Not a Gold Bull in Sight

By: Bob Loukas | Wed, Dec 21, 2016
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Gold-toothed bull skull

In last weekend's report, we covered how the Daily Cycle count was stretching too far, so marking a Nov 15th Daily Cycle Low (DCL) made sense. Doing so means that another DC began on Nov 16, and that puts today's date in the normal timing band for a new DCL. So with another DCL fast approaching, the capitulation decline we saw this week fits perfectly with expectations.

The large drops in Silver and the Miners are strong indications that the final capitulation for the current Daily and Investor Cycles is at hand.

(Keep in mind this is an except from a premium report published over the past weekend. Prices on charts reflect Friday's close)

Daiuly Gold Chart

An outlook is not an absolute call, so until Gold bottoms we'll be dealing in probabilities. I'm highlighting the most likely outcome to enable consideration of the risk/reward profiles on potential trades. So, while I expect that a major low in Gold is imminent, traders should still be cautious. I cannot stress enough that traders must be both realistic and patient as they consider possible market moves. And they need to understand that trading with a good probability of success does not guarantee that they will be correct.

Turning to the Miners, the lack of a sharp "V" bounce after Thursday's low suggests that more downside is ahead. The 20+ day triangle bear pattern cracked to the downside on Wednesday, and this type of decline typically runs for 3 to 5 sessions, so we should be close to the DCL/ICL.  Another weak open next week should give way to a solid reversal higher.

VanEck Vectors Gold Miners ETF Daily Chart

But remember - the tail-end of any Cycle can be extremely dangerous.  Too many traders fear missing the early part of the next rally and are burned by the declines that come with a final washout decline. The last week of any Cycle is typically the most volatile, and provides the largest price change, so I'd urge extreme caution with Gold.

That said, we covered the possibility of a final flush lower last week, and that's what has come to pass. While we can never rule out further declines, I believe that the end of the coming week will see Gold moving higher in a new Investor Cycle!

Weekly Gold Chart

 


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Bob Loukas

Author: Bob Loukas

Bob Loukas
The Financial Tap

Bob Loukas is the founder of "The Financial Tap", a membership site dedicated to helping traders and investors navigate the markets while increasing their expertise and understanding. Bob has over 20 years of experience in trading the markets, is a life-long student of economics, and has an abiding passion for the financial markets. Much of his investment philosophy is top-down in nature, beginning with a global and macro outlook which is used to create a framework that drives his intermediate investments.

Bob is a leading expert in Market Cycles. His love of Cycles grew after his introduction to the work of Walter Bressert, one of the pioneers in the field. Cycles were a natural fit with Bob's passion for top-down analysis. As Cycles are intertwined on multiple time frames, understanding the global outlook greatly helps him to identify the long dated Secular Cycles. From that point Bob is better able to identify the shorter Cycles and to build a cohesive investment strategy. Bob's Cycle Analyzer, a software based analytical and intelligence system, is used to predict the future movements of the major financial markets.

Originally from Sydney, Australia, he is now settled and has been working in New York City for the past 13 years. His background and education is in Computer Sciences and he holds a bachelor's degree from Monash University in Melbourne Australia. He has extensive experience in the Financial Software area and has served as a senior executive at various Fortune 50 management teams developing financial trading and reporting software.

Happily married with two children, family is a big part of his everyday life. Other passions including golf and long distance running. He plans to complete the 2012 New York City marathon.

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