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Weekly Reversal Report 7/19/2015: We Are Still Under Construction! And A Quick Word On GLD and $XAU

From March 1998 Saturday Evening Post

There was no weekly reversal report on the weekend of 7/12/2015, as I traveled to an internet marketing seminar to get a better grasp on reviving this blog as a business, and in particular how to rebuild the audience that this blog once had via survey.  That was accomplished, and that survey construction is under way. I also got the video camera operating, though I will have to learn a way to run video editing through a separate computer to manage the editing, but that is on its way as well. As I think many of you know now, this blog has gone from a very large audience via measurement in alexa.com to being a virtual non-entity. Part of it is the fact that it is no longer a daily blog, but most importantly, I have stalled any expansion of product until I fully understood a way to really know that my old audience wants. That will be forthcoming, as Juan Morales (an internet marketing expert from Panama I met for the first time last weekend), showed me a way to do this. There will be a bit of a social media blitz associated with the survey, but it will NOT initially even require you to identify yourself. It will, in a short but well directed series of questions, tell me kind of trading and investing information I should provide for you. If I were to revert to the daily 4 hour grind of producing pattern signals as I once did, and no one wants them, I would then be wasting my time, and more importantly YOURS. I will continue to use neural nets provided by Ward Systems NeuroShell Day Trader Professional to do it, but I want to do that in a relevant way. If I do that, I think I can reduce the construction time for far UNDER the 57 years it seems like it has taken to revive this thing. I am a trader first, and I am a one-man shop, but this blog can also help me to fund research if I can provide something you need. More on that is coming, and I hope it can get going by the end of August. Stay tuned!

GLD AND XAU

Much has been written about gold (and for purposes of clearer charting, I am going to use the ETF proxy for gold, GLD) and the XAU stock index. With the July 16, 2015 bounce at a previous low on the XAU, many were predicting a modest rally in the shares of gold miners and perhaps, even of the metal itself. When viewed from a larger time frame however, one sees a bit of a different story. Take a look at the monthly chart for XAU and for GLD.

So that you don’t think Ihave completely whacked out on the data, I fully realize that July 2015 is only half over, but in both cases with these indexes, new lows beyond previous solid support have been broken this month. If rates increase, at least in the short run (4 to 6 months), we could indeed see a correction in the XAU to extremes near 32.70 if symmetry holds. If support holds, it needs to hold at the level it is at now near that 1.272 extension of the previous major support, which is 54.20. The price of gold will be influenced by U.S. Federal Reserve rate increases as, when all other things remain the same, the currency will be considered stronger because of that high rate of return on short-term U.S. government securities. The important thing to take away from this is that we are at a very critical inflection point in the price of gold itself. If you look at the GLD monthly chart, there is support at around 99.50, but if that breaks, price symmetry would suggest that 78.30 (equivalent to approximately $783.00/oz) would be the ultimate target low.

Those lows might not hit for 6 months or so, but the point is, there is a very distinct possibility that if these indexes close below the support lows they have just now broken that those targets can be hit. As the days and weeks move forward, I will run the models on GLD and XAU. I will also take a look at individual names in that index as they arise.

We are operating in a more complex world economy than 40 years ago when the USA was almost the only real game in town. With US debt skyrocketing, economic slowdown appearing more evident on a global basis, and China and the Eurozone in their own separate monetary policy and political quandaries, we are likely to see volatility and even a few things we might not have contemplated as being possible before. The important thing to take away is that if key supports do not hold, the Fibonacci price patterns in that same 3 to 6 month period ahead favor the bears.  I will do my best to put some statistics around that in the near future.

In any event, I am hoping to learn enough about video production and editing this week, as this afternoon I did get the camera charged, the lights all coordinated with uninterruptible power supplies and surge protection put into place. Now the real work begins.

I will now accept the full challenge of bringing this blog back to its once former glory to the best of my ability. It will be a difficult climb, but I think it will be worth the effort, and I am confident that you will be too. Thanks once again for supporting my blog.

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