Gold Update

In August 2018, gold carved out the bottom outlined via this projection published in the August 29 Profit Radar Radar Report.

Gold appears to have finished the first leg of this rally on February 20 at 1,350, which was followed by a 70-point drop.

The March 10 Profit Radar Report featured this gold chart, which projected a rally to about 1,320 followed by a drop back into the 1,250 range.

Gold made it as high as 1,325. As the updated chart shows, price dropped below the short-term black trend channel today (red arrow).

This is the first indication trade should work towards our buy target. The coming days will hopefully bring further confirmation.

Popular gold ETFs include:

SPDR Gold Trust (GLD)

iShares Gold Trust (IAU)

Continued updates are available via the Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s evaluation of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF e-Newsletter to get actionable ETF trade ideas delivered for free.

Dollar, Euro, Gold Update

Dollar Update

The January 2 Profit Radar Report published this chart and long-term US Dollar Index forecast:

The US Dollar Index could be at or near the end of a 5 ½ year rally. As per Elliott Wave Theory, it is possible to count 5 waves up from the May 2011 low. There are bearish divergences at the December highs, and investor sentiment is in favor of a lower dollar. We are alert for a potential multi-month US dollar decline.”

As it turns out, the US Dollar Index actually peaked on January 3, and spent the next 8 months falling lower.

In August/September we were expecting a bottom, but at the time we were not sure how big of a bounce to expect.

In November it became clear that the rally from the September 8 low to the October 27 high was only 3 waves, a first indication that the dollar bounce was over (a 5-wave move higher would have marked a trend change according to Elliott Wave Theory).

The chart below reflects the most likely Elliott Wave Theory count, which projects a more significant low in early 2018.

Smart money dollar hedgers are near record long the dollar, which could lead to a more sustainable rally even before the dollar reaches new lows (a solid close above 95 prior to a new low would suggest that the wave 5 low is already in).

However, hedgers are often early and may become even more bullish in the coming weeks. The lower the dollar falls, the better the buy signal.

Corresponding long dollar ETF: PowerShares DB US Dollar Bullish Fund (UUP)

EUR/USD (Euro)

The euro (EUR/USD) generally moves in the opposite direction of the dollar.

Since the above dollar analysis provides a multi-month forecast, we’ll use the EUR/USD for a short-term outlook.

On November 14, the EUR/USD broke above the black trend channel, and re-tested that channel on November 21 (blue circle).

The November 20 Profit Radar Report said that: “The EUR/USD is near support around 1.17. This could serve as springboard for new recovery highs.”

We now expect a rally above 1.21. The gray trend channel provides some short-term support/resistance levels. Trade should not drop below 1.17.

RSI appears unlikely to confirm new highs above 1.21, which would harmonize nicely with our expectation of a larger pullback.

Smart money euro hedgers, however, are nearly record short the euro, which will draw the euro down eventually. We’d love an opportunity to short the euro above 1.21 against a bearish RSI divergence.

Corresponding inverse euro ETF: ProShares UltraShort Euro (EUO)

Corresponding euro ETF: CurrencyShares Euro Trust (FXE)

Gold

This September 28 article included a detailed long-term outlook for gold.

The October 4 Profit Radar Report said all there was to know about gold for the weeks to come: “Support for gold is at 1,245 – 1,260. Resistance is at 1,298 – 1,304. For now, gold is likely to trade between support and resistance.”

Gold is pushing the upper boundary of the outlined trading range, but thus far there’s been no breakout. Silver failed to confirm gold’s push higher, which can be a warning signal. On balance volume has been increasing, which is a positive. Nevertheless, we would view a break above 1,307 with suspicion.

Corresponding gold ETFs:
SPDR Gold Trust (GLD)
iShares Gold Trust (IAU)

Corresponding inverse gold ETFs:
ProShares UltraShort Gold (GLL)

Continued forecasts for the US Dollar, EUR/USD, gold and silver are available via the Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, and 24.52% in 2015.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

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Will the Absence of QE Continue to Melt Gold?

The Fed just announced that sterilized QE is over, done, toast. Gold prices have crashed, slicing through a 15-month support shelf like a knife through butter. But, are QE and gold really connected? This chart shows the surprising truth.

Here are two facts (most investors will say they are not random):

  1. QE is over.
  2. Gold is crashing.

Here is a key question:

Is gold crashing because QE is over?

To get the answer, we’ll do two things: 1) Rewind and 2) Reason.

Rewind Time to 2008

Gold’s last big bull market leg started in October 2008, right after the Federal Reserve unleashed QE1.

Investors feared inflation due to the massive liquidity influx. Gold was considered as the default inflation hedge and prices soared from $680/oz to $1,900/oz.

At first glance it seems like QE1 buoyed gold. The inverse conclusion is that the end of QE may well sink gold.

Reason & Facts

During QE1, gold prices, and gold ETFs like the SPDR Gold Shares (NYSEArca: GLD), gained 34%.

QE2 lifted GLD by 10%.

But, and that’s a big but, throughout QE3/QE4 GLD lost 32%.

The chart below plots GLD against a visual description of QE1 – QE4. QE3 and QE4 are lumped into one graph (light green) to illustrate the combined effect of both programs.

QE3 started when gold was still trading near $1,800/oz ($175 for GLD). It’s been down hill ever since.

Gold rallied during QE1 and QE2 and declined during QE3 and QE4. Statistically, the evidence shows a 50% chance that QE may or may not have affected gold prices.

I realize that there are other factors in play, but one takeaway from this chart is that the absence of QE in itself is not necessarily terrible for gold and GLD.

More Facts

The December 29, 2013 Profit Radar Report featured the following gold forecast for the year ahead:

Gold prices have steadily declined since November, but we haven’t seen a capitulation sell off yet. Capitulation is generally the last phase of a bear market. It flushes out weak hands. Prices can’t stage a lasting rally as long as weak hands continue to sell every bounce.

Gold sentiment is very bearish (bullish for gold) and prices may bounce from here. However, without prior capitulation, any rally is built on a shaky foundation and unlikely to spark a new bull market.

We would like to see a new low (below the June low at 1,178). There’s support at 1,162 – 1,155 and 1,028 – 992. Depending on the structure of any decline, we would evaluate if it makes sense to buy around 1,160 or if a drop to 1,000 +/- is more likely.”

Obviously much has happened since December 29, and the levels mentioned back then may need some tweaking. Nevertheless, gold has fallen below 1,178 and is trading near the 1,155 support level.

In addition, gold sentiment has soured quite a bit. Two recent CNBC articles expected gold prices to drop below $1,000 and trade at $800 next year.

The Commitment of Traders report shows increased pessimism, but not historically extreme pessimism.

The chewed out adage that fishing for a bottom is like catching a falling knife obviously applies to anyone looking to buy gold.

But based on a composite analysis of fundamentals, sentiment and price action, the falling golden knife is closer to the kitchen floor than the hand that dropped it.

The latest Profit Radar Report includes a detailed strategy on how to buy gold with minimum risk and maximum rewards.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

This Simple Gold ETF (GLD) Chart May Prevent Much Headache

What is going on with gold? The world is in turmoil, but gold is going nowhere fast. Instead of trying to figure out how trouble in the Ukraine or Middle East will affect gold, take a look at one simple chart. It may just have the answers.

Every time there’s political unrest somewhere on planet earth, gold prices are supposed to go up.

Every time there’s deflation somewhere on planet earth, gold prices are supposed to go up.

Every time there’s inflation somewhere on planet earth, gold prices are supposed to go up.

Every time the stock market drops, gold prices are supposed to go up.

Every wedding in India or broken rice sack in China supposedly affects the price of gold.

It’s tiring to keep track of all the forces allegedly driving gold, especially when gold is obviously having a good time defying conventional Wall Street ‘wisdom.’

Instead of overanalyzing every global conflict, monetary or currency trends and wedding seasons in far of lands, it may be worth to simply watch one chart.

The SPDR Gold Trust ETF (NYSEArca: GLD) chart below is ‘dressed up’ with two simple lines.

Those two solid red lines form double trend line resistance right around 130.

My research suggests that GLD Gold ETF may test trend line resistance, but will not surpass it.

Trade towards 130 would be a low-risk opportunity to go short (stop-loss just above trend line resistance).

The actual gold price chart is even a bit clearer than the GLD chart. Continuous updates for gold are available via the Profit Radar Report.

The moral of the GLD chart story, is not to get caught up in all kinds of unpredictable fundamental cross currents.

For anyone who wants to get a headache, Goldschlaeger schnaps may be a more pleasant than following media predictions gone awry.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Why 2014’s Biggest Gold Rally May be Bearish for S&P 500

Gold just saw its biggest one-day gain of the year. At the same time the S&P 500 climbed to yet another 1-year high. Since 2009, this constellation happened three times, and led to short-term S&P 500 weakness every time.

Gold jumped 3.26% on Thursday, the biggest one-day gain of 2014. Ironically, such a display of gold’s strength is short-term bearish for the S&P 500.

Since the beginning of the post-2009 QE bull market, there’ve been three prior occasions when gold staged the biggest move of the past six months, while the S&P 500 (SNP: ^GSPC) traded at new 1-year highs.

All three instances are illustrated via the charts below:

November 4, 2010:
S&P 500 pulled back immediately.
Gold staged a minor pullback a few days later before moving higher.

July 22, 2013:
S&P 500 grinded higher for a few more days before a multi-week correction.
Gold meandered sideways/down.

September 18, 2013:
S&P 500 and gold pulled back immediately.

Gold’s performance is in line with what the Profit Radar Report proposed on May 28: “Gold broke out of the triangle and is approaching a general support zone at 1,255 – 1,230. A bounce from this zone to about 1,330 is quite possible.”

Thus far in June, gold bounced from 1,238 to 1,322.

Based on gold seasonality a bottom for gold may be in. But gold cycles and the lack of a real washout selloff suggest another new low.

Silver cycles are a bit more bullish than gold, that’s why the June 15 Profit Radar Report recommended to buy silver at 19.6 (silver spiked as high as 20.1 today).

Summary

Gold is getting closer to its initial up side target around 1,330 and the S&P 500 is at the up side target (1,954) projected by the Profit Radar Report back in January.

It’s too early to panic sell, but risk for gold and gold ETFs like the SPDR Gold Shares (NYSEArca: GLD) and the S&P 500 (NYSEArca: SPY) is rising.

Why is S&P 1,954 so important? Here’s why the Profit Radar Report pegged 1,954 back on January 15, 2014.

2014 S&P 500 Forecast

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Silver ETF Still Lacks Classic Signs of a Major Low

Precious metals will enter the history books as worst performing sector of 2013. Silver prices are down 60% from their 2011 high. Surprisingly, silver investors seem to be equipped with a cast iron stomach … which may be needed until a bottom is found.

The iShares Silver Trust ETF (NYSEArca: SLV) chart is about as ugly as it gets.

From 2011 to present, silver prices have tumbled some 60%. That’s already more than the S&P 500 (NYSEArca: SPY) lost during the ‘Great Recession.’

The UltraShort Silver ProShares ETF (NYSEArca: ZSL), a leveraged short silver ETF, has doubled since the beginning of the year.

There’s light at the end of the tunnel, but silver investors do not appear to have thrown in the towel yet. Typical markets don’t bottom until the last towel is thrown in, trampled and abandoned.

The chart below plots the price of silver against the tons of silver held by the SLV silver ETF (based on iShares’s data) and SLV trading volume.

Silver investors must have a cast iron stomach. The amount of silver held by SLV seems nearly immune to the bear market.

The 10-day average of SLV trading volume lacks any hint of panic selling.

A sustainable low remains an illusion as long as weak hands continue to hold silver.

Weak hands are ‘on the fence’ investors, unconvinced about silver’s up side, scared of the down side, and on the fence for now. Once the weak hands have capitulated, silver can break free of its bearish shackles.

As subscribers to my Profit Radar Report know, my down side silver target has been below 20 for well over six months.

The down side target is comprised of various support levels, creating a dense support cluster and probably a good buying opportunity (once we get there). Forgive me for keeping the actual target price exclusive to subscribers of the Profit Radar Report.

How about silver’s precious cousin, gold?

A similar analysis of the SPDR Gold Trust gold ETF (NYSEArca: GLD) actually provides more ‘noise’ (in a good way) and texture for a better analysis. The GLD analysis is available here: Tell Tale Sign of a Gold Market Low

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (stocks, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. We are accountable for our work, because we track every recommendation (see track record below).

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

The Missing Tell-Tale Sign of a Lasting Gold Market Low

The best time to buy is when there’s ‘blood on the street’ or when investors throw in the towel and all the weak hands are purged out. How can you tell when that’s the case? Here’s possibly the only way to identify the ‘puke point’ for gold.

Based on the Commitment of Traders Report (COT) and gold assets held in gold ETFs like the SPDR Gold Shares (NYSEArca: GLD) and iShares Gold Trust (NYSEArca: IAU), we know that investors/traders do not want to own gold right now.

In fact, both sentiment gauges have plunged to 5-year lows. Sentiment surrounding the precious yellow metal is bearish enough to spark a rally.

The big question is whether any rally will be fake and short or real and long.

At major market bottoms investors generally throw in the towel. Some call this the ‘puke point,’ where all the weak hands are purged out.

We’ve seen such a ‘puke point’ for the S&P 500 in March 2009 and once again in October 2011 (the Profit Radar Report identified both of them).

The opposite of the ‘puke point’ is the extreme infatuation seen around gold’s nominal all-time high in September 2011. Everyone wanted to own it. When everyone is scrambling to buy an asset from you, it’s best to give it to them.

Via the August 24, 2011 Profit Radar Report I warned subscribers that: “I don’t know how much higher gold will spike, but I’m pretty sure it will melt down faster than it’s melting up. We should see sellers en masse.”

Unlike the S&P 500, gold has been in a bull market for most of the 21st century. This means that data mining for past market bottoms is difficult, especially when looking at gold ETFs with price history limited to eight years.

Nevertheless, the chart below should be helpful in spotting a lasting gold bottom.

The chart plots the price of gold against gold (in tons) held by GLD and IAU.

The red graph at the bottom shows the 5-day average combined trading volume for GLD/IAU.

Gold assets have been in freefall mode. This shows us that gold may be oversold, but that’s about it.

The volume data is much more insightful. There’s been a volume spike at every prior gold low – the puke point. But there hasn’t been a volume spike recently.

The absence of obvious mass surrender suggests that a lasting gold bottom has yet to be seen. My most recent Profit Radar Report includes ideal targets for this major gold low along with short-term key resistance.

Simon Maierhofer is the publisher of the Profit Radar ReportThe Profit Radar Report presents complex market analysis (stocks, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. We are accountable for our work, because we track every recommendation (see track record below).

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.