Gold Stocks (XAU) Buy Signal Validated
Gold Stocks (XAU) Buy Signal Validated;
Quick (Initial) Surge Underway…
Gold & Silver = Positive on 1 – 2 Year Basis!
12/14/17 Weekly Re-Lay Alert – Transition Year Culminating – XAU Shift?:
“In the Feb. 8, 2017 Weekly Re-Lay Alert (Gold Stocks Reinforcing Cycle High), a detailed examination of the XAU (and HUI) was provided. Most notably, the developing divergence between the XAU & HUI was highlighted – leading to the conclusion that a top was imminent.
One of the conclusions was that Gold stocks were poised to reverse lower & ultimately drop to new intra-year lows. The weekly trend needed to turn down & validate that scenario, which would confirm a multi-month and possibly intra-year peak. Accordingly, the following warning was also included:
“One final note to keep in mind… A drop to new 2017 lows – in either or both of these Indices – does NOT automatically mean that Gold & Silver would do the same.”
The XAU & HUI did turn down (their exact peak – for then and for all of 2017 – occurred on Feb. 8, 2017) and did reverse their weekly trends down, confirming that analysis & turning focus back to monthly cycles that continued to project the next multi-quarter (possibly 1 – 2 year) low for Nov./Dec. 2017.
Those indexes set progressively lower lows in March, May & July 2017 before a strong rally into early-Sept. That rally peaked below the level of the early-Feb. high – reinforcing the overall intra-year outlook for 2017.
[NOTE: While the XAU was setting those progressively lower lows, Gold set a series of progressively higher lows – in late-Jan., early-Mar., early-July (which fulfilled the intra-year outlook for a ~4-month rally followed by a pullback into a mid-2017 higher low) and Dec. 12, 2017.
As long as Gold does not drop below its mid-2017 low of 1214.5/GCG, it will perpetuate this sequence of ascending lows & reinforce the outlook for a stronger advance in 2018 – after the Year of Transition is complete. This ongoing divergence – stretching through most of 2017 – powerfully reinforces what has been warned about Gold stocks for the past year.]
The XAU produced similar signs of an impending, multi-month peak as it approached geometric cycles converging on Sept. 7 – 11. As in all cases, the cycles merely provide the backdrop. Price action (and specific technical indicators) need to validate those cycles & provide specifics regarding a potential reversal. The Sept. 6, 2017 Weekly Re-Lay Alert stated:
“The XAU is spiking above its April high though it remains well below its Feb. peak. Last week, it attacked the synergistic combination of two weekly LHRs (90.66–91.08) – another signal that usually immediately precedes an intermediate high.”
The XAU peaked on Sept. 7/8 – in sync with those geometric (30 & 60-degree) cycles. The Sept. 9, 2017 Weekly Re-Lay reiterated the broader context of that developing top – again focusing on the Feb. 2017 peak and its significance for the entire year:
“As a result, the latest phase of a 60-degree/2-month low-low-low Cycle Progression is now poised to time a subsequent high on Sept. 8/11…
On a larger-scale basis, the XAU remains below its Feb. ’17 high which was well below its Aug. ’16 peak – so a larger range of consolidation remains intact. The monthly trend pattern reinforces that conclusion.”
For all intents & purposes, the XAU has traded sideways (although it has been a sometimes-volatile sideways pattern) throughout 2017. Following its ‘1’ or ‘A’ wave rally & subsequent pullback of 2016, the XAU created a lesser-degree ‘1’ wave rally into Feb. 2017 and has since traced out an ‘a-b-c’ decline that forms the subsequent ‘2’ wave retracement (‘1-2’, ‘1-2’).
That ‘a-b-c’ decline (Feb. ’17 high – July ’17 low – Sept. ’17 high – Dec. ’17 low) has created some wave similarity – in which the ‘c’ wave decline nearly matched the magnitude of the preceding ‘a’ wave decline – reinforcing that perceived wave structure.
While producing that ~10-month correction, the XAU has also created an ‘inside year’ in which the high is lower than the preceding year’s (2016) high and the low is higher than the preceding year’s low. So, the entire trading range of 2017 is ‘inside’ the trading range of 2016.
The general rule of thumb for an inside period (day, week, month, year) is that it typically resumes the trend of the preceding period. 2016 was a reversal higher, so 2018 has a better chance of seeing a new advance.
Of course, there are other technical indicators relied upon for this clarification. One of those is the monthly 21 MAC – a moving average channel which has now had ample time to ‘catch up’ with price after the sharp rally of 1Q – 3Q 2016.
In November, the XAU pulled back to meet the ascending monthly 21 Low MAC – a common occurrence at a ‘B’ wave low (after an initial ‘A’ wave surge) – and closed the month precisely at that level.
While it is not uncommon for a final, intra-month spike below this channel, the XAU should finish the month back inside the channel (above the level of the monthly 21 Low MAC) if this indicator is to remain a positive factor. Currently, the XAU would need to close above 80.15 on Dec. 29, 2017 to achieve that.
The ideal scenario would be that it exceeds 80.66 (Dec. 1, month-opening high) & gives a daily close above that in the interim – turning the intra-month trend up and providing a slightly off-center Intra-month V Reversal higher.
More significantly, it could/should close the month above 81.20/XAU – on Dec. 29 – to generate a monthly 2 Close Reversal higher.
The monthly 21 high MAC & MARC are already setting up an intriguing scenario for January, if the XAU can turn its daily & intra-month trends up in the coming days. A more convincing validation would be the XAU reversing its weekly trend back up. That cannot occur until Dec. 29, at the very earliest.
As corroborating factors emerge, the January scenario will be examined. So, too, will an examination of larger-degree cycle highs in 3Q 2018.
Suffice it to say that Gold stocks could embark on a significant rally after fulfilling the greatest synergy of weekly & monthly cycles that appeared on Dec. 4 – 15.
If the recent low holds, it would fulfill an 11 – 12 month low-low-low Cycle Progression. as well as a 21 – 22 week high-low-(low) Cycle Progression originating from the early-Feb. intra-year peak. (That is another form of cyclic symmetry within the overall 2017 ‘a-b-c’ decline – corroborating that wave perception.)
Corroborating those cycles, the XAU dropped right to its weekly HLS (75.77/XAU) in early-Dec. – the weekly extreme downside target for last week – and closed the week above that level, signaling an impending 1 – 2 month low by holding that extreme support & target.
That was subsequently validated by an intriguing daily divergence between the HUI & XAU as the HUI (and GDX) spiked to new lows on Dec. 12, while the XAU held at higher lows and showed signs of bottoming. The 12/12/17 INSIIDE Track Intra-month Update highlighted that and stated:
“Today’s action – with the HUI (and GDX) spiking to a new low as the XAU held above its recent low – could be the kind of divergence that precedes a 1 – 2 week rebound.”
The XAU quickly validated that and surged on Dec. 13, providing preliminary confirmation of a developing intermediate bottom. The next sign would be a daily close above 80.37/XAU, which would turn the daily trend up & confirm a multi-week bottom.
This action also dovetails with the potential for a low in Gold & Silver at the same time of year as the 2015 & 2016 lows…
Gold & Silver have initially bottomed after dropping into the first half of Dec. – the same time that Gold bottomed in 2015 & 2016. A low by/in mid-Dec. would perpetuate an annual/360-degree cycle and be in sync with weekly & monthly cycles in the XAU.
That potential was/is corroborated by diverse indicators including the weekly trend patterns & the weekly HLS – both of which favored a low being set this week (Dec. 11 – 15). That has initially taken hold, but Gold & Silver would need to do more work to confirm it.
On a near-term basis, Gold & Silver were/are expected to see a rebound into Dec. 15/18 – 30 & 60 degrees from the two previous highs (Nov. 17 & Oct. 16).
Intermediate (2 – 4 week & 1 – 3 month) traders can be entering Gold stocks or related instruments at these levels [reserved for subscribers].” TRADING INVOLVES SUBSTANTIAL RISK!
Gold, Silver & XAU showing signs of significant bottom after fulfilling wave objectives, technical indicators & multiple cycles – all anticipating (at least) a 1 – 2 month bottom in this time frame (after Dec. 4, before Dec. 15 & ideally right around Dec. 8). XAU leading rebound after triggering a divergent buy signal on Dec. 12. Gold & Silver now corroborating.
Overall wave structure is constructive & could spur new multi-month advance. Depending on action in January 2018, precious metals could trigger an overall 6 – 9 month advance!
See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.