Silver Remains Bullish into ~June 14; Gold Needs to Exceed 1312.6/GCQ.
Silver Remains Bullish into ~June 14; Gold Needs to Exceed 1312.6/GCQ.
05/30/18 Weekly Re-Lay Alert – Parallels and Paradox:
“A combination of the 90/10 Rule of Cycles, Hadik’s Axiom of Market Correlation & good old human emotion (particularly a trader’s Perfect Storm of psychological nemeses – fear, greed & ego) often creates an intriguing paradox in the markets. That paradox involves markets, that trade at odds a majority of the time, peaking or bottoming in close proximity to one another.
A perfect example was the Oct. 19/20, 1987 action in Bonds & Stock Indexes – both setting multi-year bottoms within 24 hours of each other. For most of the preceding 18 months, they had traded in 180-degree opposition to each other (bonds declining since 1Q 1986 as equities surged). However, the action of mid-Oct. saw both markets reaching extremes and dramatically altering the ‘normal’ correlation.
Many other examples have occurred on diverse levels (daily, weekly, monthly, etc.) – reinforcing this merging of parallels & paradox.
In some cases, the paradox reveals the expected (inverse) correlation is only applicable a minority of the time. For instance, a sharp drop in equities will often spur a safe-haven rally in Gold. However, during the other ~90 – 95% of the time, different correlations prevail. In 2017, a declining Dollar was suddenly in vogue – prompting rallies in equities and Gold.
From late-Dec. ’16 into Jan. ’18, Gold rallied 20% as the DJIA gained 35%. Both peaked in late-Jan. and both entered ~4-month correction/consolidation phases at that time. Both have been forecast, since 2017, to see multi-month highs in June 2018 and subsequent highs in Nov./Dec. 2018.
So, even though a sudden sell-off in stocks could still trigger a flight-to-quality rally in Gold, that would be the exception and not the rule.
In the interim, equity indexes were projected – since mid-2017 – to set a multi-month low in March 2018, culminating an initial sharp sell-off. That has since played out.
The XAU, in contrast, was forecast to see successive lows in Dec. 2017 & May 2018 even as Gold was giving mixed signals leading into mid-May cycles. So, there are times when cycles in related markets do not trade in lockstep.
What that demonstrates more than anything is that each market has its own set of governing factors & fundamentals, even as it is periodically impacted by external forces (i.e. the correlative influence of another market that is in an extreme phase; see Hadik’s Axiom of Market Correlation).
That is why it is most important to view each market on its own… and only then consider possible correlations. Unfortunately, too many traders get hung up on the correlations first… and then miss so many moves while waiting for an elusive correlation to drive market action. So, on to the individual complexes…
Gold & Silver are rebounding but need daily closes above 1312.6/GCQ & 16.740/SIN to give a more convincing sign of a multi-week low taking hold. That would still be expected to spur an overall advance into June 11 – 15… the latest phase of a 20-week high-high-high-(high) Cycle Progression.
They need weekly closes above 1321.7/GCQ & 17.00/SIN to show intermediate strength.
1 – 3 month traders could have entered long positions [reserved for subscribers].” TRADING INVOLVES SUBSTANTIAL RISK
Gold, Silver & Gold/Silver Index (XAU) slowly rallying into June 11 – 15 intermediate cycle peak, when another multi-week peak & reversal lower is most likely. Silver could match the duration of its Dec./Jan. rally with an advance into ~June 14 (the precise date of the 20-week cycle from the Jan. 25 peak) while Gold is expected to set a lower high at that time. Its weekly trend pattern projects new lows after that rebound. Gold’s pivotal resistance comes into play at 1312.6/GCQ. See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.