Since our last report, Gold has held its cycle low of 1130.40 on Friday, November 7, its lowest level since April 2010. Silver, on the other hand, fell to 14.15.50 on December 1, its lowest level since August 2009. This creates a case of intermarket bullish divergence, in a time band when longer-term cycle troughs are due. As stated in our previous reports, “The overlap and the ideal price range if a low were to form right now (in Gold) would be 1131.30-1158… it could be a distorted (expanded) primary cycle coinciding with the longer-term 17- and 34-month cycle lows…. due date is October 2014 +/- 6 months…. It would probably take a close above 1245 to support this view.” We are getting close
December 15 starts the 6th week of the 15-21 week primary cycle, if the 1130.40 low of November 7 was the start of the primary cycle. The alternate is that this starts the 10 week of an older primary cycle that began with the low of October 6. I prefer the former labeling as price have now moved above both the 15- and 45-day moving averages, and the 15-day MA also moved above the 45-day MA. This is a bullish technical signal, consistent with the beginning stages of new primary cycles. That did not happen from the low of October 6 (see daily chart above). However, until prices close above 1239, the alternate labeling is still possible, which is much more bearish. Since the low of November 7 was below the low of October 6, it would mean the market is in a bearish trend and the final low would not be achieved until the end of this primary cycle. If this is the correct labeling, then we must be alert to a powerful sell off that could result in a contracted primary cycle trough due December 22-January 16. The price target could then be as low as 975.70 +/- 111.80.
For now, we will stay with the bullish outlook. That is, the low of November 7 was in the time band for the 17- and 34-month cycle lows. It was an expanded primary cycle (22 weeks), which is a form of distortion, which we like to see at long-term cycle lows. It has now exhibited a case of intermarket bullish divergence to Silver, which fell to a new long-term low on December 1. Unless prices fall below 1130.40, our outlook is now for a 4-10 month rally in Gold, with an upside price target of 1463 +/- 78.50, or 1281.50 +/- 36.80.
Gold is now in time band for a 6-week major cycle trough. A corrective decline would take prices down to 1185.50 +/- 12.60. A break below this range would be a concern for the bullish case. On the other hand, a break above line A-B would be confirmation that the major cycle trough is over, and the next leg of the up move is underway. A close above 1250 could be explosive, with a measuring upside target of 1367.50 +/- 27.80. With Uranus signatures so active right now, explosions in either direction are possible, and they could last into March. Just as I expected a long-term cycle crest to be completed in stocks under Uranus square Pluto, I also expect a long-term, cycle low to be completed in Gold. I cannot rule out the possibility that both have happened – or will happen - in November-December 2014.
The weekly chart of Gold above, constructed by Kat Powell, also shows a recent pattern of 22-27 week cycle in Gold. Notice how Gold rallied for 5-12 weeks after each of these lows. And in each case, prices exceeded the 25-week moving average. However, we also note that each rally was lower in price than the prior one. Gold will have to exceed 1347 to break that bearish pattern.
Trading Strategies for Gold: Our last issue stated, “… all traders are advised to cover shorts for nice profits and go long, with a stop-reverse (back to short side) on a break below 1130… In the event that Gold or Silver (but not both) take out their low of November 7 (1130.40 in Gold, 15.04 in Silver), you may remain or get long, especially if the close that day or the next is in the top 1/3 of the day’s range. Your stop-loss would then be on a day when both break to new multi-year lows.” That all happened as Silver fell to 14.15.50 and Gold held well above 1130.40. Thus, position traders may remain long with a stop-loss on a break below 1130. Short-term aggressive traders not in the market may look to buy a 5-7 week major cycle low due this week or next, at 1185.50 +/- 12.60, with a stop-loss on a close below 1150. If prices do break under 1130.40, revert to shorting strategies, selling any corrective rallies. However, you also need to be alert to the period of December 22-January 16. On any new low in Gold, there is the possibility of a big reversal back up.
Since our last report, Silver has plunged a new 5-year low on December 1 at 14.15.50. By December 10, it was up to 17.35, a gain of 22.6% in just 7 trading days. As stated in our last issue, written by Kat, “Should Silver break through trendline resistance and climb to 17.00, it is within reach of a 38.2% retrace target of the 17-week decline at 17.57 as illustrated on the enclosed chart.” An update of that chart is shown on the next page.
December 15 this starts only the second week of Silver’s new 13-21 week primary cycle. A normal corrective rally in a bear market would take prices back to 17.88 +/- 88. Last week’s high of 17.35 was in this range. However, that was only the first week of the new primary cycle, and it is very rare for primary cycles to top out only one week after the low. Even in bear markets, the rally is usually 2-5 weeks. Thus, we expect prices to go higher than 17.35 before falling below 14.15. In fact, since the 14.15 low of December 2 was a distorted primary cycle, we don’t even expect prices to fall back to there for several weeks, even months. It is my view that December 1 was a longer-term cycle low, such as a 7-year or even 18.5-year cycle trough. It will take time, of course, to confirm that. However, as stated in our special Silver issue in May 2014, “The downside price target could be as low as 13.12 +/- 2.87 (due 2014-2016), and even a re-test of the 8.40 low of October 2008.” The first price target zone was entered, with a cycle distortion.
For now, traders can buy any corrective declines. A normal corrective decline presently would be back to 15.75.50 +/- 38. One concern presently is that the 18-day standard CCI soared to +227 last week. Such a reading often corresponds to a crest within 7 trading days from which prices decline at least 9% before resuming their upward movement. A 9% decline from last week’s high would pull Silver back to 15.79. This 15.75 area is shaping up to be a major support zone for Silver.
Trading Strategies: As stated last issue, “… traders could probe the long side with a stop-loss on a close below 15.04, or at a time when both Gold and Silver take out last week’s low. If one takes it out and the other does not, this could be a case of intermarket bullish divergence, in a critical reversal zone, and traders can buy that set up.” All traders may now look to buy on a decline to 15.75 +/- .50, if not already long, with a stop-loss on a close below 14.15 or at a time when both Gold and Silver fall to new yearly lows. We are looking for the next move up to 19.00 +/-.50 unless prices fall back below 1500.
Short-Term Reversal Dates in Silver: Look for isolated highs or lows in Silver (and probably Gold) in these solar-lunar time frames, and from which prices reverse at least 2.5% (and better if 4%):
Dec 17-19**
Dec 26***
Dec 29*
Jan 4-5*
Jan 20-21***
December 15 starts the 6th week of the 15-21 week primary cycle, if the 1130.40 low of November 7 was the start of the primary cycle. The alternate is that this starts the 10 week of an older primary cycle that began with the low of October 6. I prefer the former labeling as price have now moved above both the 15- and 45-day moving averages, and the 15-day MA also moved above the 45-day MA. This is a bullish technical signal, consistent with the beginning stages of new primary cycles. That did not happen from the low of October 6 (see daily chart above). However, until prices close above 1239, the alternate labeling is still possible, which is much more bearish. Since the low of November 7 was below the low of October 6, it would mean the market is in a bearish trend and the final low would not be achieved until the end of this primary cycle. If this is the correct labeling, then we must be alert to a powerful sell off that could result in a contracted primary cycle trough due December 22-January 16. The price target could then be as low as 975.70 +/- 111.80.
For now, we will stay with the bullish outlook. That is, the low of November 7 was in the time band for the 17- and 34-month cycle lows. It was an expanded primary cycle (22 weeks), which is a form of distortion, which we like to see at long-term cycle lows. It has now exhibited a case of intermarket bullish divergence to Silver, which fell to a new long-term low on December 1. Unless prices fall below 1130.40, our outlook is now for a 4-10 month rally in Gold, with an upside price target of 1463 +/- 78.50, or 1281.50 +/- 36.80.
Gold is now in time band for a 6-week major cycle trough. A corrective decline would take prices down to 1185.50 +/- 12.60. A break below this range would be a concern for the bullish case. On the other hand, a break above line A-B would be confirmation that the major cycle trough is over, and the next leg of the up move is underway. A close above 1250 could be explosive, with a measuring upside target of 1367.50 +/- 27.80. With Uranus signatures so active right now, explosions in either direction are possible, and they could last into March. Just as I expected a long-term cycle crest to be completed in stocks under Uranus square Pluto, I also expect a long-term, cycle low to be completed in Gold. I cannot rule out the possibility that both have happened – or will happen - in November-December 2014.
The weekly chart of Gold above, constructed by Kat Powell, also shows a recent pattern of 22-27 week cycle in Gold. Notice how Gold rallied for 5-12 weeks after each of these lows. And in each case, prices exceeded the 25-week moving average. However, we also note that each rally was lower in price than the prior one. Gold will have to exceed 1347 to break that bearish pattern.
Trading Strategies for Gold: Our last issue stated, “… all traders are advised to cover shorts for nice profits and go long, with a stop-reverse (back to short side) on a break below 1130… In the event that Gold or Silver (but not both) take out their low of November 7 (1130.40 in Gold, 15.04 in Silver), you may remain or get long, especially if the close that day or the next is in the top 1/3 of the day’s range. Your stop-loss would then be on a day when both break to new multi-year lows.” That all happened as Silver fell to 14.15.50 and Gold held well above 1130.40. Thus, position traders may remain long with a stop-loss on a break below 1130. Short-term aggressive traders not in the market may look to buy a 5-7 week major cycle low due this week or next, at 1185.50 +/- 12.60, with a stop-loss on a close below 1150. If prices do break under 1130.40, revert to shorting strategies, selling any corrective rallies. However, you also need to be alert to the period of December 22-January 16. On any new low in Gold, there is the possibility of a big reversal back up.
Since our last report, Silver has plunged a new 5-year low on December 1 at 14.15.50. By December 10, it was up to 17.35, a gain of 22.6% in just 7 trading days. As stated in our last issue, written by Kat, “Should Silver break through trendline resistance and climb to 17.00, it is within reach of a 38.2% retrace target of the 17-week decline at 17.57 as illustrated on the enclosed chart.” An update of that chart is shown on the next page.
December 15 this starts only the second week of Silver’s new 13-21 week primary cycle. A normal corrective rally in a bear market would take prices back to 17.88 +/- 88. Last week’s high of 17.35 was in this range. However, that was only the first week of the new primary cycle, and it is very rare for primary cycles to top out only one week after the low. Even in bear markets, the rally is usually 2-5 weeks. Thus, we expect prices to go higher than 17.35 before falling below 14.15. In fact, since the 14.15 low of December 2 was a distorted primary cycle, we don’t even expect prices to fall back to there for several weeks, even months. It is my view that December 1 was a longer-term cycle low, such as a 7-year or even 18.5-year cycle trough. It will take time, of course, to confirm that. However, as stated in our special Silver issue in May 2014, “The downside price target could be as low as 13.12 +/- 2.87 (due 2014-2016), and even a re-test of the 8.40 low of October 2008.” The first price target zone was entered, with a cycle distortion.
For now, traders can buy any corrective declines. A normal corrective decline presently would be back to 15.75.50 +/- 38. One concern presently is that the 18-day standard CCI soared to +227 last week. Such a reading often corresponds to a crest within 7 trading days from which prices decline at least 9% before resuming their upward movement. A 9% decline from last week’s high would pull Silver back to 15.79. This 15.75 area is shaping up to be a major support zone for Silver.
Trading Strategies: As stated last issue, “… traders could probe the long side with a stop-loss on a close below 15.04, or at a time when both Gold and Silver take out last week’s low. If one takes it out and the other does not, this could be a case of intermarket bullish divergence, in a critical reversal zone, and traders can buy that set up.” All traders may now look to buy on a decline to 15.75 +/- .50, if not already long, with a stop-loss on a close below 14.15 or at a time when both Gold and Silver fall to new yearly lows. We are looking for the next move up to 19.00 +/-.50 unless prices fall back below 1500.
Short-Term Reversal Dates in Silver: Look for isolated highs or lows in Silver (and probably Gold) in these solar-lunar time frames, and from which prices reverse at least 2.5% (and better if 4%):
Dec 17-19**
Dec 26***
Dec 29*
Jan 4-5*
Jan 20-21***
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