Gold Bear Trap Is Sprung

m9Submitted by Morris Hubbartt:

The public’s level of ownership has declined to a level not seen since the lows of 2008. This indicates gold is probably making a major market bottom.

GDXJ has moved lower, with gigantic volume. This type of selling has driven the key RSI indicator to historical lows.   A rule of thumb is that once RSI goes below 25, buy orders can be placed.   Bearish analysts think that GDXJ has broken down from major support, but I think this is a huge bear trap.  Sentiment, climactic volume, and oscillator action suggest that junior gold stocks are about to reverse and surge higher, stunning the bears!


SDBullion’s new 2013 Silver Buffalo round is available now as low as .99 over spot!

2013_buffalo_obverse

TLT (T-Bond Proxy ETF) Help Me Now Chart

 

m1

 

  • The US Bond Market needs help, and it’s likely going to get it. The Federal Reserve is now engaged in buying over $1 trillion worth of US Bonds per year. Is that enough?  Bond yields are rising (bond prices are declining).  That is the last thing the US government wants to see right now, as it wallows in un-payable debt.  The Fed seems prepared to do whatever it takes to keep rates low, even if the cost of doing so is a dollar that goes right off the trading board.

 

  • This weekly chart shows that the bond market is substantially oversold. I expect TLT to rise towards the $120-$125 area.  At that point, a right shoulder of a h&s top pattern would be in play.  A huge crash could occur in the bond market, unless the Fed becomes even more aggressive with bond purchases, than it is now!

 

T-Bond COT Report Chart

 

m2

  • This chart is from www.sentimentrader.com.  It shows that commercial traders (“smart money”) are short-term bullish.  Each time their net long position has touched the upper green dotted Bollinger band on this chart, a substantial bond rally has ensued.  Gold has usually rallied as well, which is great news for gold investors.

Dow Triple Arc Chart

 

m3

  • Another event that could fuel a bond market rally, is a stock market correction. I don’t see a deep correction in stocks, yet. I think this will initially play out as a modest pullback, with the Dow declining to my Fibonacci arc target of 13,400. From there, I’m forecasting a small rally, and then a much bigger sell-off, taking the Dow down to about 12,200. As the Dow falls, gold should have a great rally.

Gold Triangle Action Chart

 

m4

 

  •  This week, the bottom line of this symmetrical triangle was almost tested, but it held strong!

 

  •  Many technical indicators are now approaching oversold status. The RSI fell to under 20 at one point (now 25), and a CCI buy-signal spike is in play.  Technically, gold looks superb, and is poised to rally.

 

Gold Public Opinion Chart

 

m5

 

  • The public’s level of ownership has declined to a level not seen since the lows of 2008. This indicates gold is probably making a major market bottom.

 

Gold QE Bars Chart

 

m6

 

  • After the Fed unveiled QE1 & QE2, gold rallied strongly.  This time, it has declined.  It’s been a very frustrating time for gold investors, but I want to point out that many money managers have moved their focus away from gold, to the Dow and the S&P500.

 

  • Business conditions have improved, but not dramatically.  A sell-off in the general equity markets would bring the focus of money managers back to the gold market, and I think we’re on the cusp of such an event right now.

 

GDX Sentiment Washout Chart

 

m7

 

  • Gold stocks are more hated than any other asset, according to all the sentiment data that I study. This chart highlights the gold price action, after a number of  “sentiment washouts”.

 

  • There could be a test of this week’s lows, but this sentiment chart suggests that a major bottom is here.

 

Market Sector Comparison Chart

 

m8

 

  • This chart indicates what the average trader thinks of gold stocks. To take advantage of this negative sentiment, do the opposite of the crowd.

 

  • When almost all the money flows out of a sector, like it has here, prices can only go in one direction, and that is… up!

 

GDXJ Bear Trap Chart

 

m9

 

  • GDXJ has moved lower, with gigantic volume. This type of selling has driven the key RSI indicator to historical lows.   A rule of thumb is that once RSI goes below 25, buy orders can be placed.

 

  • Bearish analysts think that GDXJ has broken down from major support, but I think this is a huge bear trap.  Sentiment, climactic volume, and oscillator action suggest that junior gold stocks are about to reverse and surge higher, stunning the bears!

 

Silver Snack Pack Chart

 

m10

 

  • Last week, silver was not on my immediate-buy list. It is now. Investors should buy modestly, and gamblers could be a little more aggressive, with the size of positions they take now.

 

  • I call this the snack pack chart, because traders can enjoy modest “snack packs of profit”, by selling some positions for quick gains, while holding 70% of their position for banquet-sized profits.

 

  • For silver investors, the bigger profits will come after inflation returns.  That’s probably 2-4 years away, which is a long time to wait.  So, I recommend that investors use 30% of silver positions, for short term trading!

 

Unique Introduction For Web Readers:  Send me an email to alerts@superforcesignals.com and I’ll send you 3 of my next

Super Force Surge Signals free of charge, as I send them to paid

subscribers. Thank you!

 

The Super Force Proprietary SURGE index SIGNALS:

25 Super Force Buy or 25 Super Force Sell: Solid Power.

50 Super Force Buy or 50 Super Force Sell: Stronger Power.

75 Super Force Buy or 75 Super Force Sell: Maximum Power.

100 Super Force Buy or 100 Super Force

Sell: “Over the Top” Power.

 

Stay alert for our Super Force alerts, sent by email to subscribers, for both the daily charts on Super Force Signals at www.superforcesignals.com and for the 60 minute charts at www.superforce60.com

 

About Super Force Signals:

Our Super Force signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building.  We are two business owners with excellent synergy.  We understand risk and reward.   Our subscribers are generally successful business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market.

 

Frank Johnson: Executive Editor, Macro Risk Manager.

Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist.

 

Email:

trading@superforcesignals.com

trading@superforce60.com

Super Force Signals

422 Richards Street

Vancouver, BC  V6B 2Z4

Canada

SD Bullion

Comments

  1. “For silver investors, the bigger profits will come after inflation returns.  That’s probably 2-4 years away, which is a long time to wait.”
    This statement is dependent on the age of the holder IMHO. If you are 60 y/o you might agree with this! if you are in your 50′s or younger buying when on sale and holding may be your best bet. The bigger question the article hints at is right on, are you risk adverse or a gambler? I tend to think that most of us stacking PM’s and even semi PM’s are Extremely Risk tolerant. Otherwise we would be much fewer in number, having had stroked out long ago. Tiger

    • Age could matter in that assessment but another factor is WHY one is buying silver.  Those expecting to bounce in and out of the silver and gold markets while raking in large profits during short time periods WILL be disappointed.  Others, such as myself, who are in their 60s but own PMs as a family financial insurance plan are far less concerned about the price volatility of silver and gold.  My PM insurance contract is written in ounces and not in dollars.  If I had 1000 oz. in my safe last week, I still do.  The change in fiat prices have not changed the ounces a bit.  Because I do not NEED to sell my silver, I can choose the time when I do… or not.  If it is not needed for its original purpose during my lifetime, I will leave it to my family, where it will continue to serve its intended purpose.

  2. As always here am I saying…that I like PM’s at these levels….lower would be fine by me.
    As odd as it may sound to some…the very last thing I want to see happen is Silver gap up to $65 or something higher. Sure, that’d be fun to add up in dollars ‘n all…but at what cost elsewhere??

     
     
    And far as Bear traps go, & I’d love to be wrong, but thinking the best Bear trap I’m likely to see 18 months in either direction from now –was the one my Seahawks sprung on Chicago back in November.

Speak Your Mind