Long = up / Medium term = neutral / Intermediate term = Down / Short term = neutral
Let's start with Gold and the long term chart analysis; what it tells us about the three time frames; long, medium, and intermediate term.
We are always being bombarded with analysis that says "long term, medium term, short term," these being the three time frames most followed. There is a fourth intermediate term that appears on the weekly charts. Short term is best left to daily charts. If you don't know what time frame you're in, how do you know when to buy long term? Or short term? If you're a long term investor and you're not buying at the low end of the long term range, you're probably paying too much for your purchase. Put it this way, you're not getting it where the most likely low price point is going to occur. It is paramount to success that you know what time frame price is reflecting, and more important, to know what time frame your investment style best suits you. The reason you might not be doing as well as you should is that your trading in the wrong time frame resulting in entry's in the market that are not optimal. Read on, here's what we mean.
This will give you a good overview of how we separate long, medium and intermediate term price action.
One of the biggest reasons we as investors can't see the forest for the tree's is that price is active on about five or six different time frames and we are forever getting them mixed up or not considered them when we invest.
A great example we can give so you might understand is this. See if that rings a bell, recalling a trade like this. When you buy a stock or a futures contract due to your convictions for a long or medium term move you buy it with a plan to hold it for a while.
Has this ever happened to you?
You find yourself within a week (sometimes only one day LOL) of having bought a long term position, that you're already selling and closing the trade. Your purchase was either too big or too leveraged or you're not really a long term investor (long term investors don't sell out in a week). You weren't really wearing your long term "view" when you made the purchase. If you did, you used short term parameters to exit. There is no other reason for selling out the position so soon. Right ? The only one we can think of that would be valid is an emergency happens and you needed the money and had no choice but to liquidate. You must know the price ranges that separate the long, medium and intermediate term zones. Only then can you really invest where long term price ranges exist. Here's what we mean.
The chart below is divided into three channel's of price. Each channel gives a price range deviation that measures the total range of price combined with velocity (momentum or slope of the price advance). Thus we have the long, medium and intermediate term trends.
The Red Channel line is a Long Term Channel from 1993 and is the smallest long term channel but the one that provides the price action we are most concerned with. Though you can't see the beginning of the line, it is measured from an important price cross. It's validity was confirmed during 2009 and most of 2010. There you see how price spent almost a full year trading at or just below that long term Red Line. It's validity is further strengthened buy the big move up once price broke above that channel.
The next channel on the chart is the Main Channel. This channel line is taken from 2001/2002 lows and covers this new 21st century gold bull market's original price range and momentum for the first 8 years of the bull market. At the end of 2010 and 2011 price broke above the main channel line and toyed with the red channel line for a year. Note how the EXACT BREAKOUT IN PRICE was when the third Time frame (intermediate) lower green line met with the main channel line, and both of those met up with the long term red line. This at the SAME POINT TIME that price was there also. This is where PRICE AND TIME meet. The result was a long term BREAKOUT of significant force. On this chart we call this final time frame the MOMENTUM channel instead of intermediate. Due to its time length, its actually now a medium term channel.
Finally, we get to the points made from the chart. First, is that the lower green channel line or the Upper red channel line are the two most likely targets for a 2012 low. We've had the buy signal on medium and long term accumulation from 1448-1552 on our weekly button for a few weeks. Thus either this lower green channel line holds and we have the low for the year in place, or price has got one more leg down in the 1350 area---plus or minus 50 dollar area.
If you're a long term investor, your best plan to buy at both price area's. Question---those who have told you where the low was and to buy. Have they been correct so far? If yes, stick with them. If no, that's because no one knows where THE LOW will be. IF NO ONE KNOWS where the real low will be, then the BEST THING is knowing where the CLOSEST TWO AREA'S OF LONG TERM SUPPORT RESIDES and THAT is where to buy in 2012. If the latter and lowest price doesn't come in, and the green channel holds and ends this correction - you at least have the current purchase at the lows and any move up from here will be profitable. If price does have a move to the red channel line, that is where the second position of the year should be put on. The importance of these price parameters are important for one reason. THEY ARE NOT BIASED. While a human still has to draw the lines, it is drawn from points that PRICE makes. It is the least arbitrary non-biased data that we have to make price projections. And if we think about it, what else could be better than price itself? The channel lines on this chart are the same one's we were using two years ago.
There's lots more on things like this in the member buttons, but in summary, we've been saying since we hit the lower green line, we're at one of two places where the odds are the highest for a yearly price low. Investors should act accordingly and that is to buy a bit near the price area we suggested (a few weeks ago on the member pages) and buy just enough that you can still sleep at night. If you're already in trouble in your average price from buying at the upper levels of the green channel line, give our subscription a try. From the chart below, you'll have a good perspective of where the important price points are going forward.
The same chart is printed again below so you can see as you read. The lower green channel line (first target) or the upper red channel line are the two most likely targets for a 2012 low. The lower green channel line is the lowest intermediate and medium term PRICE range. As long as we remain above the lower green channel (with a 50 dollar allowance for price stops) this momentum channel remains in effect. Purchases as an investor should be bought at this lower green line. But it should only be done with the notion that price can still test the long term red 1993 line on the chart if we get a break from the lower green channel line. The fundamental would be the "liquidity crisis" and we've already witnessed in 2008 what that did to price. Although many said "it won't happen this time, price won't go down, it did go down. We've been in the gold can go down on a liquidity squeeze, and all of our past reports on the member buttons show that we've had that conclusion for a while that if could bring gold down.
And why the lower green channel line so important for support? Because the market has shown us for three years, it has held every price test of that area. It is the current "momentum slope" But we say buy with the notion that we are going to test the long term red line for two reasons. First, after three years of price testing, the chance of a break of this channel line has grown. The liquidity crunch is the only thing that could possibly bring the price down, at least that was our forecast since the beginning of 2011 (not after last September).
We have the buy signal on medium and long term accumulation from 1448-1552. Thus either this lower green channel line holds and we have the low for the year in place, or price has got one more leg down in the 1350 area, plus or minus 50 dollars where the long term Red Channel line resides. If you're a long term investor, your best plan to buy at both price area's. If the latter doesn't come in, you at least have the current purchase and could very well be the low for this correction. There's lots more on memeber sights, but in summary, and as we've been saying since we hit the lower green line and we're at one of two places where the odds are the highest for a yearly price low. If the GLOBAL liquidity crisis escalates out of Europe, then the potential for gold to have one leg lower to the 1993 line will come in play. It would be there another long term buy point could be considered.
Short Term Price Trends and the Gold ETF (GLD)
For those who follow GLD, the Gold ETF (below)--- last weeks low was a direct hit off a long term support line. The bounce back up has come to the moving averages and the 159-161 area should be resistance on Thursday. The chart doesn't show the Friday Action, but gold's resistance remained at the moving averages. Now comes next week. With a short term CYCLE turn due next week, we find out if the trend is ready to favor moving up, or we get resisted at these averages and turn back down. This is not a cop out, but rather we're telling you this is the point in price (resistance) for the short term and that whatever way price breaks from here next week, favors that trend to move in the same direction into the latter portion of January. The time for a cycle turn (not shown) is is this coming week. From the 9th through the 13th of January is when the next time point is due. So next week should set the pace and develop the next short term move into the 23rd of January.
Notice how our moving averages have done an excellent job all year providing us the "TREND" of the market on an intermediate time frame. If there is one indicator you're looking for that provides the "trend" this indicator is excellent. Whenever the red line is above the blue line and price is below both averages, the intermediate term trend is "BEARISH" Whenever the blue 34 BAR BLUE moving average is above the RED 13 bar moving average and price is above both average lines, the trend is up. A note about the indicators. The blue average is a 34 bar or 136 hour moving average. The advantage in using GLD is that its the NEW YORK Session price only, where the highest volume in the gold market occurs. It makes the price patterns much more interesting to me. But there's even more to learn from this chart. Much more.
It suggests that there has been a shift, at least for the moment, where price is becoming much more important outside the USA sessions and the moves have gotten bigger. That will make it harder on the ETF traders of GLD and SLV. But it also could very well be that the "control boyz" have expanded their territory.
The chart shows (above and below chart the same so you can see and read) price gaps where trade occurs in the rest of the globe and not of New York influence. Notice on the way up on the final big move how gold began to have price gaps as soon as price moved above the middle green channel line. What was a new all time high in price. Since that point, price gaps began to appear on the charts. we can count 13 of them as opposed to just one.
And what and why is that important and what does it tell us ? A lot. There's a lot more than meets the eye.
First and foremost, it tells us that GOLD is no longer CONTROLLED by just the New York Market but that GOLD has gone Global. As new markets for gold open in China and Hong Kong and other Asian and oversea's market, they become a driving force with "influence" on price and that gold has TOTALLY become a "GLOBAL 24 hour Market." And that means those markets are going to have more influence as we move forward. Not that the "control boyz" won't be participating there, but simply that interest is global now as is influence. Many people look forward to this new MARKET in Asia to finally put an end to USA control of "manipulated" price. And it sounds reasonable. That is if you think the "control boyz" are NOT BEHIND the new exchanges. Do you own Google searches, but some of the names we saw aren't exactly choir boys. Since the PEAK there has been five price GAPS down and two, or maybe three, depending on how you measure them. (we didn't use some of the tiny ones). It suggests that there has been a shift, at least for the moment, where price is becoming much more important outside the USA sessions and the moves have gotten bigger. That will make it harder on the ETF traders of GLD and SLV. But it also could very well be that the "control boyz" have expanded their territory.
Gaps also tell us when a MAJOR move has gotten out of control and usually signals to be on watch for a peak.
Long term = Up / Medium Term = Neutral to down / Intermediate term= down / Short term=Neutral
Silver and the 21st Century Bull Market
Today's look at silver uses SLV---the Silver ETF. A major low might be in the making, but as you can see, this has been a major crash and a three dollar move in silver---10%---still leaves a long way to go. NO TRENDS have yet turned up. This so far is just a bounce. It has the chance of being a key low, but how many times have you heard that in the last 8 months that the low is in. Not one from here. We're not ready to say it, but we're watching this one carefully. There was major US MINT sales to open the year --- levels that have not been seen before. That should be enough to keep this bounce going. Watch the ADP on Thursday and the Non-Farm Payroll on Friday. If those are bullish, silver can get a nice move up here.
HUI Gold Stock Index
The HUI gold index has been in a massive choppy and overlapping pattern all year. This is now the 5th time we hold the 480 area in the HUI. This area is the line in the sand area we've watched for a full year. A break below this area would warn of a test into the 400 area. The medium term trend remains neutral, and yet another bounce attempt is underway. As long as we're above the 480 area on the HUI, the trend has NOT GIVEN way to the downside.
The US Stock Market
The stock market is nearing major resistance, and is an area that need be watched carefully for a peak. The first few days of January should provide a rally, but after that we need to be on guard. If price can hurdle this area, we'll reconsider.
The US Dollar remains in an intermediate uptrend and is trying to improve its bullish status from weekly to Monthly. This 80-83 area will be a major turn point in 2012 which decides whether we move to the 90 area or turn back down. The trend remains up but price is at YEARLY RESISTANCE at it's challenging the 2010 highs. A new yearly HIGH above the last would be the first one we remember for a while. It's certainly a long term price point as the long term red and blue moving averages have finally come back together and are drifting sideways. This is happening at a time when PRICE IS ALSO right at the moving averages at at the EDGE OF THE LONG TERM downtrend channel line. It's the most important PIVOT spot for price in the last five years. Manipulated or not, the US Dollar made is all time low some 37 months ago and the LONG TERM TREND is ready to go from BEARISH to NEUTRAL. It might not sound like much, but it's opening the door for a rally to a minimum of 87 and up to 92 on the INDEX. If that happens, it suggests that the liquidity crunch will get much more SEVERE and bring on danger levels to the global financial centers as world money flows head for the biggest liquid market.
The Euro remains in a downtrend and is at a long term lower support line. The medium term trend remains down. Price still needs to take out these area's of LINE support. More interesting is there is a long term INVERTED HEAD AND SHOULDER pattern that has formed. What on earth could provide support to the EURO in this area?
By holding Euro's today, you are betting that you are in fact holding a new form of Deutschmark!
Buttonwood Turn Dates
The group is working on refining many aspects and is also studying if there are longer term signals that can be extracted from the data they use. Buttonwood dates usually emit a trend change, or an acceleration in price. As in all timing indicators, there is no holy grail.
Want to receive Buttonwood e-mail? Email firstname.lastname@example.org with the Subject "Subscribe to Buttonwoods".
To read more of our Buttonwood's update, click the new button in menu (left). All welcome. You'll find more charts too.
The Forecasted Buttonwood date for a DEC 15th low was RIGHT ON THE DAY. The next short term trend was the 28th and 29th which produced the low we just saw and now we have arrived at the next key date, Jan 4th. So far that was the high on this bounce. The next turn date is Jan 12-13th time frame. If we exceed last weeks' high on a closing basis, it will suggest higher to the next date. Otherwise, with stochastic's near a turn, the potential is that this was the peak and we're heading down to this next date (end of this coming week). A close below that last hammer bar on this price chart would favor the move down to the 12th is in play.
January 1 2012 ~ SEASONAL UPDATE
The longer term seasonals show that the February area is a great place for a first quarter top and that is what we will favor. We'll look for a pullback into the week of Jan 9th and then a push up into the 3rd week of January and then a pullback near month end. If price makes a high near Jan 9th, then we'll look for a pullback instead to the third week of January.
http://www.mrci.com/web/index.php (chart below Moore Research)