SUNDAY UPDATE: DOWN THE RABBIT HOLE

 

“A gold trader takes a walk!”

Almost the entirety of  last week, I felt like I was with Alice, as she was flying 

down the rabbit hole to meet the Queen of Hearts … nothing made any sense, 

& correlations came and went like blown kisses in a dream … first something 

matters then it doesn’t … oh wait, the market has changed its mind again, and 

then it’s on to something else … from totally dead trading conditions one 

second, to screaming higher the next, like there’s never gonna be another 

down tick ever again … until there is, and now it’s an “oh shit moment”, and 

you’re transported to the back seat of the “Thelma & Louise” cadillac over the 

cliff … “enjoy the ride, it only hurts when you hit the bottom”.

I’m posting 2 charts today, the first the 20 Day MA [both day and New York 

session] for the SP500 for 2018, and directly below that, the second chart of 

our weekly gold stats.

 

 

click to enlarge both

And it becomes quite evident from looking at both above, that gold has 

severely lagged in volatility compared to the February/March debacle in 

stocks, and very little has carried over to the most recent bloodbath on Wall 

Street, these last 6 weeks or so … “WTF is wrong with gold? … cuz quite 

frankly, we should be seeing $20+ daily ranges and we’re not … it’s simply the 

same old shit, different day routine … so why no reaction from out favorite 

yellow pet rock”?

In my book, it’s not the FED and/or the BIS holding gold volatility down 

anymore, it’s the frickin’ ChiComs … consider two [2] very important facts 

regarding our buds over in dictator “Xi land”; 1) they receive about 1 ½ 

billion dollars a day from the U.S., over and above what they import from the 

U.S. … that’s a helluva lot of money … in prior years, most of it went into 

Treasury bills, notes, bonds … not any longer, and 2) the ChiComs are buying 

massive amounts of physical gold from refiners everywhere, particularly 

Switzerland.

So, why not use some of that useless fiat, a/k/a the U.S. Dollar, and sell gold 

futures lower every chance they get … turn around and buy the shit out of it in 

the Pacific Rim on futures exchanges from Korea to Australia, and then take 

delivery? … so what you lose hundreds of millions in “paper losses”, cuz you’re 

buying billions in physical at stable or cheaper prices … it’s simply a cost of 

doing business to get the physical you need, without causing a panic in the 

market of a price melt up … cuz you need thousands of tonnes of physical gold 

… and what better way of getting the West to give it to you than letting the 

scumbag TBTF & TBTJ international banks act as your agents for a few coins 

in their pockets?

So, they buy in Asia to take delivery, sell in New York to keep the price stable 

or lower … they don’t care about “paper losses” … “you wouldn’t either if 

someone was giving you approximately $500 billion dollars a year from trade 

… give the banks their “nickels and dimes”, but “mission accomplished” cuz you 

get the physical you really want … “and that “physical” ain’t ever leaving China 

Skippy”!

Cuz it all fits nicely into their plans of ruining U.S. hegemony [political, 

economic, financial, & social], without ever firing a shot … cuz some morning 

you’re gonna wake up to find crude oil is no longer priced in dollars, but Yuan, 

and the realization that they have announced that the Yuan is now backed by 

gold bullion … where does world commerce flow now? … and without the need 

for dollars from crude oil, where does the U.S. borrow trillions to finance the 

“free shit army”, from food stamps to grant giveaways to beyond worthless 

bullshit studies of the sex lives of frogs? “Do you seriously think they don’t care 

what price they pay for all the gold they’re buying [along with Russia & India]? 

… in a free market, their demand for physical would be far worse than soybeans 

skyrocketing in the worst drought the midwest has ever seen … price would be 

skyrocketing beyond belief … but it hasn’t has it, and why not? … cuz they’re not 

that fucking stupid to pay anything for it, when they know they can manipulate it 

to their benefit, with the help of western bankers”.

Stock market crash? … so what? … for the ChiComs, it’s all about gold priced 

in USDCNH, and if that’s stable, nobody in China is gonna get their “big girl 

panties” bunched up … however, at some point, when the world wakes the hell 

up, gold is the world’s most under priced, under allocated, asset class going 

… it most assuredly won’t stay that way in the future.

At least now you know, IMHO, why gold seems so screwed up in its trading, 

and why it goes “TNT & Crickets” so quickly … their point isn’t to make 

money, their point is to get the dealers to offer them physical at favorable 

prices, without the price going northward in a big way … in the process, of 

course, specs get crushed, simply cuz nothing makes any sense … one second 

gold goes for days and can’t hold $1 gains to save its life … and then in seconds 

it turns, and for days it can’t go down a $1, no matter the news or order flow 

… it’s the ChiComs folks, right along with their BFF’s JPM, Vampire Squid, 

HSBC, Barclays, etc., acting as middlemen and taking their ounce of flesh 

… to the Chicoms, it’s simply a cost of doing business that is immaterial for 

their ultimate purpose and goal, which is to eventually control the world’s gold 

supply and back the Yuan … and if that happens, you can kiss the U.S. goodbye 

… we’ll turn into Britain, which in a little over 70 years [1900 - 1970’s], went 

from world superpower to banana republic so fast it’s simply incredible 

… somewhere Queen Victoria is not happy!

This is Thanksgiving week, so we’ll see how things “shake out” … of course, 

Wednesday, Thursday, & Friday will most likely be a wasteland, but these 

times are anything but normal, so it remains to be seen what awaits us. In any 

event, I’ll be there and attempt to make sense of it … and yes, the PAMM will 

trade … onto the week!

Have a great rest of your weekend everybody!!

-vegas

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OPERATIONAL, AS WELL AS OUR C2 OPTIONS ADVISORY 

SERVICE.  DETAILS IN “DOWNLOAD LINKS” SECTION IN 

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IDEAS ARE CAPITAL

“Honey, tell me again why you didn’t buy it here.”

Now that October is over, in the next few days I’ll be posting for download the 5 months from June 2016 – October 2016 gold exhaustion moves; every exhaustion move gold made [RM=1 -4], no matter the time of day, is captured with commentary on the M1 candlestick chart. [Note: exhaustion moves of less than 9 minutes are not in the data; I explain in the tutorial why this is the case, but the short version is that statistically, they could be viewed as a random sequence, so they are left out. It’s not that they are insignificant for trading purposes; quite the contrary, but from a probabilistic point of view one could make a valid case that exhaustion moves less than 9 minutes are random and just total luck. In order to knock down that argument those moves are simply left out of the data.]

In total, there were 174 exhaustion moves [9 minutes or greater in length] from RM=1 to RM=4 representing $1,573.94 PER Oz. Of these 174 exhaustion moves, from the very top/bottom to the end at the exhaustion lines, 91.4% [159/174] were EXACTLY EQUAL IN TIME [MINUTES] to cell numbers on either the Cardinal Cross or Diagonal Cross of Gann’s ‘Square of Nine’; the other 8.6% [15/174] were ± 1 minute from being exactly on the Cardinal Cross or Diagonal Cross. In total, there were 104 up exhaustion moves and 70 down exhaustion moves; RM=1 represented 84.5% of all moves [147/174], RM=2 represented 9.8% of all moves [17/174], there were no RM=3 moves, and RM=4 represented 5.7% of all moves [10/174].

Now, here’s the really important question to ask of the data; “what is the cumulative error rate in exact price for all the exhaustion moves that is away from the Cardinal Cross or Diagonal Cross? In other words, after 174 moves, what’s the total price missed by?”

THE TOTAL ERROR RATE = -$0.18

THAT’S RIGHT, after 174 moves the algorithm came up on the short side by 18 cents.

I will show in the tutorial why mathematically this is then almost impossible to be considered “random”; in other words, not only are cycles present, but the math behind the algorithm that you see on your screen models exhaustion behavior extremely well, thus giving us the very best liquidation and entry points [for down moves] you can ask for.

This might be a good time for that “Oh Shit” moment you’ve been dreaming about; oh, and one more thing. The data for the DOW30 looks every bit as good as the gold data; the cumulative error rate for the DOW30 [price] for the month of October was +2 DOW30 Index points with the total exhaustion point moves [in Index points] = 2,651!!

“Go ahead, tell me again how it’s random bullshit?”

Turning to gold today … well, somebody lit a fire under the price in Europe didn’t they? With the daily calculated white horizontal line way below the market here at the open, we should get a decent buy signal on the first bit of market sell off; question is, after that can it continue upward and give us some nice profits?

Well, that didn’t take long did it? Got the first buy signal a few minutes after the open after a failed attempt at a new high; got in a little early on the slope change because I saw the “engulfing pattern” at the bottom, and as we got closer to the end of the M1, I knew that in a few seconds when the new M1 would start that we would see a slope change in the plum line. However, I’m not at all excited about being long up here in the mid to upper 1280’s, so my “trigger finger” to liquidate is going to be rather fast; first sign of resistance on the M1 that goes red towards the last half of the M1 is going to see me liquidate. After commissions it yields about $1.25; skimpy, but better than nothing or a loss.The trade is directly below.

I’m reasonably sure will get some more downside to get me back in; moments later we get buy signal #2. And again, like the first trade, once we start moving up, I’m not only raising my “mental stop”, I’m also acutely aware of potential resistance lurking up here [read commercials bullion wall” of sell orders] to halt the rally; we need to liquidate before it turns around to ensure good liquidation fills, otherwise you know the drill. This trade captured about $1.50. Trade #2 directly below.

Ok, so I’m sittin’ here just a tad below my daily goal of $3; it’s going to take a decent sized sell off to get me back in, and quite frankly for a measly quarter, I’m not all that interested in giving anything back. Quite likely there will be more “buy signals” up here, but again I ask the question as we climb the price mountain again, “where’s it gonna go? Can we get above 1290 and stay there? That 'slaughter' in price on October 4^th has more than a few retail spec position players shaken; I don’t see them coming back in the market unless we get over 1300 and stay there; so that leaves the bullion banks & dealers, and once they cull the order books and see the bids 'drying up', I guarantee you they will “monkey hammer” the price once again." I’m not sayin’ it will be today, but I just don’t see prices steadily moving higher from here without some very quick sell offs, that if your long near the top, you’re going to get some algo signals that aren’t very friendly towards your position. One minute it looks good, the next not so much. Thanks, but no thanks.

The data I first presented in today’s blog should have all of you readers in giddy shock. I’m not trying to be overly dramatic here, but after having seen a massive rally in June, “chop” in July and August, a killer move lower in September, and then basically “chop” in October, gold has “shown its hand” in basically all market conditions. And through it all, the volatility algorithm pretty much “nailed” the short term trading tops & bottoms with an accuracy that should have the hair on your neck standing up; if it isn’t (and it’s just as good in the DOW30), then as a professional trader all I can say is 3 things; 1) “either you don’t give a shit about trading and making money”, 2) “you see no need to trade and improve your financial life because you are comfortable where you’re at”, or 3) “you don’t believe the data.”

To the first 2, I can’t help you, but as to the third, you got 174 gold charts at your disposal [here in a couple of days] cataloging every single exhaustion move 9 minutes in length or greater over 5 months in every type of market conditions; look at as many as you would like and pay close attention to where buy signals occur in relation to the bottom of the move; it should amaze you, and if it doesn’t it’s your problem not mine.

Ok, off to the beach with my BFF; his nurfball, bag of Beggin’ Strips, a nice big beach towel, fresh cold water in the cooler [with other assorted beverages for humans], and of course the beach umbrella for some shade. All in all, it should be a great afternoon … both of us are sooooo outta here … until tomorrow.

Have a great day everybody!

-vegas

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