Thursday, July 31, 2014

The Golden (and Silver) Ratio

Pursuant to my earlier post regarding near-term weakness in the gold miners GDX and GDXJ, I noticed that the GLD:SLV ratio is making a descending channel (bearish) in the same kind of time frame that the miner's are hinting at. The channel curiously intersects with a resistance line put in place with a higher low back in February and again in July. If one were to expect precious metals strength in the medium term (i.e., around or after September) with near term weakness which is what the miners are suggesting (depending of course on the steepness of the subsequent fall), then the GLD:SLV ratio validates this hypothesis. I'd like to thank The Rabbit Hole for following this ratio (which is written about here) and bringing it to my attention. It's an invaluable tool when anticipating precious metal price changes.


Jakob Richardson © 2014

Mounting concern regarding gold miners (GDX) and the juniors (GDXJ) in the immediate term

As an example I've used a 'transition' that was seen in the commodities ETF (DBC) some time ago. The area of interest has been highlighted with a green circle.


You'll see that leading up to the area in question was a steep ascent and then a gradual topping pattern characterized by a curve comprised of several data points clustered together in a very tight range. An "inverse hockey stick" pattern. What follows is an equally rapid decline testing the other channel resistance line.

This "hockey-stick" is being seen in several of precious metal mining companies, but more importantly, GDX and GDXJ. For both the proportions of the ascent are not been as dramatic as in the example I used for DBC, but if one uses their imagination the pattern holds. Similarily there appears to be what I fear is another topping pattern consisting a gentle curve cresting at the resistance line with a high concentration of data points clustered together in a tight range. I fear a steep fall in both ETF's with resistance around $23.25 for GDX and $35.00 for GDXJ.



From there, if the bullish scenario prevails (and it should with the higher lows we have been witnessing recently) they should stop there and reverse for a proper breakout.

Jakob Richardson © 2014

Did you know a group of rabbits is called a "fluffle"? Awwwww......

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Thank-you everyone! I was able to add over a 1,000 readers to my little website in the month of July!


    Wednesday, July 30, 2014

    Daily Commodities Report: 2 Hour Chart

    Agriculture: DBA

    Coal: KOL

    Coffee: JO

    Commodities: DBC

    Copper: JJC

    Corn: CORN

    Cotton: BAL

    Crude Oil: USO

    Gold: GLD

    Silver: SLV

    Lithium: LIT

    Livestock: COW

    Natural Gas: UNG

    Palladium: PALL

    Platinum: PPLT

    Sugar: SGG

    Uranium: URA

    Wheat: WEAT

    Jakob Richardon © 2014

    Why aren't Apple iPhone chargers called Apple Juice (trademarked)?

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    Tuesday, July 29, 2014

    Daily Charts: Commentary Update

    Agriculture: DBA
    Thankfully I've spotted the larger red downward channel that we are now firmly a part of and quite predictably a bounce took place on the lower most channel line. It's current inner blue channel uptrend looks a little too narrow so this blue channel may widen before finally falling back after touching the upper limit line.

    Aluminum: JJU
    Commentary appears in the image. I am very surprised to see it continue rising but our at least we know what the overall trend is. Calls will appear where appropriate.

    Coal: KOL
    KOL broke through my green line at which point a "buy" was issued and has since refused to let up. At the time of writing it has settled at the resistance set by a high in late April. Some of its recent bullishness might have something to do with an Australian/Indian coal deal that will be the largest of its kind. It could also mean that my red descending channel was just a temporary trend while it's recent climb now widens the original blue ascending channel. A break above today's point will clarify the picture to this. Listed as "neutral."

    Coffee: JO
    JO has had a good run too recently. I called a "buy" when it broke out from its inner red channel but now finds itself approaching a resistance point that was resistance in the previous cycle. If there are profits I'd take 50% of them and then gradually reduce as it rises to $37.00. It might continue on after pausing and then widening so let's continue wathcing this. 

    Commodities: DBC
    DBC does not look 'happy.' At the time of writing it is clinging for dear life on the border of my proposed ascending channel. My "buy" remains but I need some validation after this ascending channel widens a bit.

    Copper: JJC
    Some money was hopefully made when it broke out of it's current descending channel but I am now listing as a "sell/short" as this inner channel has simply widened. Let's return to whether we buy this again when it gets to $38.75 (there is only one previous tap on the channel limit line so the answer will probably be 'yes,' but as I said we will examine the issue again when it's closer to that price). Sorry for the muddled picture but a clearer one has emerged.

    Corn: CORN
    Comments appear within the image.

    Cotton: BAL
    Commentary appears within the image.

    Crude Oil: USO
    USO is listed as a "sell/short." Clearly international events are not playing the significance initially perceived as demand has been met comfortably. I am going to need to follow this closely too as an apparent inflection point has been reached.

    Gold: GLD
    Presented without comment ("sell/short")

    Lithium: LIT
    My "sell/short" recommendation remains as I feel a sell-off is building up. Daily charts for LIT are not looking positive. 

    Livestock: COW
    Near term weakness still seems evident in the chart but in the medium term I forecast another ascending channel to begin. A larger blue ascending channel may appear once the immediate term volatility resolves itself. Probably best to stay "neutral."

    Natural Gas: UNG
    UNG has firmed nicely on the lower most channel line. The question on my mind for the last two weeks has been, "where from here." One possibility is a proper bounce as we observed in May, a second being a trend taking on the approximate slope of the larger blue channel which would only take us to about $22.50 before declining again, or the third possibility of a complete breakdown. I'm leaning towards the second option, but only weakly.

    Palladium: PALL
    Presented without comment.

    Platinum: PPLT
    Still a weak "sell/short." The declining channel has been widened is all. PPLT will breakout above $149.00 in the medium term and has taken on a morphology similar to GLD and SLV.

    Silver: SLV
    Presented without comment.

    Soy Bean: SOYB
    SOYB's current weak ascending channel is holding. Still a "buy."

    Sugar: SGG
    I listed SGG as a "sell/short" yesterday with my forward looking red arrow and today prices fell 2.23%. Resistance is at $49.00.

    Uranium: URA
    Not much to say except everything looks good so far! My "sell/short" may have been a little early but near term weakness is evident, medium term however looks great!!

    Wheat: WEAT
    Urgh........





    Jakob Richardson © 2014

    Monday, July 28, 2014

    Big Shiny Tunes II: Gold (GLD)

    Returning to my weekly charts I'm annoyed how slowly GLD is correcting. Again, too many speculators in the market are keeping it high and COT reports are showing large commercial short positions. Additionally, as was reviewed by Midas Touch and de Meadville, there is short term weakness in the market and but good long term strength, something I've been going on about for a few weeks. I still expect it to come down and touch somewhere around $122.00 before breaking out (illustrated by my forward looking blue "buy" arrow).




    Jakob Richardson © 2014

    Weekly Commodities Report: Daily Charts

    Commentary will appear tomorrow.

    Agriculture: DBA

    Aluminum: JJU

    Coal: KOL

    Coffee: JO

    Commodities: DBC

    Copper: JJC

    Corn: CORN

    Cotton: BAL

    Crude Oil: USO

    Gold: GLD

    Lithium: LIT

    Livestock: COW

    Natural Gas: UNG

    Palladium: PALL

    Platinum: PPLT

    Silver: SLV

    Soy Bean: SOYB

    Sugar: SGG

    Uranium: URA

    Wheat: WEAT





    Jakob Richardson © 2014