During the 01-08 stage of the commodity bull platinum was the strong brother of the precious metal complex. Where he led the rest of the complex followed.
Well platinum is at it again, only this time he's got help. Palladium is also leading the charge higher. Both metals have eclipsed their December highs. As a matter of fact both metals have been so strong that the 50 day moving average never even turned down during the recent correction.
We still need to see gold rally above $1161 to break the pattern of lower lows and lower highs but the action in platinum and palladium is suggesting this C-wave still has further to go.
I suspect how the dollar reacts to the employment figures tomorrow will probably give us a big clue as to the next move in gold. Ironically I suspect a poor jobs number is going to be more bullish for the markets as it will probably depress the dollar.Perhaps even completing a weekly swing high which is one of our requirements for a continuation of the C-wave.
I'm still sitting on the fence as to whether gold is stuck in a D-wave decline or whether this has been a very tricky midpoint consolidation. I will say the recent strength despite a strong dollar is very encouraging.
There are four important requirements that have to happen before we can say with a high degree of confidence that the C-wave is still in play.
The single most important is the dollar. We simply must see the intermediate dollar cycle top. No C-wave has been able to fight a rising dollar. The dollar is getting late enough in the intermediate cycle that it could put in a top at any time.
The next requirement is for gold to put in a right translated daily cycle. If this remains a D-wave then all daily cycles should be left translated. If gold can eclipse $1131 this week then we will have a right translated cycle and that shouldn't happen in a D-wave decline.
The next hurdle is the $1161 level has to be surpassed. Gold has to break the pattern of lower highs and lower lows. It will do that if gold can top $1161. That will also eliminate the December trough as the intermediate cycle low and move the phasing to February. That is very important as it will mean gold is on week 4 of the cycle instead of week 10. That would give gold 6 more weeks for the second leg to progress.
And finally we need the miners to start participating. If the HUI can cut through the 420 resistance level that will be a big step in the right direction. If miners can break out to new highs along with gold all resistance in the gold market will be out of the way and the path will be clear for the second leg of the C-wave to rack up another monster move.
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T1. A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move. Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected. T2. Reversal or resistance to a move is likely to be encountered: - 0n reaching levels at which in the past, the commodity has fluctuated for a considerable length of time within a narrow range - On approaching highs or lows T3. Watch for good buying or selling opportunities when trend lines are approached, especially on medium or dull volume. Be sure such a line has not been hugged or hit too frequently. T4. Watch for "crawling along" or repeated bumping of minor or major trend lines and prepare to see such trend lines broken. T5. Breaking of minor trend lines counter to the major trend gives most other important position taking signals. Positions can be taken or reversed on stop at such places. T6. Triangles of ether slope may mean either accumulation or distribution depending on other considerations although triangles are usually broken on the flat side. T7. Watch for volume climax, especially after a long move. T8. Don't count on gaps being closed unless you can distinguish between breakaway gaps, normal gaps and exhaustion gaps. T9. During a move, take or increase positions in the direction of the move at the market the morning following any one-day reversal, however slight the reversal may be, especially if volume declines on the reversal.
General Trading rules
G1. Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move. G2. From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases. G3. Limit losses and ride profits, irrespective of all other rules. G4. Light commitments are advisable when market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting and concentration on these moves will prevent unprofitable whip-sawing. G5. Seldom take a position in the direction of an immediately preceding three-day move. Wait for a one-day reversal. G6. Judicious use of stop orders is a valuable aid to profitable trading. Stops may be used to protect profits, to limit losses, and from certain formations such as triangular foci to take positions. Stop orders are apt to be more valuable and less treacherous if used in proper relation the the chart formation. G7. In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons - a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100% G8. In taking a position, price orders are allowable. In closing a position, use market orders." G9. Buy strong-acting, strong-background commodities and sell weak ones, subject to all other rules. G10. Moves in which rails lead or participate strongly are usually more worth following than moves in which rails lag. G11. A study of the capitalization of a company, the degree of activity of an issue, and whether an issue is a lethargic truck horse or a spirited race horse is fully as important as a study of statistical reports.
Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. The information included in The Smart Money Tracker and The SMT subscribers daily updates is prepared for educational purposes and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. G.D.S L.L.C., nor Gary Savage, do not represent themselves as acting in the position of an investment adviser or investment manager for funds that are not under their direct control and fiduciary responsibility. GDS L.L.C., Gary Savage, will not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, GDS L.L.C., Gary Savage, may hold positions in securities mentioned, but are under no obligation to hold such positions.