In an election, it does not matter if voter turnout is high or low, the outcome is
determined by the actual votes cast. The same holds true for the markets. Only those who make an actual buy or sell decision determine the outcome of the market trend. The market “voters” turn up in charts, recorded in the price range, close, and volume. Collectively, a “story” unfolds, and it usually is an accurate one as it does not include any opinions. Opinions do not matter. Articles written about fundamentals, pundit declarations, etc., all fall under the category of opinions. The market is the best source for information, and that is a fact.
So writes Michael Noonan (edgetraderplus.com) in edited excerpts from his original article* entitled Gold And Silver – Only Votes Cast In Elections Count, Same For Markets.
[The following article is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Noonan goes on to say in further edited (and in some instances paraphrased) excerpts:
While…fundamentals (usually) ultimately drive all markets, there is a lag or lead time that does not always coincide with current market behavior. Currently the fundamentals do not apply in the gold and silver markets. Instead it is the faux (supply) paper market, which cannot even justify its existence anymore, that has been the driving force.
What makes a proper read of price and volume, over time, in the markets so cogent is that they reflect reality. They are factual records of actual transactions from those who have chosen to translate their beliefs/opinions, etc., into a firm decision that reflects market intent.
The gold and silver markets defy common sense given the known factors about:
- the demand for PMs,
- the paucity of supply,
- banks reneging on delivering physical,
- central bank stocks dropping like a gold bar, and more,
which is why reading charts has been more accurate as a barometer for the past few years. It is what is not known, both widely and by the public that has succeeded in keeping price suppressed.
It speaks to the dominance of the NWO [New World Order] and their financial arms of the central banks that they have been able to keep a lid on any ability of a sustained rally of significance for so many Quarters. We will never actually know how they wield their power, always a highly kept secret, but at some point, the charts will show a tipping point has been reached. (This was somewhat covered in Contrary To Popular Belief, Paper Is The Bellwether For Near- Term Precious Metals, click on http://bit.ly/1bVwYtL, first half of Commentary)
With that, we turn to a read of the market’s intent, as told by those who have actually “voted.” A note for the chart-challenged. While price activity is discussed in detail, it is presented in a logical manner that does not require a charting background. Follow the explanations and this technical “stuff” makes sense. It is the texture of developing market activity and understanding it.
W. D. Gann was famous for relating past market behavior, both in time and price, to then current price activity. The power of a previous resting point, just prior to a major rally, cannot be underestimated. [See Goldrunner’s fractal analysis vs. the 70s here] There is an example of this in the weekly gold chart below.
There are two concurrent factors that alerts one to the possibility of a stopping point in the current decline:
- The first is the fact that 700 was the last swing low of significance prior to the almost uncorrected rally to 1900. The difference, 1200, divided in half is 600. Add that to the 700 swing low and a half-way retracement between the two major swing points is 1300. (A half-way retracement is a general measure of the strength of a market’s trend. In an up trend, price most often holds at least a half-way correction, often higher the stronger the trend. If price goes through the 50% point, but not that much or for very long, then it counts as “close enough,” as in playing horseshoes. Almost everyone knows of or about the likely manipulation of the precious metals markets, so for price to exceed the half-way mark, as gold has, is not a surprise because natural supply/demand forces have been purposefully distorted. There are comments to that effect on the chart.)
- The other, perhaps more pertinent issue, is where price has stopped, at least for now. To the left, you see a high late in 2009, a decline, a higher rally into mid-2010, then a smaller retest that held around the swing high of 2009. The current developing market activity of the past few months has been resonating around the price area. This concept was more loosely covered here on the first chart (monthly gold) chart.
Most often there are no coincidences in the markets. Price behavior at some level happens for a reason, and when a discovery of past-related-to-present can be found, it leads to a market edge. Having an edge in any market reduces risk exposure and increases profitable outcome potential. That there has been a sideways move in price over several weeks, 1. at a previous support/resistance area, and 2. at a half-way retracement area may be offering an edge.
Gold – Weekly Chart
The thin line connecting the last swing low-to-high- to-low, at the bottom of the chart is giving some first-hand factual information about how the market participants, those who have “voted” with a buy or sell commitment, are viewing the current price level of gold.
We covered the previous absorption development of mid-July, prior to the 22 July strong, upside breakout, [See second chart here in a previous article]. You can see, since that surprise rally, price has been declining in a labored fashion. This, too, is a message from the market. Where are the sellers? Why has it been a struggle to get price lower when it fell in waterfall fashion on so many previous occasions?
What makes the above yet more interesting is the fact that the labored retracement low stopped just above a 50% retracement. A correction of a rally that holds above a half-way point is usually measured only in up trending markets. This is one in decline. Why would price show relative strength in a weak environment?
Look at the string of consecutive red volume bars indicating price closed below the day before. All that volume, (effort by sellers), did not yield any results. In fact, the last bar of that 11 day decline was a small range that closed on the high and above the previous day. It tells us buyers were taking control away from sellers. A rally did ensue. That beings us to Friday’s bar.
Last Friday’s (In)action a Red Flag
The range for Friday was small, the smallest in many trading days, and it occurred at the high of this rally. A small bar at the high of a rally reflects a lack of demand. Buyers were unable to push price higher, perhaps spent from previous effort. It opens the door for sellers to step in and push price lower. So far, for as weak as demand was, sellers were a no-show…[and this is] viewed as a red flag. This is not a market trending up that allows for the benefit of the doubt for buyers. Caution seems warranted until proven otherwise.
1350 is the first important area of resistance. How price approaches and reacts to that level will give more market insight into the developing potential strength of gold, or not. If price reacts poorly, expect more sideways, possibly lower market activity.
Silver – Weekly Chart
What was explained on the gold weekly chart applies equally to silver. Of late, silver has shown better relative strength over gold. The level of where support shows in silver is stronger than gold, but the overall chart pattern for gold is stronger than that of silver.
New lows remain a possibility, but the probability of that event grows smaller. As noted on the chart, this is silver’s best close in 8 weeks, telling us buyers successively absorbed sellers over that time span.
Silver – Daily Chart
You can see how silver has held better, relative to gold. Where gold more than retraced the low of the 22 July rally, at no time was there a close under silver’s low from that same date. Note also the strongest volume bars are green, indicating a close above the previous day. It should be the opposite in a weak market.
If this has been absorption, there is enough built-up buying to take silver above 22. It may not be easy or in just a day or two, but price can rally and go on to challenge the next higher, and stronger resistance at 26.
Silver, like gold, is not out of the down trend, but there are some positive signs of change developing…
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
Other Recent Noonan Articles:
August 1, 2013 2 Comments
…Fiats have an unbroken track record of failing throughout all of history. Gold also has an unbroken track record of being a store of value for over 5,000 years. Yes, there have been hiccups along the way, and we are in one now. It is what it is, but what it is is also an incredible buying opportunity at “fire sale” prices….[That being said,] a look at the charts of the paper-tracked PM market [beg the question] … “Where’s the beef?” Where is the substance of anything? We see none in the charts. Take a look. Words: 610; Charts :4 Read More »
Technical analysis is a measure different from fundamental analysis…and we qualifying our approach with a specialized subset of technical analysis. How so? We read price and volume behavior, over time, in the form of developing market activity. It is what one sees on a chart, price ranges, close locations, volume, time factor[s], but no more. Below are charts that suggest that the weakness in silver may be coming to an end, sooner now rather than later, but that for now, it is what it is – and what is, is reality.
July 27, 2013 2 Comments
The window of opportunity to buy physical gold and silver continues to narrow. Like the housing market top was known to be coming, when it came, those who waited too long regretted it. When the bottom for the physical PMs is known as a certainty, those who waited for a “better price” may also regret that decision. It is all about choice. Read More »
July 20, 2013 3 Comments
You will read more and more articles touting how gold and silver have bottomed. They have not, at least according to price behavior as determined by actual buyers and sellers in the market. Read More »
Charts speak the loudest…and they never lie…[because they are] the true record of all buy and sell decisions executed, coming from the most informed to the least informed. Most of the problems lie with those who form an opinion, and how they choose to impose it onto what any given chart “says.” My understanding of what the quarterly monthly, weekly and daily charts are conveying about the price action of silver is, simply,] “Silver stackers, these lower prices are a gift you should keep on taking. Stay tuned.” Read More »
June 21, 2013 1 Comment
Not one Precious Metals guru has gotten anything right in the last 18 months. All have been calling for considerably higher prices. Over the past several months none called for sub-$1,300 gold and sub-$20 silver. Crystal balls do not work and never have. When it comes to markets, anything can happen [but the charts convey that] there is no apparent ending action suggesting a selling climax or even a cause for a reaction rally. Take a look. Read More »
Charts provide certainty, for they are absolute and the final word at the end of day, week, month, etc. There can be no dispute over a bar’s high, low and close, plus the volume, for whatever the time period under consideration. There is a high degree of logic within them and, while there can be differences of opinion over their interpretation, establishing a fixed set of parameters can mitigate most any potential dispute. So just what are the charts saying about the current trend in gold and silver? Let’s take a look. Read More »
Never go against the market. It does not matter what your beliefs are…It does not matter what the fundamentals are either. [What matters] is the TREND! Once you know the trend is up you need a game plan on how to participate from the buy side and when the trend is down, a plan ion how to participate from the short side. If there is no trend, then the odds are not favorable for either game plan.[So exactly what are the charts saying about the trend in gold and silver these days? Read on!] Read More »
You cannot control what others do, especially those in power. You can control what you do. Just keep buying, regardless of price, because if/when the price of gold and silver were to go lower, you may not be able to buy. If/when the price of gold and silver were to go higher, it may be at such an accelerated rate that any price in the past few years seem cheap. Words: 550 Read More »