Saturday 24 August 2013
Last week was an homage commentary to the market forces, what
we always attribute as being the most reliable source of
information. For the first time in many months, we began
recommending the long side in futures, starting on 7 August: 19.42
for silver and 1308 for gold. We have been in and out a few times but continue to remain long, adding on Friday's strong rally.
The "news" has not changed all that much, with many PM
proponents still promising the substantially higher prices. More
articles are beginning to assert "Gold/Silver is ready for a substantial move higher," type-of-hype. Of course, these are the same people who have been singing the same tune for well over a year. The sin
in lack of timing gets glossed over in the [old]"new" drumbeat.
It can be asserted here, on record, that we have shunned the long side of paper futures for quite some time over the past few years.
There were a few buy attempts near the lows of the 18 month
trading range, but nothing of any duration, simply because the
market was not primed for long positions. That appears to have
changed, not because we say so, but because the market is making the statement in the form of price behavior.
The early probes to the long side, since 7 August, were always
cautious with an eye out for getting hammered, as in some of the
unwarranted take-downs in April and June. There was an initial lack of confidence, based on what the market had done, but the
developing activity of the past few weeks has altered that view and puts it more in line with all of the ardent beliefs in the "not-allowed-
to-show" Demand side of the equation.
This was addressed almost a month ago in "Newton's Third Law Is
About Ready To [Over] React. Be Prepared, [if you kissed it, click
on http://bit.ly/1bXsEJE] The widely recognized artificial paper
market manipulation, by the criminal central banks and Wall Street
enterprises, [if you, or anyone else you know acted in the same
way, you would be in jail, branded as a financial "terrorist," the new
noun used by government to curtail all Rights and suppress free
The Truth, that which almost all of us seek, is always to be found in reading the charts. They may be difficult to read, at times, but
those times are also a message, perhaps just to stand aside. One
does not have to be technically astute to understand the logic of
developing market activity as it unfolds in a chart. Common sense
is all one needs to follow what is presented in them.
Friday was another good day for gold and silver. It was similar, but
not nearly as time sensitive, to last week's "Buy Right Here Right
Now," scenario that began a very strong rally, [Fundamentals Never
Say When. Charts Do And It Pays To Listen, 3rd and 6th charts,
http://bit.ly/16RJhRi]. The 6th chart is an intra day on silver, and it shows the entry/exit levels since we started recommending the long side.
The area identified as potential support came from our 10 August
chart, using information that the market provided to make a logical
conclusion. [Only Votes Cast In Elections Count. Same For
Markets, [click on http://bit.ly/15mjhKP, 1st chart for gold, 3rd
chart for silver, below]. The weekly is more helpful for context,
where the daily and intra day are used more for timing.
The overlapping bars, since the last strong breakout, tell us that
buyers and sellers are in balance. From balance comes unbalance
and a trading opportunity. The market has given a few clues as to
which way the unbalance direction would unfold. Firstly, there was
a strong upside bar that preceded the small 5 day trading range,
TR. Another clue comes in recognizing how little price retraced the
gains from the rally 7 bars ago. It shows a weak reaction, and we
know that weak reactions almost always lead to higher prices.
The market has put everyone on alert to be prepared to act. All
that is needed is a reason. What would that reason be? If you see a wide range rally bar on increased volume that goes above the TR,
it is a buy, as was demonstrated on the previous strong rally bar.
Here is another market axiom. Price patterns repeat, over and over
and over. All one has to do is be able to recognize them and be
ready to act. Not all patterns will lead to the same results; some
can even result in a loss, but if you act on a series of 10 such
trading opportunities, you are virtually guaranteed a profitable
outcome. The "guarantee" is based on the Law of Probabilities.
Three of the most recent TRs have been identified below. What a
coincidence. We just mentioned how patterns repeat, and here are
three examples. The market gives us yet more important
information about this last TR breakout. Underneath is what is
called Bullish Spacing, where the current swing low is ABOVE the
last swing high. It tells us buyers are not waiting to see if/how the
last swing high will be retested. There is now a greater sense of
urgency. We are "reading" the footprints of all market participants.
That is an edge. Having an edge leads to greater profit potential.
Here we see the same band of support, identified a few weeks ago,
has proven to be helpful in putting market behavior into a context,
and that context led us to see greater profit potential from the long
side in quite a long time, over a few years.
In previous charts, we discussed how the sideways price movement
was likely absorption, and if it were, price would rally, which it has.
If you knew nothing about silver's situation, or gold's, you would still come to the same conclusion about how to approach the market.
That, too, is an advantage, and it is equally available to everyone
at the same time as/when price develops.
Last week, we said the single most important observation on the
weekly chart was the gap up range for the week. It was wide, a
strong close, and on increased volume. Sometimes, markets are
Bullish spacing is very apparent on this chart. This observation is
equivalent to last week's weekly gap to the upside. As was pointed
out earlier in gold, the inability for price to go lower and stay low,
during the week, was amplifying a likely upside breakout based on
the market's advertising the bullish spacing. Again, using the logic
of developing price activity can sometimes lead to a very obvious,
or at least probable. outcome.
Keep in mind, as we talk about futures, this bodes equally as well for those operating only in buying and holding physical gold and silver.
The additions in both physical gold/silver from just last Thursday are looking great, not that is has to for the reasons for buying are
vastly different. The buy from two weeks ago looks even better.
Consistency is important.
A correction usually entails at least a third retracement from the
last low to current high. It is not a hard and fast rule, but
mentioned to contrast it with price consolidation, when a
retracement is shallow, as you can see clearly how activity within
the box hardly retested anywhere lower. Once again, the market is
signaling its intent, based upon the entirety of all market
Anyone who thinks markets are random simply is ignorant in reading
developing market activity. We will say it again: market patterns
repeat, over and over, and by observing them in development, it
provides an edge in knowing not only on which side to position, but
It's a win-win.