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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Gold And Silver - Greater Certainty Is Found In Charts 0 comments
    Jun 15, 2013 3:16 AM

    Saturday 15 June 2013

    Opinion: noun 1. A belief or judgment that rests on grounds insufficient to produce complete certainty.

    That pretty much sums up what has been proposed and "re-proposed"
    as to the lofty heights that both gold and silver will/may/should
    attain. For many, the anticipated higher prices should have already
    been attained. In fact, over the past several months, many
    opinions have been "re-proposed" as often as central bankers have
    re-hypothecated their gold holdings. With all the known information:
    strong demand,[for the physical], inability to deliver the contracted
    physical, etc, gold and silver remain at recent lows. Hence, the
    "value" of opinions.

    While opinions can never be asserted with "complete certainty," there
    is any absolute certainty about them: they will never go away. Who does not have one? A brief editorial on the above follows, followed by
    the charts.

    [Some say their eyes glaze over when confronted with charts.
    However, there is a high degree of logic within them, so for those with glazed-eye tendencies, maybe the appeal to your logic will help,
    considerably, when reading our comments on/about them.]

    We look for certainty in the charts, for they are absolute and the final
    word at the end of day, week, month, etc. There can be no dispute
    over a bar's high, low and close, plus the volume, for whatever the
    time period under consideration. There can be differences of opinion
    over their interpretation, but establishing a fixed set of parameters can mitigate most any potential dispute.

    Little can be added to the ongoing developments, from a fundamental perspective, that has not already been painfully scrutinized and
    presented. When a change does occur, it always, [or almost always,
    to stave off picky detractors] shows up in the charts in some form of
    a change in price/volume behavior.

    In defense of charts, and for clarity of purpose, they present nothing
    more than up to the moment past tense facts in the form of price and
    volume. They are not predictive in value, contrary to many
    misconceptions, but they can be helpful to read the market's intent.
    When one can get a fix on the intent, what is then required is
    confirmation in order to then act upon the developing information.

    If one forms an opinion, based upon a reading of a chart's developing
    market activity, the opinion can be proven wrong, with the blame
    being assessed against the "faulty" chart, surely not one's opinion.
    Alternatively, if one makes a reasoned determination about a market's
    intent and then waits for confirmation to validate the intent, the odds
    of being successful increase dramatically.

    For many who played the futures market, expecting to score big time
    on the anticipated sharp increase in gold/silver prices, the losses have
    been huge over the past 20 months. Opinions can be costly. However, if one had waited for confirmation that prices were in a clear up trend,
    as opposed the protracted trading range and now down trend, losses
    would not have occurred or would have been relatively smaller.

    Without rules for engaging the markets, opinions do not matter, and
    blaming charts for the wrong reasons is a refusal to accept
    responsibility for not using confirming rules. No one can escape from
    forming an opinion. The difference comes in how it is executed in the
    marketplace. An "unconfirmed" opinion can be dangerous. Even a
    confirmed one can still prove wrong, but the circumstances are totally different. To the charts.

    We can assert the trend is down because of lower lows and lower
    highs. June is now just half-way through the month, so not much
    credence can be placed on the abbreviated information. What can
    be seen, at this point, is a very small range, so far, following a
    small range in May that closed poorly.

    What we know for certain is that the downtrend has not yet changed,
    so lower prices can be expected. Whether lower prices develop
    cannot be known, but it would be a safe bet to not buy into a
    declining market. We may hold an opinion that gold will ultimately be
    considerably higher in value, but there is no confirmation that price has begun to rally.

    We have repeatedly advocated buying, and personally holding physical
    gold, but for a different stated purpose, as a measure of insurance andthe potential for creating wealth, based upon past history.

    GCA M 15 Jun 13

    We have stated that wide range bars with closes in the middle tend to contain prices for some time, moving forward. That is an assessment
    based upon fact from proven market behavior. [See Markets Provide
    Us The Best Information, click on http://bit.ly/18pk8yE, first 3 gold
    charts, as examples].

    There is insufficient market activity from which to draw a conclusion,
    at this date. There will be some kind of developing market activity
    that will alert us to a potential change, and even that will have to be
    confirmed by subsequent market behavior.

    Can this be stopping activity from which price will turn around, or is it a temporary resting area before price resumes the trend lower? We do not know. In fact, no one knows. What we do know is that it does
    not matter. All we, or anyone, need do is wait for the market to
    confirm its [advertised]
    intent, and then follow the market. Too
    many try to lead the market, based on [ego] opinion[s].

    GCA W 15 Jun 13

    The daily confirms the weekly and monthly, at least in that the[paper]
    futures market is not going up. There we see the power of a wide
    range bar containing subsequent price activity, and the last 18 TDs,
    [Trading Days] show how weak the rally attempts have been.

    The chart "story" remains the same: the price of gold is not going up,
    for now, no matter whose "opinion" you hear/read.

    GCQ D 15 Jun 13

    Silver is a bit more interesting, as we suggested last week. Past swing highs can often act as support, and how price reacts to the potential
    support factor will determine if the high will hold. Right now, the April
    2008 swing high has slowed, if not stopped, the decline.

    Confirmation of the "opinion" comes from the position of the close 3
    months [bars] ago. It was in the middle of the range, telling us buyers
    were present at the lows, [an example of the logic mentioned earlier],
    and the following 2 bars have also held. In addition, we are seeing a
    clustering of closes. What that means is a balance between the
    forces of supply and demand. From balance comes imbalance, so at
    some point, we can expect directional movement, up or down, from
    this area.

    The obvious question is posed on the chart: "Where are the sellers?"

    SIA M 15 Jun 13

    Silver did not hold the wide range down bar in April, as gold did, but in
    the process of breaking and going lower, it has not gone much lower.
    The momentum has stopped, and we see that in how some of the bars have formed, [based on factual observations]. More developing price and volume activity is needed to determine the market's intent. For
    sure, the paper market is not headed higher, at this juncture.

    SIA W 15 Jun 13

    We said silver was more interesting. The two failed probe lower bars
    are important pieces of information. They are a demonstrated form of buyers supporting the market. Will it hold is the question? [Will that
    observation be confirmed?]

    Additional information helped to give added confirmation to what we
    posed last week, will it hold? The past 5 trading days say yes, at
    least for now. That could change next week, with additional
    information, but next week has not yet happened, so one can only
    base a decision on what is.

    In the previous week and now with last week added, we are seeing a
    slowing of the downward momentum, [remember the monthly swing
    high potential support]. Is it enough to stop the decline? It is a
    question many would like to know, but not important to know, because the market will provide us with confirming market behavior that will
    then put us in a position to possibly take a position.

    If this happens, Then do that. Just like not putting the cart before
    the horse, one does not "do that" before the If.

    What we know for certain, based upon facts presented in the charts
    as derived from the market, the best source of all, is not to be buying
    the paper futures market. We covered some of this approach in a
    different market, the S&P, if anyone wants to learn/read more on the
    topic of learning to be more successful in trading markets. [See S & P
    - Trend, Facts, Rules = Successful Trading, http://bit.ly/19efpTs].

    SIN D 15 Jun 13

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