Very interesting thing happening in the gold market at present. If you have been paying attention, Gold has now broken through the low we had in place to ensure we were still in an uptrend. This means we have a left translated cycle in progress which means we have a pattern of lower lows and lower highs.$1668 was the line in the sand for the gold index. This was easily penetrated yesterday. Now we have 2 possibilities at play. We could still be in a d-wave decline or we could be in a b-wave decline. There is a big difference between a D-wave and a B-wave. D-waves are more severe. The next line in the sand in the $1535 level. If we can stay above this in the next few weeks, we will stay in the b-wave, if not, we will be in a d-wave decline, no question. If we get the d-wave, we easily could retrace back to the $1400 level on the gold index. Bad news for some, good news for some, where will you stand?
The smart money is hoping fora d-wave. Why?, because just as spring follows winter, always without exception , a strong A-wave advance always follows a D-wave decline. Now, A-wave advances rarely make new highs but still we could get an advance from the $1400 level all the way back up to the $1900 level. The recent high a few months back on the Gold index was $1928 per ounce. Going from $1400 to $1900 an ounce is still a big move in the order of 26%
With regards to the stock-market, I feel we are going to get very chopping trading in the short term. The problem with going short the market is that it is extremely difficult to spot tops in the market. Nearly impossible. We could have a top in place but because of the volatility, it is very hard to spot. Therefore even though this is against the underlying trend, it is probably safer to spot daily cycle bottoms and go long the market for 3 to 5 day trades. Otherwise if you have had stops in place, you are going to get whipsawed out of position every couple of days and this is not a recipe for successful trading.
Sometimes in some asset classes, it is better to sit in cash and this is what investors need to learn. When you are unsure of a trend in the short term, why take the risk?. For example, if all your funds are now in Gold, and we have a risk of a D-wave, why invest all your money into that asset class?. It may be more prudent to take some money off the table and wait for an intermediate bottom and then re-deploy your funds to go work for you but this time they will be working for you at a better entry price.
