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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 - Charts Tell The Story. Decline Not Over 1 comment
    Nov 23, 2013 2:57 AM

    Saturday 23 November 2013

    However important underlying fundamentals are, in terms of supply v
    demand, they have been and continue to be of little to no use in
    determining when reality will reenter the market. When that happens,
    price will adjust and reflect the true picture of gold and silver's record
    [demand]accumulation.

    All that matters for now is the political situation involving the
    moneychangers and their puppet government regimes giving them
    cover during the end game of their world-wide theft. Just last
    Thursday, we saw once again another "smash-down" in gold futures.
    At one of the best possible times to assure liquidity and excellent
    execution, 1,500 contracts were sold around 5:30 a.m., CST. Who
    needs to worry about getting good fills when the only objective is to
    intentionally move the market lower?

    In the past few months, we have acknowledged leaning to any price
    turn taking a year, or more, rather than sooner, and market activity
    continues to bear that out. No matter what the latest "news"
    development is for PMs that paints a rosy picture, those in the
    fundamentalist camp are looking through rose-colored glasses to
    expect change in the near future. The charts continue to tell a more
    accurate story that belie all known fundamentals, and the charts
    shown here depict a market in decline with no apparent end in sight.

    The month is not yet over, and anything can happen before the
    30th. A monthly chart is presented to show how the last three
    months have had overlapping bars. This means there is a greater
    battle between buyers and sellers at a level where sellers should
    be in total control.

    Contrast the last three bars with the two preceding, and the other
    two rally bars show less overlap, indicating greater EUM, [Ease of
    Upward Movement]. The ranges of the two rally bars are also larger
    than the last three decline bars which supports the conclusions made.

    It takes more time and greater effort to turn a monthly trend than a
    weekly or a daily one. While there is no evidence of a turn in trend,
    the fact that price is hugging the upper down channel line is more
    positive. In a down market, one would expect to see price hugging
    the lower channel line.

    GC M 23 Nov 13

    The weekly shows a slightly different picture with price nearer the
    lower channel line. We can infer price is closer to a potential support
    area, and volume increased in the process. The significance of the
    increase in volume is addressed on the daily chart, and again on the
    silver weekly/daily charts.

    GC W 23 Nov 13

    The daily is a more complicated read, yet revealing about that 1,500
    contract sale, seen on the third bar from the end with a sharp volume
    increase. One would expect a big "win" for the bears, with all that
    unopposed selling, yet the location of the close, mid-range the bar,
    tells us buyers were equally present, keeping price from closing lower.

    It is the nest two trading days that make the read more complicated.
    Thursday, 2nd bar from the end, only went marginally lower than
    Wednesday's low and closed higher than the opening. Volume was
    much higher than average, of late, so buyers were again present,
    keeping price from extending lower. Friday's activity is the coin toss.

    After two days of showing some presence, buyers could not take
    advantage and rally price higher. At the same time, sellers could not
    take advantage of the trend momentum and press price lower. This
    makes Friday an inside day, and the range was small. From small
    ranges, a form of market balance, we can expect imbalance to follow.
    Note the small bar, 4th from the end. It led to a wide-range imbalance sell-off, next day

    The advantage of reading developing market activity, as we are doing, is you do not have to know in advance in which direction price will
    move. Instead, we assess the situation and prepare accordingly,
    following the market is it moves directionally.

    This analysis is all about the paper futures market, and there is no
    reason to be on the long side. As to the physical, continued buying is
    always recommended, especially at these low levels. The reason for
    buying is to own and hold the physical in opposition to the central
    banker's worthless fiat issue, as the most effective means of
    preservation/protection of one's capital.

    GC D 23 Nov 13

    Monthly silver is holding better than gold by virtue of the last three
    bars contained in the range of the 4th bar. Gold's 4th bar has already
    been exceeded, downside. The message is one of effort v result. The
    4th bar shows EUM, and the next three down bars are labored, by
    comparison.

    Price is staying closer to the upper channel line, [resistance], and not
    reacting away from it. Plus, all the activity is occurring at an Axis line,
    a line that acts as support in one area, then becomes resistance, or
    vice versa, as here.

    The trend has not ended, but it is showing potential for change as
    much for continuation.

    SI M 23 Nov 13

    Volume is the market's energy indicator. The greater the volume,
    especially at an area of support, [and resistance, as well], the greater
    one needs to pay attention. It is "smart money" that creates volume
    and moves markets. It is the public that responds, almost always at
    the wrong time, [selling lows, buying highs].

    If smart money wants to move a market lower, it sells, [creating
    greater volume] at higher price levels, in anticipation of buying in at
    lower levels. Look at the high volume low in June. Weak hands were
    selling, sell stops being triggered, while smart money was on the
    other side, buying. Then note the high volume at the swing high at
    the end of August, the reverse effect.

    Will the same hold true for this past week? We do not know. Volume
    was not as great, but we do not need to know, in advance. If a swing low develops, there will be evidence of one on the lower time frames
    that may afford a low-risk entry. That, in turn, depends on ones'
    trading style. The point is to see how it is the market that provides
    the most reliable information.

    SI W 23 Nov 13

    The daily chart appears as the weakest in position of the three time
    frames. It is closer to a potential turnaround, or ready to head for
    new lows.

    The increase in volume on Wednesday, and slightly higher on Thursday tell of a potential story as the daily gold chart. It is always best to let the market show its hand, and then follow. Examples of that were
    given on the weekly chart with the June low and August high. These
    signs work on all time frames.

    Buyers, or Stackers, should continue unabated. Those looking to trade paper futures have no reason to buy. We have not been advocates of the short side, just because we do not like the company and refuse to
    be a party to their efforts.

    SI D 23 Nov 13

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Comments (1)
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  • Robert Edwards
    , contributor
    Comments (536) | Send Message
     
    Great article! Nice to see a technically based article on SA, since SA favors fundamentally based articles to the exclusion of technically based ones usually (which explains why I instablog vs. write articles). And the volume figures are indeed key as they give us a clue as to the actions of smart money that does indeed buy at lows and sell at highs. Keep up the good work.

     

    And you are indeed correct. If gold is going to rally it needs to do it immediately. I wrote an instablog article Friday that explains the correlation of GDX on this decline, with the June decline, and if correct, we are at the bottom now and should immediately rally beginning Monday. If not correct, then I must prepare for a move lower.
    23 Nov 2013, 05:36 AM Reply Like
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