DXY, GLD and GDX

August and September tend to be the weaker months for stocks. August 2015 also seems recently in memory, and while January 2016 drop was about the same, the August decline was sharper, with most damage from highs occurring in just 5 trading days. 

But with everyone anticipating seasonal weakness, I don't think this year will be as severe. This may or may not be correct, and at some point stocks will have another drop of 5% or more, but my guess is that August and September are more stable for stocks. A correction could be in time, not price, with a choppy range bound period. 

But $DXY is falling off a cliff and GLD is perking up, and so in addition to oil which is suddenly showing long term strength for the first time in months, I am wondering about a $DXY melt down and GLD melt up as the next near term best move. Let's look at all 3 charts. DXY first.

DXY Q
First support not until 91 area with 38% Fib, 20MA and 100MA.

30 1 DXY Q.png

DXY M
38% fib from higher anchor is nearly 92. Rising 50MA is currently 91.55 and will be higher as August opens. If that goes, however, 88 area with monthly 200MA and 50% beckons. RSI sliding below 50 also points to more chance of reaching 30 area. 

30 2 DXY M.png

DXY W
Red lines at various weekly close and price lows of past 2 years. Rising W200MA currently 92.13 seems like it will test. 

30 3 DXY W.png

DXY W pivots (long term)
Possible support at 2HS1 92.79, and if that goes then 90 is next long term support.
 

DXY D
Daily chart with pivots and MAs. Arrows show bounce attempts or lack thereof. Blue shows 5 day bounce to JunP. That was the best! Otherwise red arrows show where support crumbled without any attempt at bounce at all! 

30 5 DXY D.png

Bottom line - DXY while weekly and daily RSIs are fully oversold, this is in meltdown mode. Currency trends tend to persist more than stocks and with every Trump antic selling seems to increase. Watching 2HS1 and weekly 200MA but the way it is moving $DXY could semi-crash through 2015-16 lows. This would set the stage for major melt up in GLD!

GLD Q
Falling 20MA resistance for 3 of last 5 bars, but note last bar weak selling and currently lifting from rising 10MA. If that 20MA clears there is a lot of room to upside.

GLD M
Congestion for the last several months between falling M50 and rising M20 seems to be resolving to upside.
 

30 7 GLD M.png

GLD W
From below all weekly MAs just 3 weeks ago to above all. 6th time since 2016 trying to clear weekly 200MA, and 4th time this year. It could fail again but chances are just as good we see upper weekly BB or higher. 

30 8 GLD W.png

GLD W
2HR1 to YR1 target 124-126 is not unreasonable! YP and 2HP just had liftoff so why not? 

GLD D
Above all pivots and likely to open above the AugP. Already above 61% Fib. MACD cross 7/18 did not correspond with pivot or MA buy, but above Q3P on 7/21. But here late and RSI getting up there but I am thinking stage set here for melt up above the prior highs. Also note huge buying from D400 thick brown ie monthly 20MA (and yet monthly 20MA still looks like resistance on that timeframe). 7/11 20% portfolio long nice pick if i do say so, but if this is going higher and suddenly GLD above all pivots with USA mains below AugPs (could happen). there is room to increase. 

30 10 GLD D.png

GDX
Has been weaker than GLD technically for much of the year, with 3 breaks of YP although no downside follow through. GLD had just 1 break. Also, GLD well above D200MA 3 separate times and GDX barely above and even still touching on Friday 7/28. GDX has not met condition of above all pivots & MAs for much of this year - however, any higher and it will do it!

30 11 GDX D.png

On gold

There has been quite a lot of chatter about bitcoin recently and it is making it quite obvious how useless gold is as a currency in comparison. Hard to store, hard to carry and very few places can make change for it. Like so many elements of society, technology is replacing it with a different digital version - paper money, books, photos, the list goes on and on and on. 

Here is daily bitcoin/USD vs GLD in red. I purposely picked the start of 2016, because the few months that GLD outperformed BTCUSD was one of the best rallies in GLD in years. And remember BTC would look even better against other currencies like EUR and especially CNY/CNH.

GLD (not posting charts)
Quarterly chart - below 10MA and falling 20MA
Monthly chart - below 10MA, 20MA, 50MA, 100MA and not oversold
Weekly chart - below 10MA, 20MA, 50MA, 100MA, 200MA, recovering from oversold
Daily chart - above 10 and 20MA, below all others

So the recent move is most likely a bounce in a downtrend. If GLD stays under its YP at 114.41, then if The Pivotal Promise delivers we will see 97.68. That is a nice risk reward with it currently at 111.75 and could get even better if GLD is able to rally further. 

GLD and GDX

These got whacked today. Too bad, I thought stocks may consolidate this week but didn't think that would correspond with a big drop in GLD. FOMC chatter. Anyway, yesterday GLD was comfortably above YR1 and today gapped under the level. If you had full positions then the decision here is to reduce taking gain today or use the MarP as a rough stop area and see what happens.

The other thing to factor in is the DXY yearly pivot; see the recent currency post. Point being DXY above YP would be additional pressure on GLD and GDX.

GLD W chart 1 week up bar above levels, 2 weeks red bars, this one looking like break although 2.5 more trading days left before close. 

And there is the MarP smaller orange dots which still can be support. 

GDX W looked like it might clear the YR1, but fading under this week. 

GDX yesterday looked fine above YR1, today down but not so bad. Well above the MarP. 

GLD and GDX

Search on GLD tag or look through featured posts and you'll see I started sounding quite bullish on gold in late January, and even suggested an add if it traded above its YP (which happened in early Feb). In the last weekly strategy sum, I mentioned to keep an eye on the YR1s. Of course GDX is an extra juicy way to play gold although the correlations don't always line up exactly. 

Now, whether this is the start of another epic run like the 2000s into 2011 remains to be seen. If you got in early then easier to give those positions some room. Gains on the adds in early February are what are at stake, if still holding those. 

GLD and GDX have held up quite well despite a big stock rally, so if stocks fail at big yearly levels (TBD) then perhaps they will get another run.

Sum
I don't have a firm conclusion at this point. GLD exceeded its YR1 and just now dropping below. GDX has had 2 days of high volume selling exactly from its YR1, but so far holding up fairly well. But both remain above all pivots and have nice upward sloping D20 and D50 MAs. If GLD stays above its YR1 then it is a much easier long term hold. Even though GDX has had selling from that level, if GLD stays firm then that should help GDX as well and then I would think to hold above all pivots. 

GLD W would be better to hold the YR1 as support, but right now breaking, somewhat bearish especially on weekly close. Of course all could change after 2:00 today, but this is what it looks like now. 

Here's the daily chart so that still quite healthy above all pivots; GLD did far better than TLT maintaining gains through the stock rebound. You could make a case for holding above the monthly pivot and if that lasts, then seeing how the Q2 and AprPs look.

And here's the daily chart with all levels. You can see the attempt to jump above the YR1 has faded and now maybe turning into resistance. Keep in mind that virtually all asset classes had major turns on yearly levels already. 

Here's a standard daily chart chart with simple moving averages (10, 20, 50, 200) and Bollinger bands. RSI is about in buy area near 50 and there is both lower BB and then eventually the D50 can be support soon. So I am not saying sell here; just watching what happens at the YR1s and then deciding whether best to reduce position or hold. 

GDX was structurally weaker so far has stopped right on its YR1 / 1HR1 combo. That said, maintaining most gains so far. 

Daily view with all levels. Large high volume selling bar at the YR1 / 1HR1 combo on 3/8 and again on 3/14. That said, still above all pivots. This is why it is often a good tactic to take some profits on a big level, and hold other positions as long as it remains above all pivots and/or above rising MAs lines. 

Again on this view GDX just doesn't look too bad yet, only 1 slight close below a D20MA.

TLT and GLD update

If following The Pivotal Perspective you avoided a lot of the damage in stocks, started buying back 1 day off the low; and made great gains in the safe havens. Since these were the only things in the universe above pivots they were screaming buys, and then even adds as they cleared YPs in later January (for TLT) and early February (for GLD).

Recently I was shuffling the add portions expecting a safe haven drop if stocks bounced further, which was right for TLT and not for GLD. Let's take a look.

Wait, you mean those red lines at the top were there before the move? YES. From the open on 1/4/2016 yearly resistance levels like all yearly pivots are fixed and in play. So 1HR2 at the tippy top, also resistance at YR1 red crosses; so now the big issue is if 1HR1 lower red dots holds as support especially on a weekly close. That level is 127.87.

Here's TLT D with med term levels. You can see TLT below the small orange dot from early March, that is the March pivot. TLT has been mostly above the monthly pivot (except a few days) from December. Maybe we will see the S1 area 126.33 which is just a bit lower than the 1HS1.

So, if in from early January I think at this point hold portion above this area, 126.33-127.87. Any recent reduction below the MarP could be put back on if stocks indexes fail their major pivot area and we want to rotate back to more defensive. But if stocks clear their YPs and hold as support, we will be reducing safe havens further.


GLD also lifted from 1HP then jumped above YP and was at its YR1 / 1HR2 at the next bar. 3 weeks pause under YR1 but no red yet - that's bullish. If YR1 can act as support then the door opens to 124 1HR3 and maybe YR2 near 134.

Here's GLD D with medium term levels. Unlike TLT, it is still well above MarP support and much easier to hold above that. 

Lastly GLD D with all levels; there was some selling from YR1 but it has kept coming back. So far any reduction an error but we can see what happens. 

TLT and GLD update

The Pivotal Perspective has been all over the safe haven rallies because it was crystal clear using this method that both were making positive moves from important levels as stocks rolled over. Summary posts are here for TLT and here for GLD. 

Although I did say taking some gains from the more recent adds (TLT adds 1/25-28, then GLD adds 2/4-5) I encouraged to put them back on per bearish playbook. So we are in management phase of full positions on these. Now what?

TLT weekly chart with long term levels shows clear lift above 1HP, clear big high volume jumpabove YP, which acted as support from there; pause at 1HR1, tag of 1HR2 / YR1 area but maintaining pretty well. So the big issue is whether that's it for the year or if TLT will clear the YR1 and go for the 2015 highs or maybe higher. A simple long term strategy could be to hold above the 1HR1 near 128 that can act as support.

I don't like to see 2 smaller blue bars in an uptrend especially with wicks, but let's see how the bar closes and how stock indexes react to their FebPs from here. 

Here's the daily chart with medium term levels. You can see the launch above the QP and JanP, then Q1R1 turned into support, Q1R2 turned into support, but still struggling at Q1R3. OK, maybe Q1R2 will continue to hold as support. Also, in a few trading days, we'll have the March pivot which will probably act as support. Per my bias I think this is a full hold but it will be much easier if stocks indexes reject their FebPs. 

GLD was making an equally clear move a few weeks behind TLT. GLD did try to jump above HP & YP in 2015, but the difference at the time was that stock indexes were still above their YPs while this time they had crumbled. Knowing that is why I was really thinking the move was for real, in addition to seeing DXY weakness at the time. 

GLD too has quickly reached its YR1 / 1HR1 combo. So again we have the same issue - is that it for the year? Or will those levels clear and hold as support? So far just a pause, no red and looking like it could clear - and would be an easy hold for higher targets. 

Here's GLD D with medium term levels. Similar jump above Q1P, and was already above JanP at the time. No damage from Q1R1, a jump above that. Now it is consolidating under Q1R2 but not too much damage. 1 day rejection met with buying today. So I also think this is full hold and let's use March levels to held guide the position as well as keeping an eye on the big YR1 / 1HR1 combo. 

If you added GDX for kick above its YP, that is doing fine and looks like it should test its YR1 / 1HR1 combo as well with even a Q1R3 nearby all 20.20 to 20.42.

4:25 EST update.

A much different look at the close on each. TLT small blue bar with rejection from a monthly resistance level.

GLD especially poked above but did not close above YR1, potentially bearish if any lower tomorrow.

Weekly strategy update

Some charts on vehicles that I mentioned in the last weekly strategy report. Conclusions are obvious - USA reclaiming FebPs on SPY & DIA which is a mild positive. So my view of a Pivotal Portfolio is shifting a bit more bullish here. But a reclaim of a monthly pivot while being below the others is not the same as position long on an asset above all pivots (the only examples that I track this year have been TLT, GLD, GDX and BTCUSD). 

If you have been following along, there is  a speculative INDU / DIA position from 2/12 that is an easy hold and/or possible add (or SPY), and some smaller combo of the suggested emerging market vehicles RSX, EWZ, and EEM from 2/16 or what is left if you took some quick gains last week.

TLT is not getting hit too hard, but right now GLD looks more like rejection from YR1 area which, if appears this way into the close, I think is a profit taking signal on any add from 2/4-5. In addition, DXY has just held its YP and even reclaiming its 1HP which further pressures GLD.

SPY jumping above the FebP.

GC continuous contract making the rejection look clear (based on first hour, real judgment at the close), and this is really the 2nd time we are seeing selling from this YR1 area. 

Sure enough vehicles that led on the recovery of the FebPs are getting more pop on the bounce. RSX, EWZ and EEM here. Watch FebR1 on EWZ approaching soon.

Lastly BTCUSD had nice pop and already at the FebR1. Let's give this some time. So far pause no rejection despite DXY strength. If people want to get money out of China, a stable BTCUSD is definitely a way. So maybe there is another massive move on this. 

Hold gold?

The Pivotal Perspective was all over the rally in gold. From my view you didn't have to think about it too much - an asset class that was below all pivots especially long term levels for much of the last few years was suddenly above 3/4 levels and bells were ringing. Here is a summary review post with links to the originals.

Also on 2/1: "If it rallies above the YP with a look of support, then add." Even if you bought the close of a massive rally bar, you were in at 112.32, although if buying that day above the YP then could have been as low as 109.75. 

So like TLT, the question here is one of management. The original buys 1/25-29 are very easy to hold, but what about the add? As of last week GLD was above its YR1 - OK very overbought RSI, but not rejected from the pivot level. Now there is a gap down that could be rejection. Exits are trickier than entries but I think there are a couple reasons to hold it. 

This move has been the best jump above long term levels since July 2012 and that was a high test attempt after a multi-year tremendous run. There was one attempt in 2014 that barely cleared the level and immediately faded; then another early rally in 2015 that lasted 3 weeks above the YP after tagging the 1HR1 for the high of the year. So this time *is different* compared to the last 2 years. 

Long term moving averages like the monthly 20MA and daily 400MA point to a similar conclusion (charts not shown).

Granted, it would be easier if the $US fell back under its YP at 96.48. That said, faith in central banks is not the same as last year. Their maneuvers, instead of looking like backstopping the market, are growing more suspect. This could increase the support for gold. Last, Goldman Sachs has been 5 for 6 on its top trades of 2016 and they are calling for a short today. So maybe that is a hold :)

On the daily view, you can see the drop under YR1 thick red crosses 118.98, but let's look at levels that could act as support. FebR3 is at 114.53 which would also be a possible gap support. Even though FebR3 is a resistance level, it has convincingly cleared and the nearest medium term level that might be support. 

Zooming into short term levels, GLD has been entirely above its weekly pivot since 1/20  to today - quite a run. One week holding the weekly S1 at 114 area would not be too bad. Let's see what happens. 




Gold update

Prior gold posts: 
1/27
"With 3 trading days left in the week, it is possible that gold is giving the best looking long term buy bar in about a year. Very simple: if the move is for real then gold stays above the 1HP and will then clear the YP." "Above that [1HP/Q1P combo] is bullish because now a market that was very beat up is suddenly above 3 pivots. Then the all important YP is not far and may test."

2/1
"Last week I noted on the blog that GLD might be putting one of the best weekly bars in quite some time." "Still, the [2/1] open at 107.54 is just a little over 2% above the 1HP which is not bad risk/reward for a long term position. If breaks on a weekly close then the position is closed. If it rallies above the YP with a look of support, then add."

2/4
"So the big question here is whether this is normal pullback to support on DXY and another failed breakout attempt in gold, or whether we are seeing a real long term trend change. I don't know, but I do know where to watch to answer this question. DXY YP 96.48 and GC G6 YP 1137 (just continue to update on rollovers)."

Now let's look and see what happened. GLD W below with long term pivots only. Clear lift above the 1HP the 1/25 week was the first tell. Active traders were buying there, long term investors looking at charts over the weekend could have been taking partial positions on the 2/1 open. 

Here's the daily chart. Volume was picking up on the advance to the YP, a good sign. No rejection at all, next day above, then launch. Per notes above, full position. I think let this one run for a while :)

Dollar and gold

I've written about gold here on 1/27 and followed up here on 2/1. I haven't talked about the currencies, but pivots work on these too. First, something very interesting has happened with the dollar just in the last few days. Here are the charts: first weekly with long term pivots (yearly & half-year) only, then the daily with the usual view of long term and medium term (quarterly & monthly) as well. 

DXY the dollar index has been entirely above its yearly pivot from mid August 2014, and in fact is the first touch of the level since then. During this time it has been mostly above its half year pivots as well, with a few breaks in 2015 2H that did recover and rally to 2HR1 exact on the highs. So from The Pivotal Perspective, this test of the YP is really important. Above the YP and we can think YR1 at 102.72; below and start thinking YS1 at 92.45.

Here's the daily view. The selling started with a rejection of the FebP. A break of the monthly pivot has happened several times last year, but the difference here is the very next day it broke through Q1P without any attempt to hold, and the 1HP didn't bounce either. Now the YP as I type is caving without any try. Next support is a long way down. 

Meanwhile, gold is following through on recent advances and doing the opposite, clearing its yearly pivot. Using the continuous contract below, you can see GC mostly below both the YP and HP since early 2013. There were a few breakout attempts that quickly failed. I'll address these soon in another post. 

Here's the daily view of the current G6 contract. Unlike the end of 2015, it has been above its monthly pivot in both January and February. Then it cleared the 1HP / Q1P combo. That looked like a failure but came back enthusiastically and cleared again. After a brief pause it has been off to the races. In pivots a lot of the time a second move is definitive, and in this case at the end of a long downtrend it took three tries to really clear and get moving up. 

So the big question here is whether this is normal pullback to support on DXY and another failed breakout attempt in gold, or whether we are seeing a real long term trend change. I don't know, but I do know where to watch to answer this question. DXY YP 96.48 and GC G6 YP 1137 (just continue to update on rollovers). 

Gold follow up

Last week I noted on the blog that GLD might be putting one of the best weekly bars in quite some time. The weekly bar doesn't become official until close, because theoretically it could have jumped above a level and closed well under it keeping the downtrend intact. But that didn't happen, so let's check it out again.

If you are really interested in this idea, first I suggest checking out that prior post and check how $GLD looks in a strong uptrend like 2009-2011. It jumps above major pivots and or lifts from them as support, then runs. That isn't happening quite yet because it is still below the all important YP (orange crosses).

But it did clear the 1HP (orange dots) and that is potentially a big deal, because it has been below major pivots for so long. So what can happen from here? 

1. Most bullish, continue to rally or pause just slightly at the YP, then rally from there.
2. Some bullish, rally up to YP, drop but still hold the HP, then in more time clear the YP.
3. Sideways, stay congested between the two major pivots for a while
4. Some bearish, give up the gains and break under the 1HP again.
5. Most bearish, quickly return to status of below all pivots.

Now let's turn to the daily chart for more information with the medium term quarterly and monthly pivots turned on as well.

Ah ha! Now we see the current FebP at 105.78. This means 3 pivots are in the 105 area: 1HP 105.22, Q1P also 105.22 and the Feb P. Easy hold above that support cluster at 105. Next would be to watch reaction at resistance at the YP. People putting money in the market might also want to check the futures, both GC1 continuous and current contracts, as occasionally the futures will often confirm or question a setup on the ETF GLD.

A long term investment strategy is to be partially long when an asset is above one of two long term pivots, fully long or leveraged when above both, and out, short or hedged when below both pivots measured from weekly close. On this basis, $GLD put in a partial buy as of 1/29 close. While a fund could do their transactions right there, an individual wanting to check charts once weekly on the weekend would likely be buying on the open today which due to the gap is higher than Friday. Still, the open at 107.54 is just a little over 2% above the 1HP which is not bad risk/reward for a long term position. If breaks on a weekly close then the position is closed. If it rallies above the YP with a look of support, then add. 

 

 

Gold

As most market observers know, gold put in a phenomenal rally from 2002 to 2011. GC1 futures data shows about a 650% rally low to high. But since then a lot has been given back, about 50%.  In this ever more digital age, will gold ever regain its luster? (Sorry.) Using pivots we don't have to guess. Let's look at the long term levels when gold was in a decent uptrend versus the last few years. 

To make it simple I am showing only the YP (yearly pivot) and HPs (half-year pivots) without any support or resistance lines on the GLD weekly chart. As you can see 2009 to 2011 was all above pivots with each touch a perfect buy chance or hold. 

Then something changed in 2012 and that was a break of both the HP and YP. It was able to recover, but then put in a lower high. The start of 2013 showed trouble from the start with a clear rejection of both the 1HP and YP. This is often (not always) a bearish sign in the market, and sure enough 2013 had a big drop. 

Even if you thought bankers were destroying currency and wanted to own gold, pivots showed to be less allocated or better out of any asset that is below all pivots. If you restricted your buying attempts to weeks above a long term pivot, then 2013 in and out, 2014 and 2015 a few tries that would not have cost much.

There hasn't been any buy signal at all in more than a year, as GLD has been completely below long term pivots from February 2015 to recently. 

GLD did close a bit above 1HP the first week of the year, but not with a look of support. Also, the futures failed so given the trend there were two reasons to wait. With 3 trading days left in the week, it is possible that gold is giving the best looking long term buy bar in about a year. 

Very simple: if the move is for real then gold stays above the 1HP and will then clear the YP. If the YP smacks it down and it breaks the 1HP, then the trend is still down. It could stay congested between the YP  and HP for a while, although that is a tight range which will break one way or the other at some point. 

Now let's zoom into the daily chart with all pivots. Look at at the October bounce. If you bought 10/2 , the first day above a quarterly pivot in months, then you had a chance for gain or the worst case small loss when exiting early November. Note I am not even qualifying this as a long term buy, because GLD was not above a half year or yearly level at the time. 

GLD has been above the JanP after being below monthly pivots for 2 months straight, and now this is the 2nd time above the 1HP / Q1P combo (hard to see because same level) at 105.22. Above that is bullish because now a market that was very beat up is suddenly above 3 pivots. Then the all important YP is not far and may test.