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

Monedas's picture

Monedaisms : "Barstool" ?

Any and assorted Turdites who frequent drinking establishments and /or drink while on line !  Monedas  2012  Comedy Jihad Terms And Definitions Department !  devil

FriedEggs's picture

The always interesting

Stewart Thomson...

This guy gets you pumped up about Gold&Silver...

.

  1.  There seems to be a contest going on in the gold community.  It’s a contest to see who can make you the most afraid of owning gold, silver, and gold stocks. 
  2. I love competition, so I’ve decided to enter the contest.  Click this ultimate fear chart now.  Why draw miniature fears on the chart when you can have the big enchilada? 
  3. What is your biggest risk in the gold market?  Your biggest risk is that gold goes off the board against the dollar.
  4. Face that risk, or consider selling out and going home.  I’m interested in sending the dollar bugs home.  This is a war, and you need to get stronger.  Stop thinking and start fighting.  In the gold war against the dollar bugs, you’re a solider.   
    ...

20. There are elections in many countries this year.  Geo-political issues are heating up.  The January indicator is in   bullish play.  The wheat crop is dealing with a growing rust disease, and the solution seems years away.  There is a big head and shoulders pattern in play on oil.  Silver has a flag-like pattern on the long term chart.  I’ve never seen so many bullish factors in play for gold and related assets, while so many investors are so terrified.  The gold billy goat is climbing a Mount Everest of worry, and loving every step of the climb!

http://www.kitco.com/ind/Thomson/jan102012.html

.

Fried(e)

Nick Elway's picture

The NDAA vote tally

You can follow these links to see how your representatives voted.

I struck out with mine..

Senate:

http://www.govtrack.us/congress/vote.xpd?vote=s2011-230

House:

http://www.govtrack.us/congress/vote.xpd?vote=h2011-375

boatman's picture

stash place

i still like a wall,a razor knife, wall tape,sheetrock mud and paint.

whaddya gonna strip all the walls in my house?

good luck

ClinkinKY's picture

@ Shill--An Hour and 5 minutes To Doomsday

Doooooom! Doomsday clock

 
Jack's picture

Questions for the U.S. citizen

In The Spirit of Democratic Capitalism, Michael Novak elucidated the principles required for what the Founders called a democratic republic:

1. A free government, where power is separated, checked and balanced effectively.

2. A free enterprise economy, where enterprise is encouraged and supported by law and non-governmental factor, and government treats all citizens and legal entitites equal.

3. Strong morals, families, and voluntary communities (non-governmental) which see charity and service as virtues and engage them adequately to meet all needs.

Each of these principles threatens the status quo of the current oligarchy in Washington.  As long as our country tries to return to them, the elites will try to take them away.

Do we as citizens work towards this?  Do we strive to understand the Constitution well enough to know when power is not separated, checked or balanced?  Do we fight for a real free enterprise system of democratic capitalism with no perks for those of elite status?  Do we see charity and virtue as valuable enough to use them to meet needs in our own communities?

Which of the candidates parading before us would be most likely to hold to these principles?

ClinkinKY's picture

This is why we can't afford another four years of B.O.

One or two more Elena Kagans and private property rights are finished.
 
 
Jan 11 2012

Supreme Court Justices Stand Up to EPA Tyranny

Thankfully the Supremes still stand as somewhat of a brake on the most tyrannical branch of our government — the faceless, unelected, and explosively expanding federal bureaucracy, which is taken to its most abusive extremes by the antihuman envirofascists of the EPA:

Several conservative members of the Supreme Court criticized the Environmental Protection Agency (EPA) on Monday for heavy-handed enforcement of rules affecting homeowners after the government told an Idaho couple they can’t challenge an order declaring their future home site a “protected wetlands.”

Justice Antonin Scalia assailed the “high-handedness” of the environmental agency when dealing with private property, and Justice Samuel Alito described some of the EPA’s actions as “outrageous,“ arguing that most people would say ”this kind of thing can’t happen in the United States.”

The EPA said that Mike and Chantell Sackett illegally filled in most of their 0.63-acre lot with dirt and rocks in preparation for building a home. The agency said the property is a wetlands that cannot be disturbed without a permit. The Sacketts had none.

The couple, who attended the Supreme Court arguments, said they had no reason to suspect there were wetlands on their property.

They must not have realized that a temporary muddle puddle is all bureaurats need to throw you off your own property in the name of the spotted owls and polar bears.

Due to outrageously extravagant fines charged by the day and the inability to challenge until the EPA brings suit, most consider themselves to have no choice but to knuckle under to the envirothugs, no matter how unfounded the capricious rulings.

Good thing there are a few genuine Americans among the Supremes to put up resistance to the noose of liberal authoritarianism tightening around our necks.

However:

Justice Elena Kagan questioned why the Sacketts didn’t simply file for a wetlands permit. “Couldn’t you have gotten the legal determination that you wanted through that process?”

Here’s why:

Attorneys for the Sacketts say the process would be exceptionally costly and time-consuming, especially when they maintain that there is no need for such a permit because their lot doesn’t contain wetlands.

Those arguments aren’t likely to sway autocratic moonbats like Kagan, Sotomayor, Ginsburg, or Breyer. One more Obama pick and the Supreme Court will have degenerated into a rubber stamp for any left-wing despotism Big Government chooses to impose.

On tips from Sean and IslandLifer.

Smiddywesson's picture

robberies at PM vendors

Good job Jimmy, thanks.

In a previous post, I discussed taking worthless coins and putting them in plastic numismatic cases with tags to make it seem they are valuable.  Combined with some costume jewelry, they make a great decoy over your stash site.

Jimmythehand's post made me consider doing the same when I pick up product from my vendor.  Bring something heavy and some clear tape.  Take the product out of the nondescript cardboard box the vendor gave you and weight it and tape it closed.  You can bet someone with the stones to rob you coming out of a vendor knows what their sales boxes look like, and he's not going to hang around to unwrap it, only to find a bunch of old padlocks.

Smiddywesson's picture

The Russians

The Russians lived through hell when the Soviet Union went under.  This tip comes from a Russian who posted to another web site. 

When you leave a gold or silver vendor's shop, you have to dry clean yourself to prevent you being followed home.  The unfortunate fellows who didn't look behind their backs on the way home from the coin shop often had their kids snatched and interrogated so they knew exactly how much to ask in ransom.

agNau's picture

@YabYum on Hecla:

Unfortunate for me, as I hold some....another huge positive for the Silver market, as this will remove available Silver from the market! Supply/Demand swings further to our side!
2010 saw 3.4 million oz's produced @ Lucky Friday mine.
We just saw 3.4 million oz's taken off the market with the swipe of a pen from the US Government regulators.
They deserve a big THANK YOU!

Drifter's picture

smiddy re: opsec

it's not .gov thugs tossing the house I'm referencing here, that's a separate issue

it's an ever growing ever more desperate criminal element, see the UPS guy post

check into Ferfals Argentina devaluation posts circa 2001 ff, he mentions cleancut men in business suits walking up to you on the sidewalk and sticking a gun in your face so they could feed their kids

cavalier's picture

Hecla to produce 2,500,000 ozs less silver in 2012

Due to the not so Lucky Friday mine closure for all of 2012 Hecla has reduced its estimated production of silver for 2012 from 9,500,000 ozs to 7,000,000 ozs. Reduced silver supply should help silver go up. Also means less US silver for ASEs. Good news for silver bulls unless you are long HL.

Katie Rose's picture

Women and the military

OK,

I'm going to say what no one has had the courage to say when it comes to women and the military.

RAPE!

When a woman is captured, she is always brutalized and RAPED!

It is a sick, sick world where women are allowed on the front lines in combat positions.

My sister was a WAC officer during Viet Nam. She was flying through the ranks until a certain "Major" began encouraging/demanding certain "favors" from her. The higher she rose, the more persistent the demands from male superior officers.

My sister is brilliant and would have been a fabulous asset to our country.

She used the GI Bill to go back to school and is now a farmer, a very smart one..

If you love your daughters, keep them out of the military. Period. 

Forget Women's Lib. The military is not a place for women.

Patrancus's picture

CA Lawyer

"I have neither the time, nor inclination to present a detailed critique of any of the narcissistic individuals running for high office, other than to generally comment that anyone aspiring to high office has a personality disorder.  Who would want that job, other than a power-hungry, self-interested narcissist?  I want to enjoy my time with my family.  I don't want to worry about the world's problems.  I think I am normal.  Hence my opinion on this"

I would guess that all here want to enjoy time with family and don't want to have to worry about the world's problems, sounds pretty normal. However normal for one may not be normal for another and in the reality of time, the clock is ticking down.

No time is why we find ourselves in the predicament we have today, if we do not make time for restoring this republic now, this cycle, this year, want the enjoyment of family and friends ? well then maybe we deserve to enjoy neither. 

If you are able bodied American who loves liberty, I want to encourage you to take action this year and show up either at caucus or where ever you can work to restore this republic, this is what it will take to restore the American  republic. 

Drifter's picture

that's sick KRose

in a perfect world those officers would have been busted to buck private and put under her command

single6's picture

A vote for Romney is McCain 2.0

"MetLife Quits Mortgage Business, to Cut Most of 4,300 Workers - Bloomberg

Yup 8% un-employment alright.

A VOTE FOR ROMNEY IS OBAMA 2.0!"

A vote for Romney is McCain 2.0!!!!......it's the third term of GWBush(Mr I will sign the assault weapons ban, did sign Part D Medicare, gave us Dept of homeland insucurity....

Perfidious Albion's picture

Monedas

Hat tip for you m8 best lateral thinker on the forum.

and a curvey stool..

5X_barstool_viva_BK.jpg

NW VIEW's picture

THE AMERICAN WAR- US & THEM

@JACK:  Democratic Capitalism  is

a term that means about as much to the 52% population as QE3.  The current class warfare is just heating up, however the 52% still vote.  How will we educate that segment of America that the current direction will come to an end in time because the dollar will fall like a stone, the printing presses will become silent, the tax revenue  will continue to  sink, the wealthy will stop expanding and hiring, and more factories will be built everywhere except in America?  When the massive entitlements dry up the trouble will be at our doorsteps.   Many of us who have paid huge taxes and created many jobs for decades have thrown in the towel and will not pick it up again.  We have made it to easy for socialism to work unchecked in America.    The entitlement segment needs to hear that the end is near.    jmo

Smiddywesson's picture

Hecla

Does anyone else smell a rat in the Hecla news?  Ok, sand and rock has to be removed from the bottom of the main shaft, and the shaft is over a mile deep, but what's up with the arbitrary year closing?

Aren't they in the business of moving massive amounts of sand and rock every day?  Why would it take a year to do so?  Isn't there tremendous pressure on TPTB to keep supply moving?

There's absolutely zero chance this mine will stay closed.  It's a good company with a good safety record of only two fatalities in 26 years.  I'm not saying it has bottomed yet, but Hecla is on my buy list.

Fr. Bill's picture

Earlier signs of trouble at Kitco

Zoltan wrote:
In case you have forgotten they [Kitco] filed [for bankruptcy] last year. 

I missed that!  I used to haunt Kitco's metal forums and traded profitably in its unallocated pool, in both gold and silver, until last spring.  I'd likely still be there, except they upped their discount/premium dramatically and added on an "administrative charge" to any pool transaction.  The net result was to make profitable trades impossible UNLESS the change in price for the trader were drastically higher than they had been before. 

When I first got into the pool, it was possible to make a profitable trade in silver with a change in price of 44 cents, and in gold at $10.  After the increased their discount/premium, it required at least a move of $1.44 in silver and $45 in gold to make a profitable trade!  Actually it was a bit more than that, 'cause you had to factor in TWO "administrative charges" -- one for the buy, another for the sell.

So, I looked around at other options, which eventually led me to Bullion Vault (the best for my purposes, though there are others out there that probably serve others' purposes better, such as Gold Money).

The point: when Kitco raised their pool charges and spreads, I wondered what they were thinking, as it had to have the effect of reducing (maybe drastically) the trading in the pool, resulting in lower income, not greater income.  Maybe those hikes in prices last spring were early "tells" that the company was stressed enough to eventually declare bankruptcy.

I wonder what a good replacement for those ubiquitous Kitco charts is gonna be?

Drifter's picture

Sarah Palin & Jim Demint

both gave street cred to Ron Paul voters in the last few days

I'm beginning to experience strange new glimmers of hope...or maybe I'm getting the flu, I dunno

perhaps a RP vice presidency is in the offing, they'll figure he can do little harm there and be given make work duties

WangDang Doodle's picture

Banks circumvent Reserve Requirements

SRSrocco,

According to this article US banks have bypassed reserve requirements thru deposit re-classification...

http://www.marketskeptics.com/2009/03/deposit-reclassification-used-to.html

Conclusion to the article:

"I have to congratulate Wall Street. I didn't think there was anything that could surprise me anymore. I was wrong. Apparently, financial institution decided that reducing their reserve requirements to zero was a smart thing to do.

Deposit reclassification is a glorified accounting trick that allows banks to avoid nearly all reserve requirements."
 

Orange's picture

Eric Sprott

Interesting short video presentation by Sprott. I like his statement where he says the miners should hold their silver. Even better, he says he would buy the silver, therefore they can register the sale, but then they hold the units in silver. Smart guy.

http://sgtreport.com/2012/01/eric-sprott-who-is-not-getting-the-silver/

Jack's picture

America

@NW View:

"How will we educate that segment of America that the current direction will come to an end in time because the dollar will fall like a stone, the printing presses will become silent, the tax revenue  will continue to  sink, the wealthy will stop expanding and hiring, and more factories will be built everywhere except in America?"

Sadly, this 52% may be the last to get it.  Having skin in the entitlement game, and being addicted to American Idol, etc, they have no motivation to "get it".  I do hold out hope though.  Look at this site.  A year ago, I knew little or nothing about the manipulation of the PM market and its implications.  Because of Turd and others across the internet, I and others here are no longer falling for the CNBC blah, blah, blah.  True there is a level of courage that is required to think outside of the box, but once one steps outside of it, it becomes easier to do your own research and come to conclusions that are not dictated by the mainstream press.  

We are generations into the socialism game both here and in western Europe.  Catalysts are required to change it.  I believe some of those catalysts are here in Turdville.  I believe it is certainly more worthy to try to be the catalyst for positive change than to sit back without hope.

BTW: I used to live in God's country where you hail from.  I grew up picking blueberries, raspberries, himalayan wild blackberries and (later) marionberries.  I consider the mountains in the center of the Olympic Penninsula to be some of the most beautiful country on earth.  I still have Hirachi sandals and think Powells Books in Portland to be the best book haunt outside of NYC.  PM me some time if so inclined and we can visit in more detail.

Be Prepared's picture

Latest Jim Willie - The USDollar Paper Tiger

The USDollar Paper Tiger

Events in the last decade displayed a vigorous effort to defend the USDollar. The rogue nation of Iraq sold crude oil in Euros for three years, until they were liberated. Its tyrant was a scourge to be sure. Weapons of financial mass destruction seem to have replaced the traditional type, the new variety being derivatives, mortgage bonds, and even sovereign bonds from weak nations. Newer weapons from the United States feature extended hands from clearing house fronts that snatch and grab segregated private accounts, and backdoor raids of exchange traded fund precious metal. Let's not overlook the more frontal assault weapons deployed like unseating Qaddafi and capturing his gold held in foreign accounts, along with all that cash. Liberation has its benefits. The confrontation with Iran would be comical if not so dangerous. The claims have been silly in my view for years, in the perception of Iran as a serious threat to the West. They have been subjected to cut communication lines on the Persian Gulf seabed. They have been subjected to Stuxnet viruses to obstruct their nuclear refinement process, via the Siemens rear door. They have been subjected to an influx of heroin from the north, where the USMilitary manages the Afghan situation and locale.

To be sure, Iran's clergy qualify as a bunch of clownish fools with a tight grip on power and security forces. The shock here is that the relatively educated Tehran crowds have not disposed of their corrupt class of leaders. The clergy has been skimming from oil revenue for years, complete with hidden Swiss accounts. The same goes for the American corrupt class of leaders, with their USDollar control levers, their failures to deliver USTreasury Bonds (aka naked shorting by Wall Street firms), their hidden mechanisms behind Quantitative Easing to Infinity (QE never stopped), their insider trades to exploit financial markets (flash trades with a peek), their ETF dampers on numerous individual markets (regular inventory raids by Wall Street), their nationalization of Fannie Mae & AIG in order to put the fraud records in a warehouse (bond counterfeit, duplicate income stream usage), and their absurdly positive economic drivel data (more like chronic 10% CPI and chronic minus 3% GDP).

<Rest of the Article>

question's picture

KRose

A girlfriend of the wife's was raped while serving in the military but as in Pogo the enemy was us. Not to be a pig, but stay home ladies or carry a big knife and cut where it counts (bear in mind it will still be your fault), guys can be, well you know.

kliguy38's picture

CONSERVATIVE SUPREME COURT JUDGES

REALLY???  Perhaps we might want to concentrate on which judges you are referring to. I only see a court full of corporate fascist shills willing to take your rights as instructed by their banker's masters. You have all been had....but if you think there are judges on that court that are not working for the same banking cabal then you haven't learned much over the last three years.

coach247's picture

Hi SRSrocco! The GFMS

Hi SRSrocco!

The GFMS group are supposed to be the most reputable source of data for silver but I wrote them off a long time ago as being utterly biased in their analysis.  I recall back in 2007 or so they were claiming a silver surplus and if one went through their notes, much of the 'supply' they quoted was based on Asian silver recycling.  There was no hard data to support this, it was entirely their estimate which was furnished to create this 'surplus'.  So if one has a bias to present a bearish outlook, just invent some huge mythical glut of silver bullion to justify your projection, and since there is no other widely distributed reporting on the metal, it becomes fact.

I do not have the link for the quote, but at about the same time one of the senior people at GFMS issued a statement that Central Bank bullion purchases do not count as demand, since they would ultimately become sellers again in the future.  What a ridiculous statement, especially given the current environment when CB buying is a huge factor in the gold market. I cannot believe how this group of shills is considered reputable.

One final factor that does not hold water in terms of the GFMS survey.  They document the bullion supposedly held in the ETFs as part of the supply.  Now I would suggest there is a very strong chance that the 'bullion' inventory held by ETFs is merely COMEX unbacked paper promises to deliver bullion.  So in effect the ETFs represent a paper promise on a paper promise.  And if minimal actual silver bullion is indeed held by these funds, then it is just one more fake source of bullion supply that they use to support the assumption that the market is in surplus.  You can create bits of paper to fake inventory into infinity but that does not in effect add a single ounce of silver.  Those who cannot distinguish between paper contracts and real bullion should not be trusted to issue guidance.

cheers!

mike

Hold over's picture

On January 10th, Project

On January 10th, Project Veritas reporters walked into New Hampshire Polling Locations during the Presidential Primaries, saying dead people's names. We stated the name of a dead person we got from the NH obituaries. The names of the deceased were both Registered Republican and Democrats And in almost every case, saying a dead person's name, we were handed a ballot to cast a vote. We used no misrepresentation and no false pretenses. in fact, in almost every case, we insisted we show ID and they insisted that we vote without showing ID.

#!

JHNewman's picture

Closing Update

The probabilities are still very high (85-90%?) that gold and GDX are still just in a bounce, and still have a big date with the downside, IMO. 
 
My Hidden Weakness signal (from 2 proprietary, customized indicators -- used in combination) is still very strong on the daily charts of gold and GDX. That signal says:  "This rally isn't going to hold, and gold/GDX will roll over and head back to the downside in a significant way". The signal has proven to be very reliable in this big corrective phase for the PMs.
 
I would GUESS that this is roughly the top of the bounce for gold. Price touched the upper Bollinger Band on the daily chart today. $3.00 above that is extra resistance from the 50 EMA at 1650 (all prices are spot). And the daily candlestick looks to be forming a spinning top = indecision, or roughly equal amounts of buying and selling.
 
I believe we're in the second and final 5-waves down of this correction. This final 5-waves down started at 1803 on 11/7. The bounce that we're in is obviously the strongest of the 3 bounces up that we've had since 11/7. The "greater buying, less selling" of this bounce relative to the other 2 signifies, I believe, that we're getting close to an ultimate bottom for this correction.
 
This bounce should be Elliott Wave 4 up, to be followed by the final Elliott Wave 5 down that should finish this correction. Looking at MACD on the daily chart, I'd say the odds are extremely low it'll get back above 0 this time around. It looks like price is going up just to "recharge" for a final drop into the correction bottom.
 
It looks like the PMs have held up in the face of a strong dollar because stocks have held up. But it looks like stocks are close to a top and, when they roll over, gold and GDX will finally roll over too.
 
I still believe the Major Bottom for this correction will be somewhere south of 1500, with the highest probability being somewhere in the 1478 - 1420 zone. 1478 was strong horizontal support for the big low at the very end of last June. And 1430 - 1420 was strong horizontal-resistance-now-turned-support from the highs of last December. 
 
Using cycle analysis, my best estimate for the timing of this Major Bottom is 3 - 4 weeks from now.
 
My 2 cents worth. Gotta run. (Girlfriend's kicking my ass.) Good trading to all!
 
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