Saturday, October 14, 10:08 am EST. There is no doubt that the timer nailed the most recent low, as it did last July. I ‘hated’ that last rally, which ended by September 8, and backed down for the entire next month, because I never saw any conviction on the part of traders behind it, in the form of any pick-up in volume.
Well, we’ve gotten a signal a week ago, and the market has turned up. It’s rising, just as that signal had indicated, but… once again, volume is just not any part of this equation yet. Friday’s average volume for the 16 symbols I track was off by 31% from its own 50-day average volume. Rallies do not live without some life being injected into them by means of increasing volume.
We can say this much though… the average price of our 16 symbols is in an uptrend. That uptrend is above its own uptrending 50-day moving average, which, in turn is also above the uptrending 200-day moving average. At the very least, it can be said that the metals and miners are in a bull market. Beyond that, the price chart for all 16 forms a bullish head-and-shoulders bottom, with the bottom of the head being December 20 of last year, the left shoulder formed by November 14, and the right shoulder by March 9 of this year. That right shoulder then became a bullish double-bottom event by May 4, which has not been violated since.
Another bullish chart pattern is that a wedge had been being formed from successively lower tops, the dates of those being 11/9/16, 2/8/17, 4/13, 8/1, and all the dates 8/10 thru 8/24. The wedge was broken out of on 8/25, but with an indecisive Doji candlestick. However, that indecision was decided upon the very next trading day, when on 8/28, they rocketed up. A line drawn thru all of those top dates just listed, formed a level of price support, once price broke out 8/25. This brings up the next bullish piece.
Since the 9/7+8 top, price had been falling back for all of September, and into October, until we called the bottom by means of the timer by 10/6. That price decline found that line of price support that connected all the previous tops to be perfect support on 10/2, but it still did not launch, and then as price slipped back just a bit more, to get all our indicators in place… price found it’s own 200-day moving average to be that most recent place of perfect price support. In other words, all the chart evidence suggests that at some point here, possibly in the very near future, the precious metals and their miners are going to take off.
There’s more of a bullish case to be made… Commodities in general have been in a bear market for some years now, but that seems to be reversing at this very point in time. This is true of copper, and other base metals and basic materials, and it may also be coming true now of oil as well, as the case for higher oil prices is beginning to be made at this time.
I’m talking myself into leaving my trade in place for the near two weeks I’m going to be off-line! That’s really not wise, and unless I saw evidence Monday, Tuesday or Wednesday, that this ‘rally’ was actually developing some serious ‘legs’, as they call it, I’ll be closing out my trade before Wednesday’s close. A bullish case can certainly be made, but we have yet to see it play out, and since it hasn’t actually gotten underway with any serious committment yet… it can only be said that we are very early in the game. We got here by watching, and staying on top of it, daily.
Here’s to your accumulation of real wealth!
Harold F Crowell