforming the other one.

Now I would like to show you why I think silver has been acting so strong lately. Silver is viewed by most investors as a commodity and when the stock markets are in rally mode, like right now, silver tends to go up as an improving economy puts more demand on silver. Also you will see the gold to silver ratio fall as silver outperforms gold. Below is a chart I built several years ago that shows you exactly what I mean. Its a combo chart with the SPX on top and the gold to silver ratio on the bottom. It clearly shows that when the stock markets are in rally mode that is good for silver as the gold to silver ratio falls as silver is outperforming gold. Its not a perfect correlation but it does give you a heads up and as long as the SPX stays in rally mode the gold to silver ratio should keep falling enforcing the bullish stance in the stock markets. Bottom line is that if you own silver you should be hoping for the stock markets to rally and not crash.

Next, the precious metals stocks march to their own drummer and seem to do whatever the hell they like. The first ratio chart below shows you that the HUI to gold ratio is beginning to breakdown again after consolidating for eight months or so. If this expanding red bear flag plays out it will put this ratio all the way down to the very beginnings of the bull market that started all the way back in 2001. It will have made a complete round trip to 13 which is the price objective of the red expanding red bear flag. Please note the purple vertical dashed line that shows you where the precious metals stocks stopped outperforming gold in the overall big picture. As you can see it was at the very end of 2003. Yes the PM stocks did outperform gold right after the 2008 crash but as you can see they soon topped out with the formation of the 7 point red diamond reversal pattern. Note the price of gold when the ratio topped out in 2003. Its hard to believe but gold was trading around the 400 mark. This combo chart shows you why the precious metals stocks investors are so wore out. Always hoping but never getting what they want. I do think if this ratio chart does hit 13 sometime in the future that would represent a very good investment if one has the cash to buy the bargains.

When we compare the HUI to silver we see a similar setup. This ratio also topped out at the end of 2003 with silver trading at $6.00, purple dashed vertical line. How obscene is that? Now I want to focus your attention to the right side of the chart to the HUI to Silver ratio where you can see a H&S consolidation pattern that has formed. The black dashed support and resistance rail, once it was broken to the downside, reversed its role and held resistance that created the head portion of the H&S pattern. If you look close you can see it has been backtesting the neckline and is now ready to start the move lower IMHO.

In the Weekend Report I showed you how this potential rectangle, in gold, may form in here. Gold that has been beating it’s head up against the top red rail of the possible red rectangle consolidation pattern for 5 days now. I think there is a good chance that we may see several more reversal points as shown by the black arrows within the downtrend channel. From a symmetry perspective it seems to fit. Keep in mind as these horizontal trading ranges mature it usually takes longer for the price action to go from the top rail to bottom rail and vise versa. The rectangle won’t be complete until the price action touches the bottom red rail. At that point gold will have it’s fourth reversal point completed.

One last chart that I use to compare the HUI to the SPX. Its a combo chart with the HUI on top and the SPX on the bottom. It shows that sometimes they trade together and sometimes they are inverse to each other. Lets focus on the right side of the chart starting with the green shaded area that shows both the HUI and the SPX falling together. Then in November of last year they decoupled and the SPX has been in rally mode while the HUI has been declining, blue shaded area. How long this inverse relationship will last is anyone’s guess but until it changes this is the reality of the situation.

I hope this Wednesday Report helps put into perspective for you what is really happening right now. I know how over sold everything is related to the precious metals stock. All the indicators, you name it there all oversold, but they are just indicators, its the price action that you have to follow above and beyond everything else. Keep an open mind. All the best…Rambus

EDITOR’S NOTE :
Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .

Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period at www.goldtent.org and now Here at Rambus Chartology since early 2012 .
www.rambus1.com

To review his Work and incredible calls from the 2007-2008 period click on the top right sidebar in the “Wizard of Rambus” ….”What If ?! ”

To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology Form with questions and answers, and learn the Art and Science and Mindset of a Pro Trader you may Join us by subscribing at
www.rambus1.com

We have many subscribers from all over the world who are glad they did as they enjoy the many daily updates and commentaries provided at this exciting new site.

As you will see Rambus (Dave from The Ozark Mtns in Arkansas) has prepared us for this difficult period by being one of the only ones to see and warn about the incredibly debilitating PM smackdown as early as Jan 2 2012 …click on the” HUI Diamond in the Rough” Post in the “Wizard of Rambus” top right

More Recently Rambus called a Bottom in HUI in this post…and has had subscribers on board for a Powerful Run to the Upside
rambus1.com/?p=5651

Followed again by his timely bearish call in this SLV Update which has had us on the sidelines and or short
rambus1.com/?p=8876

BUT
What is he seeing Now ?

You will find Rambus to be a calm humble down home country tutor with an incredible repitoir of all the TA based protocols tempered with his own one of a kind style…simply put…He wants to keep his subscribers on the right side of these crazy volitile and downright dangerous markets
See you at the Rambus Chartology

I showed you this stock on Monday that was trading down at the bottom rail of a big 5 point rectangle reversal pattern. To launch a big rally there needs to be a base built. What we are seeing in most of the precious metals stocks is just the complete opposite. We are seeing topping patterns not bottoming patterns.

EDITORS NOTE:

If you are not yet a subscriber why not join us for Daily Chartology Classes

Details on the right sidebar

Subscribers have been out of the PM Majors and Juniors for many months

Some adventurers have been in the Kamikazi Trades like DUST (3X Short PM Stocks)

Which gained nearly 10% Today

Some are in the World Market ETFs like IRE (Ireland)

Rambus believes there will be a time for the PMs

But that time is not just yet.