Other Technical Indicators

As you know, I like to poke fun sometimes at the chartists and the elliotts for relying so heavily upon their squiggly lines that they fail to see the forest from the trees. At the risk of seeming hypocritical, I thought I'd show you some charts that include those squiggly lines this evening as I continue my search for tradable bottoms.

Before we begin, a recap of today and a repost of the charts I included as an update to the earlier blog. To simply summarize, yes today was great. Both metals broke free of their recent downtrends and looked good doing it. However, keep in mind that today was a Tuesday and "Happy Tuesday" often results from The Cartel covering some shorts in an effort to "paint" the CoT survey that took place after the close this afternoon. Because of this, do not be surprised to see the metals give back some of today's gains tomorrow. Additionally, let's be sure to check the OI numbers from today when they are released tomorrow. If new money was driving today's gains, we will see a nice increase in OI. If today was primarily a Cartel short-covering event, the OI will be relatively flat. Regardless, the gains in price are real and both metals suddenly have a much improved technical picture. Let's see what the rest of the week brings. To really get me excited, silver needs to close above $30.50. Gold needs to first close above $1650. Then it needs to break the downtrend line from the highs of September. That line is currently near $1680.

paper_1-10amsilv_0.jpgpaper_1-10amgold_0.jpg

OK, now let's look at two, other technical indicators as we search for a bottom. First, a disclaimer:

Look, we all know that the metals are blatantly and selfishly manipulated by The Cartel. In fact, my ability to accurately forecast price is primarily due to my understanding of this manipulation. However, as you know, the major spec money in the pits is driven primarily by HFT algos and technical indicators are some of the primary factors that cause the algos to switch from buy to sell and vice versa. So, technical analysis indicators are occasionally quite helpful in that, in the closed-loop of single market trading, if all participants are looking at the same information, price forecasting almost becomes a self-fulfilling prophecy.

So, here we go. Let's look at two of the major indicators and see if they are telling us anything. First up,

MACD

Definition: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve

Now look at these pretty charts. The blue line is the one you want to watch. Note that the blue line often bottoms shortly after price bottoms OR tops shortly after price tops. What you are looking for are price trend changes that are signaled by the blue line crossing over the red line. Look closely. Maybe print these off yourself. Notice that, recently, the blue line crossed UP through the red line in both gold and silver. This is good news!

paper_1-10pmgoldd.jpgpaper_1-10pmsilvd.jpg

And the other technical indicator we need to review is the...

RSI

Definition: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:relative_strength_index_rsi

The RSI only gives you only line to follow. When the line reaches way up over 70, the commodity is generally considered to be "overbought" and subject to a decline. Conversely, when the line is down near 30, the commodity is considered to be "oversold".

First, on the gold chart, note that lows in the RSI have generally occurred one week before lows in price and a couple of weeks prior to price trendline breakouts. Also note that the RSI itself will breakout from downtrends and, when it does, it usually portends higher prices. In silver, we get a similar picture. Pay special attention to the longterm RSI trendline. It has been downsloping since May and it just broke out back at the first of the year. This is a very encouraging development.

paper_1-10pmgoldw.jpgpaper_1-10pmsilvw.jpg

Again, secondary technical indicators are not the be-all-end-all that many chartists make them out to be. However, they can occasionally be helpful when looking for trend changes in price...kind of like what we are currently doing. When you combine the RSI, the MACD, the price charts and the OI numbers, you begin to get a sense that we have seen the bottom in both metals . Let's now just patiently wait for price to confirm these developments.

TF

218 Comments

Be Prepared's picture

The Path.... The Rocky Path

First-a-licious again, but it's really more important to focus on how to navigate all the craziness ahead.  The Path we find ourselves on is a boulder-filled rocky path.  I look out on this year and much is unknown, but what I do know is that I need to expect the unexpected.  Personally, Silver & Gold in the short term will whip-saw all around us so I am ever so glad Turd is on the job giving us some lights to navigate this dark patch.

Dr G's picture

Sweet! Good stuff, Turd.

Sweet! Good stuff, Turd. Santa has a "feeling" that gold will make a nice move in the next 48 hours (now 40 hours). We shall see if his feeling is correct, but the technicals are starting to show that a big move good be in the pipe.

I still purchased today--I've cut back a bit but am purchasing about twice a week at this point. Not big purchases, just my weekly amounts. If the price is right I do a big purchase.

Bsong's picture

Thanks Turd

This is the area I'm eager to learn.  Economy and political insanity have kept from giving the TA its Due.

JavaJedi's picture

Thanks

I too have watched MACD and RSI, but until I started lurking around here, I didn't have the bigger picture of OI and just how badly manipulated all of that stuff is.

Thanks for the wake up call, Turdville!

bernard's picture

Again, love watching the

Again, love watching the action as big sellers come in to knock silver under $30. They are losing the fight. It's going to be an awesome year. If you guys didn't see the letter I wrote to the CFTC in the other thread, it's posted below for convenience. Feel free to send from your own emails :)

to:  PosLimits@cftc.gov,
 JSommers@cftc.gov,
 GGensler@cftc.gov,
 MDunn@cftc.gov,
 BChilton@cftc.gov

To all of you supposed "regulators" who I am currently employing through my tax dollars,

 
I am beyond upset with your administration's inability to address and stop the naked leveraged short selling of silver. I would like to thank Bart Chilton for insinuating the truth of the situation. But to the rest of you-- what cometh of your investigation (or lack there of)? I am disgusted with your organizations seeming subservience to these commercial banking interests. Don't you dare forget that you are all employees of myself and the rest of the American public. I demand that you quit dilly-dallying and get back to work. How much easier could it be for you? Does the whole entire investigation need to be handed to you on a silver platter? Ha!
 
If you continue to kick the can down the road and look the other way, you are setting yourselves up for an embarrassment of epic proportions. Don't you people remember your purpose? Let me spell it out for you: serving and protecting the interests of the American public. I am writing this email to you all, so as to remind you that the victims of the silver manipulation are not faceless. We are people, American citizens... perhaps the only true patriots-- who wish to see a return to sound money. Either way, your lack of prosecution of the large commercial shorts (JPMorgan and HSBC) is akin to being complicit in this scheme of driving the metals lower. 
 
Do you not understand what is going to happen? Let me spell it out for you. Every nuclear event in the precious metals markets simply results in physical metal transferring from Western to Eastern vaults. Is this what you want? What will we do when the Chinese have it all and all we have left is our funny money? The implications are terrifying.
 
Again, as a citizen, a tax payer, and therefor YOUR EMPLOYER, I demand that you respond to this email in kind. Recognize that silver investors have been bled out numerous times the past year, and we demand justice. If you guys seek to ignore or poo-poo this email like your drone did to Andrew Macguire when he spelled it all out for you, I will be doing all in my power to see that you people are removed from your positions as regulators, as it is obvious that you are all POWERLESS to protect the public from these "nefarious market forces".
 
I look forward to hearing your response.
 
atlee's picture

nice chart work

Nice chart work Turd. I love you better as a "market strategist." Whether you or your audience is trading or not it is good info and helps keep a bead on the pulse of the market.  

Bay of Pigs's picture

Well done...

Great analysis TF. Well thought out and balanced. Very helpful.

Economical Disaster's picture

Hundreds Threaten Suicide At Microsoft Supplier Plant

SEATTLE, Wash. (CBS Seattle) – Some 300 Chinese Foxconn employees who manufacture X-box 360 machines said they would throw themselves from their Wuhan, China, plant if demands for lost wages were not met.

China Jasmine Revolution, an activist revolutionary organization with a name borrowed from the Tunisian revolt that set off the Middle East unrest, reported that employees made their demands for a wage increase for 100 employees on Jan. 2.

Management at Foxconn — the world’s largest contract electronics manufacturer and a crucial link in the supply chains of Apple, Dell, Nintendo and Song — responded with an ultimatum. Employees could quit with one month’s compensation awarded for each year with the plant or go back to working.

Many employees quit, but Foxconn allegedly dishonored the agreement and awarded former employees nothing.

Around 300 workers returned to the plant in an uproar, and staged their protest on the plant’s roof on Jan. 3.

 

Wuhan’s mayor intervened through hours of negotiations, walking them back from the roof’s edge until 9 p.m. when workers agreed to return to work, according to China.com.

Calls to Foxconn were not immediately returned.

A Microsoft spokesperson wrote CBS Seattle a statement saying, “Microsoft takes working conditions in the factories that manufacture its products very seriously, and we are currently investigating this issue.

http://seattle.cbslocal.com/2012/01/10/hundreds-threaten-suicide-at-microsoft-supplier-plant-in-china/

agrock's picture

In The First Few Days Of 2012, US Mint Sells More Silver Than In

In the first few days of 2012, the US mint has already sold 4.3 million ounces in silver coins. This is more than in all individual months of 2011 except for January and September, when the mint sold 6.4 million and 4.5 million ounces. Is the retail love affair with physical silver coming back with a vengeance?

http://www.zerohedge.com/news/first-few-days-2012-us-mint-sells-more-silver-all-most-months-2011

Shill's picture

Confucius says:"The Superior

Confucius says:

"The Superior Man is aware of Righteousness, the inferior man is aware of advantage."

silverstool's picture

Beautiful

Turd, yet again you cut through the BS and lay it on the line. This level of analysis usually comes for a fair price and I would like to thank you for being generous enough to share this with like minded individuals. A timely reminder to dip into pockets and feed the Turd!

ReachWest's picture

Turdville TV

Looks like the midday television newscast from Turdville ran again today. I was able to PVR it and load a version to YouTube for everyone here to see. Enjoy.
 
 
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Save_America1st's picture

Thanks Turd!!!

via King World News...  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/10_Hathaway_-_Short_Squeeze_in_Gold_to_Crush_Naked_Shorts.html

 
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Four decade veteran John Hathaway, told King World News that we are seeing the beginnings of a massive short squeeze in the gold market.  The prolific manager of the Tocqueville Gold Fund said the gold market will turn dramatically against the shorts.  Here are the critical observations by one of the most extraordinary 5-star rated Morningstar fund managers:  “We had extreme readings in terms of sentiment, measured any number of different ways.  Usually that means you are into the dry heave stage where there is nobody left to sell.  What I think we are seeing here is a terrific short squeeze.  I think this is going to get the shorts concerned and there are plenty of shorts that are naked here and have to cover at some point.”

John Hathaway continues:

“I think the market is testing their fortitude, that’s what I see right now.  The bigger picture continues to be monetary debasement and that’s the big driver of higher gold and silver prices.  But in the short run, I think we’re just seeing a classic short squeeze.  It could get very ugly for the shorts.  

What I like here is it looks like you put in a low here of some significance.  I think the next time around the shorts are going to be a little more timid.  Let’s see when the shorts cry, ‘Uncle.’  I think that’s what we are going to see over the next several weeks.”

When asked about Louise Yamada’s 30-year XAU vs gold chart, which showed gold shares being dramatically undervalued, Hathaway responded, “I’ve noticed that the universe of investors for gold stocks is slowly expanding.  Those (value investors) are people who are coming into the gold space that are basically agnostic about the future course of paper money versus gold.  They’re saying, ‘Boy these stocks are cheap, got to own them.’  So there’s a new bid for gold stocks, completely different that what we saw over the last five or six years.....

Continue reading the John Hathaway interview below...

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When asked about his upcoming letter, Hathaway stated, “The macro picture is it’s a world in which governments are substituting sovereign debt for private credits that have gone bad.  Just changing the wrapping paper doesn’t change the contents.  They are just papering over bad assets with government paper, which, ultimately, is going to make government paper go bad.

In terms of what is going on in the gold sector, and I appended a number of charts I look at all of the time, but I thought it would be good to share them.  One of the things that stood out to me was the fact that central banks have turned into net buyers of gold.  I don’t think that’s a trend that’s going to go away any time soon, particularly in a world of zero interest rates.

The other thing in the gold section of those charts was how rock bottom sentiment was.  I’ve been saying for some time that when things look this bleak, in terms of market action, it was a good sign of a bottom.  I’m not in the business of calling market turns, but I’ve been through a bunch of bottoms and when I see sentiment like this, I’m pretty sure there isn’t a whole lot of downside.

Lastly, the (mining) stocks themselves are as cheap as they’ve been relative to bullion prices in the 12 years I’ve been doing this.  There wasn’t a kind word anywhere for gold stocks.  Most people would say, ‘Bullion is okay, but those companies are just terrible.’  People forget that in a better market for gold bullion, which I think we’re going to see, the stocks tend to outperform. 

That’s kind of a summation of what’s is in the upcoming letter.  A lot of charts to back up what I just said.”

ReachWest's picture

I like reading the word "Encouraging" in Turd's Posts!

The general feeling out there from most of the comments and articles I read, here and elsewhere, is that we are on bottom for both metals. Turd's excellent technical analysis as presented above, looks to back up that "gut" feel that we are on bottom. 

My question is; how long do we stay here. Of course no one can know the answer to that - but I have a "gut" feel that we move off bottom, sooner than later.

Thanks for the analysis, Turd!

ClinkinKY's picture

Farmers Sue Jon Corzine Over Missing Millions

 

Montana farmers have filed a class action suit against former New Jersey governor Jon Corzine, charging that the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine's "single-minded obsession" with making MF Global a big player on Wall Street led to the firm's collapse.

MF Global's clients included 38,000 wheat farmers, cattle ranchers and others who "hedged" their crop prices by placing millions in MF Global accounts. Those accounts were supposed to be "segregated and secure," according to the federal suit, meaning MF Global could not draw on those funds.

Read more at link:

http://abcnews.go.com/Blotter/farmers-sue-jon-corzine-missing-millions/story?id=15321298#.TwzeV0qfvw4

vamoose1's picture

@bestever

Admire your guts,   kudos. 

   respectfully, i would suggest you reconsider your admiration  for bart. You  would have heard of the good cop/bad cop    two  step.  gensler needs no  introduction as the bad cop, and you  might do  some reflective thinking about the role of Chilton. I have done mine,  and it took a while. 

   Money talks and bullshit walks,  and they have done NOTHING.   In fact they are part of it.  

   Were Chilton an  honorable man,  he would have long since resigned. 

Shill's picture

Media losers purposefully

Media losers purposefully avoiding Paul second place win, and talking about 3rd place winner Huntsman as if anyone cares. Total media blackout of Paul on CSPAN.

Nothing on CNN except the talk of Huntsman 3rd place nothingness. Total media blackout of Paul. Such a disgrace our Media has become as a primetime source for information, truthful information. We know they suck but too see it in Primetime makes it even more sickening and disgusting to watch.

Huntsman as if he matters.

redwood's picture

Nice write-up Turd.  Haven't

Nice write-up Turd. 

Haven't heard anything yet on the Merkel-Laguarde meeting held 5 hrs ago.   Usually a pullback from turnaround Tuesday but maybe less so tomorrow.  Either way I'm expecting metals to go down for a few weeks after this week at least until an "official" QE3 is announced.

Dave T's picture

Survival Kits

Interesting... I see where Provident Metals, which many of us know is a bullion dealer, is now selling survival kits on their site.

http://www.providentmetals.com/food-storage-survival-supplies.html?utm_source=homepage&utm_medium=slideshow&utm_campaign=food-supply

Nice looking kits.

I Run Bartertown's picture

NBFFT

"The real show is playing out in the Primary Trend for silver and gold, UP, UP, UP for several more years in an unbeatable bull market that will give a wild ride to shake off as many riders as possible.  

Devaluation is ALWAYS the inevitable outcome of the Federal Reserve's existence, because it is an engine of inflation. It was spawned to inflate, and must inflate or die. Will it inflate? OF COURSE. So instead of looking at the plain historical record -- the US dollar down to 1.3 cents of its value in 1913, when the Fed took charge of managing the dollar " 
 
 - Franklin Sanders, The Moneychanger
I Run Bartertown's picture

Long Term Charts

http://www.silverseek.com/article/why-silver-monetary-collapse-part-2

"The process of the devaluation of gold and silver, started by the demonetization of gold and silver, is about to reverse at a greater speed than ever before. This is similar to what happened during the late 70s, when the gold and silver price increased significantly. However, what happened in the 70’s was just a prelude to this coming rally. The 70’s was the end of a cycle, this is likely the end of a major cycle; an end of an era of the debt-based monetary system (dishonest money).

Shill's picture

I have seen enough Stupid

I have seen enough

Stupid Americans, you deserve your destiny.

ClinkinKY's picture

CBS's Bob Schieffer predicts Les Paul to Finish Second:)

ROSE: So is the question who comes in second, or the more important question, who comes in third?

SCHIEFFER: Well, I think the more important question, Charlie, is the- is whoever's second, is that just going to be bunched up among a bunch of people, because right now, you have a large segment of the party [who] just don't like Mitt Romney, but they can't find their champion. Some of them like Les- I mean, not Les Paul, Ron Paul-

ROSE: Ron Paul-

SCHIEFFER: Some of them- Les Paul played the guitar, of course- (Schieffer, Rose, and Hill laugh)

Bay of Pigs's picture

GOP

Huntsman is the new Santorum tonight...LOL. Those numbers are absurd. Both Santorum and Huntsman are single digits at best.

RP most likely got 3o% or more in both Iowa and NH. TPTB certainly can't have that. They need Mitt Romney against anyone else except Ron Paul.

It's becoming fairly predictable to see how this will all go down. Another MSM blackout of Ron Paul, just like 2008.

Turdle GG's picture

Smoking gun on Swiss role in $50 Sep 6 gold plunge?

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/19203e9c-3ae2-11e1-b7ba-00144feabdc0.html#ixzz1j6wcWYbN

"Separately, the emails also revealed Mr Hildebrand ordered the purchase of Sfr25,000-worth of shares in Roche, Nestlé and Weatherford, and that his wife had mentioned buying put options on gold “when the time is right”."

http://www.ft.com/intl/cms/s/0/19203e9c-3ae2-11e1-b7ba-00144feabdc0.html#axzz1j6uyA7O7

DaddyO's picture

More technical indicators...

Some of you may enjoy this vid...

Whittle's comments are spot on!

DaddyO

I Run Bartertown's picture

Great Speech

RP is giving right now. Hitting EVERY point! He is a machine.

And I swear, he's getting even better and smoother in his delivery.

DaddyO's picture

Been out all day...

came home to see Silver closed just under the big $30. It seems the metals got some legs today and didn't get kneecapped as the market headed for its close.

So are you ready to really call a bottom, Turd?

DaddyO

Planters's picture

Paul

A great second place speech......and second is first to last. I like Paul but I don't think there is a chance in hell for him. He is a radical republican and in IMO too much for the conservatives.

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