Cycle Trading

Gold

Friday was day 27 for Gold’s daily cycle.

Gold had a narrow range day which should ease the parameters for forming a swing low.

A break above 1573.20 forms a swing low.

I realize that silver did print a failed cycle on Friday.
That obviously is not good news to the precious metal bull.
However, I do not think it is the end of the world either.
Silver is thinner market and therefore more volatile.

So I want to jump ahead to the CRB Index

The CRB

The CRB did form a weekly swing low this week.
But the commodity bulls remain frustrated because the CRB was turned back at the declining trend line.

However, the behavior of the CRB emerging from a three year low seems typical.

Even though a weekly swing low was formed in 2008 the CRB essentially did nothing for 19 weeks.

This might be easier to see on the monthly chart

The Miners

Before we discuss the current charts, I want to have everybody take a look back to the last three year low.

The purpose is to illustrate two points, perfect entry and rough ride.

I am sure that there are many of you that have seen a chart that documents the 259% rally the Miners printed off the October 2008 Low.

Probably many of you have thought “if that opportunity ever presents it self again, I am going to climb aboard and hold on.”

Now, let’s say you were asleep at the wheel and mistimed your entry and entered at the peak of the second daily cycle.

The gain for not a perfect entry and getting in at the peak of the second daily cycle still nets 145% return.

The next point is that the Miners are volatile.

On the chart above, (1) must have looked every bit like a daily cycle low in real time, yet the Miners continued to decline for another 6 days before finally a swing low with a trend line break declared another daily cycle (2).

The second daily cycle was also tricky.
The second daily cycle appeared to have peaked at day 5 and then sold off.
At day 10, (3) the HUI set the daily cycle trend line and continued to rally.
That second daily cycle peaked at a 75% gain if you did not get thrown off the bull after the day 5 sell off.

So on to the daily cycle.

Friday was day 26 for the Miner’s daily cycle.
The current daily cycle is getting rather “long in the tooth”
Only 7 daily cycles out of the previous 43 daily cycles leading from the 2008 low has printed a daily cycle low exceeding 26 days.

Keep in mind with gold giving back nearly everything and silver printed a failed daily cycles, the miners have held up really well.
With each passing day the odds of a daily cycle low printing keeps increasing.
A Bollinger Band crash in the next day or 2 will likely mark the daily cycle low.

The weekly cycle printed a swing high this week.

Once again let’s refer to 2008

Back in 2008 the HUI printed a weekly swing high week 3 and proceeded to print a lower low in week 4.

The point being is that the Miners are volatile and if you believe in the gold bull then you will need to give the Miners some room to run.

As we chronicled last week, the Miners have formed a monthly swing low and quite likely the 3 year low as well.

Unless the Miners break below 372.73, then this is all noise.

On to Bonds

Currently TLT is on day 20.

TLT is consolidating an over 20% gain from March.

The weekly cycle shows TLT right up against the cycle trend line.

A break below 140.09 would break the rising weekly trend line.
That would signal a decline into the intermediate cycle low.

And I conclude the weekend report with my Cycletracker:

The first number is the time period in which is the current cycle high.
The second number gives the current cycle count.

Ex 03/15 reads “peak on day 3/cycle count day 15”