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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
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  • Gold Should Bottom Monday, November 30, 2015..........Maybe

    (click to enlarge)

    The above chart of gold through Friday, December 20th, was included in my weekly weekend newsletter. In it, I identified what happened the last time gold traded below $1100, back in July. Back on Monday, July 20th, gold dropped hard below $1100. Then just 4 trading days later, on Friday, another low was struck which turned out to be a multi-year low, at $1078.60 in the nearby contract. After correcting a bit higher, on the 8th day following the big dip under $1100, we struck another low. Then a final push lower occurred 14 days following the big dip.

    More recently, on November 6th, gold again dipped hard and closed below $1100 for the first time in 3 months. Then again, just like in July, just 4 trading days later, we again hit a low. And just like earlier, on the 8th day we struck a low again, but this time the low was a new multi-year low. Well, it turns out that on Monday, we have the 14th trading day after falling back below $1100, and it should again be a major low. To take us up through the present, consider the following chart:

    (click to enlarge)

    You can see that today, Friday, 11/27/15, February gold futures hit a new multi-year low of $1051.60. When you join yesterday's action on the Thanksgiving holiday to today's action, we are on the 13th trading day following the big dip below $1100 again. Since we are near a major support level at $1045 to $1050, it is quite logical to expect to see a bounce beginning on Monday, which will be the 14th trading day, just like we saw in early August. Unfortunately, the present action is more bearish looking than what we saw last summer. In early August, at the end of that correction, gold was trading sideways and closing up. However now we are getting small rallies followed by a drop to new lows. We bounced off the low $1070s, to hit the high $1090s, bounced off the low $1060s and then stopped at $1080, and now hit the low $1050s, which should propel up back to the $1070 to $1075 area if we get the usual short-covering bounce. Only a move above $1080 would establish a bottom and turn the trend from bearish to neutral.

    So for now, I am buying on the current dip to around $1050, and expect to see a minimum bounce to the $1070s, even if we are still heading lower, down towards the $1000 mark like so many others have suggested. But despite the current weakness, I am hopeful that we are seeing a low at present that could last for another 3 to 4 months, hopefully, and result in a correction of at least $100 off the low. It will be interesting to see how it plays out. Another positive is that seasonally, gold likes to bottom in December and then rally during January, and often for much of the first quarter. I want to remain bullish for now, playing the long side of the market, as we should rally $100 to $150 off the lows in the first quarter of 2016, at minimum.


    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: GLD, GDX, GDXJ
    Nov 27 11:34 AM | Link | Comment!
  • It Is One (Or Two) And Done For The Fed, Otherwise Quantitative Easing Will Be Required Again!

    You heard me. But is the Fed listening? It will be one (or two) small 1/4 point rate increases by the Fed and done. If the Fed errors by doing more than that then they will likely live to regret it. Regarding gold, I believe a "one (or two) and done" rate increase by the Fed, is already priced in.

    Ben Bernanke, a student of the great depression, was adamant that the reason the depression lasted so long was the lack of long-term accommodation by the Fed. The Fed made the fatal mistake of raising rates too quickly. A dip from the 1929 crash and partial recovery was sidetracked into a long and protracted downturn that did not really change till the advent of World War 2. If Ben Bernanke was still in charge instead of Janet Yellen, I am convinced that he would be much more cautious about raising rates. If the Fed errors in doing more than two small 1/4 point raises I am convinced that they will put the fragile U.S. economy in such a tailspin that quantitative easing will be required again, and all recent recovery progress will be lost. I say this based on the fact we have zero inflation right now and there are zero signs that situation is going to improve anytime soon.

    Richard Fisher, Federal Reserve Bank of Dallas President said U.S. in trending back towards the central bank's target of 2%. He made that statement in November 2011, and since then inflation has been doing nothing but dropping! This past week we were told by a couple Fed Governors that in 2016 we should again edge back towards that same 2% inflation rate as oil prices begin to normalize and wages increase. But I say, "What are they smoking?" There is no sign of inflation improving. Deflation is everywhere and looking to get worse before it gets better.

    On Friday copper was fighting to stay above just $2 per pound, and is at prices not seen in over 6 years. Prices have fallen steadily since their $4.50 peak in 2011. Copper is supposed to have a Doctorate degree in Economics. As copper goes, so goes the economy (and usually the stock market). Well, copper is telling us we are in deep trouble. This is no time to be raising rates. And it is not just the U.S. Europe is trying to ease. China is still slowing down. US Dollar strength is hurting future earnings forecasts for business and a move above 1.00 on the dollar index will do nothing but make things worse for our exports and multinational companies with overseas earnings diminished by a strong dollar.

    Commodities everywhere are hurting. OPEC is showing no sign of caving in so crude oil prices are showing no signs of improvement anytime soon. Gold is trading at prices not seen for 5 1/2 years. Grain prices are stuck in the mud as well. Beef prices are dropping and pork prices are extremely cheap at historical lows just above 50 cents per pound. The trends are negative in virtually every market you want to look at.

    The window for the Feds to act passed a couple years ago. I do realize they are anxious to normalize rates and am a bit sympathetic for their plight. However, they should be content if they are avoiding easing. The economy can maybe handle a half point rate increase spread over a couple meetings, but beyond that, forget it! If the Fed acts too quickly, which it is looking more and more like they will, we could see a more serious downturn than we saw in the Great Recession of 2008 and 2009, and make the same error that the Fed did in the 1930s, extending the Great Depression another ten plus years. Should the Fed error again, they could be forced to print money to provide liquidity, and it could get out of hand to where they devalue the dollar at a rate that will make us a third world country. We already have monstrous debt, spending money like a drunken sailor while borrowing 35 to 40% of the money to meet annual budgets. Don't be surprised if in 20 years we become Greece, only our problems will be 100 or 1000 times worse because we are so much bigger. And did I mention that if the Fed raises too quickly, we will most likely suffer a 1929 style market crash?

    In conclusion, this makes me extremely bullish on gold. Gold has support at $1070 and again at $1050. We should soon bounce from one of these levels, but if I am wrong, we will fall to $1000 where we should bounce $120 higher back to $1120. But again if I am wrong, we will plunge to $950 where a major multi-year low will catapult gold quickly to $1200, $1400, $2000 and beyond. I see no more than $130 potential to the downside in gold, with thousands and thousands of dollar potential to the upside. If you were a gold bug the last 4 years you have been an idiot. However, mark my words, that is about to change!


    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Nov 14 7:13 AM | Link | Comment!
  • Gold Should Find A Good Tradable Bottom Within $10 Of Friday's Ridiculously Low Capitulation Close So Back The Truck Up On Gold Stocks!!!

    As a contrarian, I cannot remember when I was so bullish on gold or any other market for that matter. We have ended the day weak, closing near the lows of the day, for 8 straight days! It is time for the roulette wheel to turn up black instead of red! The entire drop from $1182 to $1085 ($97) over the last 8 trading days, can be attributed to the more hawkish Fed and topped off today with a strong employment number. If a rate hike is not priced in by now, then the gold market is broken and we need to all go home and never trade it again! However, I believe the gold market is functioning quite well, thank you, and is an excellent discounting mechanism. But it has reached a point now where any further drop would be extreme. There cannot be any bulls left in this market to drive out. They have virtually all been stopped out!

    In fact, in this article I am going to propose that the Friday December Gold Futures close at $1087.70, is within $10 of a near-term bottom. I do not anticipate any further drop in gold below $1077.70 early next week, to be followed by a minimum rally of $50 to $70, taking us back up to the $1130 to $1150 area. I will now show you how I came up with this projection starting with a look at the weekly continuation chart of Gold futures:

    I first want to draw your attention to what happened this same time a year ago. Starting in the 4th quarter (marked "O" for October), the 6th weekly bar was the low of the year in 2014, at $1133. This week, we struck a low in that same 6th weekly bar in the 4th quarter of 2015, within about $6 of the low of the year, as shown on this chart. Yes, the rally in gold should start almost immediately!

    Another thing I have noticed from this gold chart, that when you retest a major low support level, you almost always hold that support on the first retest. For an example, look how gold at the beginning of 2014 bottomed just under $1200, and for three weeks we traded below $1200, but never closed out the week below $1200. When we returned to retest that low the first week of October 2014, we closed on that Friday $1191, a close below $1200. However, the next week we bottomed at $1182.80, a further drop of about $8, and then rallied strongly to close at $1221. I expect a similar retest of the high $1070s next week, and then a strong rally and close, hopefully a similar $40 off the low. Back in 2014, we topped out at $1251, a rally of $68.20 off the low.

    Now, after bouncing, we did make a new low, finding support about $40 lower than where we stopped initially. If we bottom now around $1080, and rally up about $50 to $70 towards the $1130 to $1150 area, we could then roll over and plunge to a new low as far down as $1040. However, I see virtually zero chance we get a Friday close below $1050, within the next several months and hopefully years! Think about that. We are probably within $40 of making a multi-year low under any bearish scenario you want to dream up!

    Next I want to bring your attention to the first week of November 2014, where gold hit that $1133 low for 2014. We could not close below $1150 on any Friday. Over the next 4 weeks, gold traded under $1150 two of the weeks, but again finished above $1150. Just 11 weeks from making that 1133 low, gold hit a high of $1303.50 the 4th week of January 2015. I am looking for not only a bottom to be struck here in early November, just like last year, but a similar high in gold the 4th week of January 2016, about $150 higher than the low we bounce from. If $1080 is the bottom, expect to see a rally to $1230 in January 2016.

    Let me also remind you that after making that high in January 2015, we fell back to just under $1150 in March, only to bounce again towards $1225. It took 4 months to finally take out the $1150 support on a Friday. That occurred in the middle of July 2015 and we bottomed the next week at $1078.60. From that low we recovered first to the $1169 level and finally the $1191 level.

    Well, in the past three weeks, we have fallen from that lofty $1191 level to today's $1085 area low, a drop of $106. On this retest of the summer bottom, which has taken 15 weeks, just under 4 months to complete again, we should now bounce roughly from either the $1080 level if I am correct, or from the $1050 area if I am totally wrong! Either way, we should be very close to a major bottom for 2015 and possibly for several years.....maybe forever!

    Just like the $1200 level was good support, which later gave way to the $1150 level being support, the current $1100 level is indeed great support, despite the fact we closed below that level today. Either we drop just below $1080, where I am close to 100% sure, it will hold, or we find major support at the $1050 level where I am more than 100% sure we will hold on a Friday close, if such a thing was possible!

    If you know my track record, I have an uncanny way of correctly calling these turns. Recently I called a low in December Crude Oil of $42.60 when the turn came in at $42.58. I am much more sure of the current rally in gold about to occur, than any other prediction that I have made for the last couple years. Of course I could be totally wrong, but I am pretty sure I am right!

    Today I bought IAMGOLD (NYSE:IAG) stock at $1.48. Anything under $1.50 is a giveaway price the way I see it. If you ever wanted to own a gold stock, there is no better time than now!!!

    To follow along as we trade gold futures, or mining stocks such as IAG or KGC, as well as GLD, GDX, NUGT or JNUG, along with crude oil (UWTI or DWTI), the S&P500 (SPXL or UPRO), Biotech (LABU & LABD), natural gas (UGAZ and DGAZ), or other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to if interested in subscribing. Again, it is free!


    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: IAG, GDX, GDXJ
    Nov 07 3:16 AM | Link | 1 Comment
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