Seeking Alpha

Jeff Pierce's  Instablog

Jeff Pierce
Send Message
I’m a swing trader of momentum stocks with a holding period of anywhere from a few hours to a few months. I run a number of screens to locate the strongest/weakest stocks out there, using technical analysis to determine my entries and exits. Trying to calculate the intrinsic value of stocks in... More
My company:
tradewithZEN
My blog:
zentrader.ca
  • It's A Precarious Time For Gold 1 comment
    Mar 29, 2014 10:16 AM | about stocks: GDX

    By Poly

    This is an excerpt from this week's premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.

    This past weekend, I remained "on the fence" with regards to which direction gold was headed. Without clear evidence that the weekly (Investor) Cycle had topped, I had discussed how I was warming up to the possibility of this being a late stage 2nd DC, instead of the failed 3rd Daily Cycle scenario I had followed exclusively up to that point.

    Whatever the outcome, I maintain the position that it's just too difficult to trade gold on the Long side anymore. I'm glad we're out of positions because this just does not feel or look like an Investor Cycle that is headed higher again. Normally, in an uptrend, sharp drops into DCL's are quickly reversed, as the new Cycle powers higher. But this one has lingered for too long without catching a new Cycle bid and is almost $100 lower.

    Specifically, today the equity markets suffered another sharp reversal and bonds soared, both in response to comments made by president Obama and European leaders in response to Russia's actions in Crimea. These flight to safety moves are supposed to be in gold's "wheelhouse", especially so late (Day 34) in a Cycle. A bullish leaning asset would have taken that as a catalyst for a strong rally in a new Cycle. Instead, gold was muted and remained depressed.

    Yes, the Cycle count still supports the possibility of a (bullish) Day 34 - 2nd DCL here. But in all honesty, it's not a position one should be taking seriously here because it requires taking a considerable amount of risk. And as I outlined this past weekend, even a DCL right here is no guarantee of strong performance. A 3rd Daily Cycle would need to rally almost $100 just to break new highs and the risk of it falling well short and topping early is very real.

    (click to enlarge)

    In addition, we have an interesting development within the miners which should have all gold Longs concerned. With a fairly consistent track record of correlating to market tops, the precious metals miners' bullish percent chart has decisively turned lower. Once the charts of precious metals miners start breaking down like this, then it's almost always associated with Investor Cycle tops.

    (click to enlarge)

    Related Posts:

    Volatility Is Coming, But Which Direction?

    Speculative Buying Underlies Strength In Silver

    Bearish COT Report Fuels Oil's Mini-Crash

    Themes: Commodities Stocks: GDX
Back To Jeff Pierce's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • almoni
    , contributor
    Comments (59) | Send Message
     
    Still wait for buy physical gold from 1250
    29 Mar, 06:20 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.