Thursday, February 10, 2011

1-2-3 REVERSAL

While I don't think gold is likely to head back down and make a lower low I'm going to lay out a simple strategy to protect against getting caught in case it does.

It appears likely that we may see our first reaction against the new uptrend. This is the #2 test of the lows in a 1-2-3 reversal.



If gold then reverses and breaks through the pivot it will complete the 1-2-3 reversal and it will have begun a pattern of higher highs and higher lows.


That would be the signal that the down trend has been broken and one could add in full positions or leverage (don't get carried away) as they see fit.

The downside is of course one will lose some profit potential waiting for confirmation and if gold reverses the early morning weakness you will just have to immediately buy back.


The action would be to lock in some profits this morning and then wait for the pattern of higher highs and higher lows to complete before putting positions back on.

16 comments:

  1. Another chart with another outcome :-)
    Just 4 days ago your chart looked different.

    Well, perhaps I shall remind you that Gold and Silver correct together with S&P500. If you would draw some trend lines in monthly chart of Silver you might notice something.

    Hope your investment does not change as often as your views

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  2. "While I don't think gold is likely to head back down and make a lower low I'm going to lay out a simple strategy to protect against getting caught in case it does."

    Sheez just plain English. Not really that hard to understand.

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  3. Mr. Doubt,
    Gary show's us possible ways of development in the market.
    There is not only one way to go,so we should be ready for any case that may hapen.

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  4. Toby, if what's happening in Egypt presently continues, those who claim that this revolt is like the fall of the Berlin wall c/b right. How did Gold & Silver perform back then, I wasn't privy to those statistics back then,

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  5. Gary, Jolting how your view can change. I get it, you need to turn on dime. However , the rest of us mortals can feel a bit dazed and confused. It's like Sunday's webinar was so bullish, today so cognisant of potential bear. Did not hear that Sunday.

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  6. Since I am not a subscriber at the present time, I am glad to see this timely post. I just sold my small core position in silver thinking to buy it back and add onto it with just this type of set-up.
    Thanks again Gary for sharing your knowledge with us non-subs out here. Always good to hear what you have to say.

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  7. Don't get me wrong I still think we have one more leg up in this C-wave.
    But I don't like what I saw today especially the selling pressure in the mining stocks, especially with gold only down $4 from the recent high.

    Miners should not be selling that hard with gold only down $4.

    This definitely opens the door for possibly one more leg down in gold. I don't expect it would be terribly damaging. Maybe just to $1290ish.

    But I still don't want to ride that back down if it can be avoided. So I want to see the poor action today corrected before I go further. Once the HUI makes a higher high we will then have a new pattern of higher highs and higher lows.

    That's what I want to see. Either that or gold pushes down into one more lower low at which point I would enter with leverage.

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  8. Ivan,
    changing views every few days or being bearish too early without a clear signal is limiting the upside potential of any investment.
    December gave a clear signal for Precious Metals to get out and there is no signal to buy at all.

    If one thinks that S&P500 will go down and is showing a chart with a potential June low, how would that effect commodity stocks?

    To assume that Gold or SIlver or Precious Metal stocks go up and offer 2 options up or down is plain confusion.

    At current levels there are no buy signals and drawing a chart with lines of theoretical outcome has no basics. The right side of any chart is blank !

    If Gary would consider stepping aside from his cycle views and have a closer look at the tape and signals, he would notice that the MACD is showing weakness below zero. The weekly chart has not turned slightly positive at all.

    The only reason Gold may rise if S&P500 would rise further. A decline in S&P500 will not initiate any rally in Gold or Silver. Rather a sudden sell off.

    Gary assumes Gold will not make a lower low. Gold at 1360 level and only 50 USD ( 4% ) away from that low makes the assumption doubtful.

    It would take only a drop of 3-4% in S&P500 to let Gold fall below last low. Do your math ;-)

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  9. G J
    if the webinar was so bullish on Sunday and you would have entered on Monday, your PM Stocks are down today.
    After few days of selling in PM stocks all of a sudden the view is changing and doubtful by Gary himself it seems.
    To enter any medium term trade or long term trade would require a bullish set up in weekly and monthly chart. Both parameters are not given.

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  10. Why would one enter on Monday. We entered back on the 31st when the swing low was formed.

    There is a lot more to this than just listening to a weekend interview and then deciding to jump in with no other information than that.

    I locked up some decent profits today and now I'm waiting to see how this plays out.

    The miners are not acting right and look like they might be breaking down out of a bear flag. If that's the case then gold likely has one more leg down before this intermediate decline is completely finished.

    So for now I'm waiting with just a small core position until I either see the HUI recover and make a higher high or gold drops down into one last leg down.

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  11. Gary,
    does your subscription includes your transparent entering and exiting of trades?

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  12. Of course. I always post any trades I make in real time.

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  13. Stop causing trouble Mr. Doubt! I'm here because Toby aka Gary's been right on a whole heck of a lot here. Although he does not believe too much in theory that precious metals are manipulated, that's ok. He's a gold bull through and through and you best listen to him. As far as I go, I'm going to say that the lows are in for the year here and I think Toby is on the right track here with this 1 2 3 reversal thing a magiger here. Now, we're all gonna stay sarcastically long on everything gold and keep watching this movie here. So sit down, get your popcorn ready, and hold onto your gold & silver very, very tightly.

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  14. @Gary
    that is great news being transparent.

    @Noah
    being objective does not mean trouble.
    You do your trades and I do mine. That easy.

    I am mostly out of precious metal sector since December and await a better entry at lower prices.

    If you have noticed the other day, I turned bearish at 1320 in S&P500 unlike others did back in October.

    Enjoy your profitable trades when we speak/read of each other in the near future

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  15. Monty,
    NEVER sell your core position in silver. At some point you will see the train leave the station without you.

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  16. Dolev Reuven Gilmore,
    You are so right about not selling your core postion. Nobody knows where it goes.

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