Futures Market - Gold Highlight #3
Gold market highs of the first half, 1998 identified after sharp rally.
(COMMENT # 326)
UPDATED 19980416
COMMENT 1998-326
Let's get back to our exit discussion.
1. The novice trader who is just turning the pages of the books should have noticed the weekly "Inversion Cycle" indexes in the precious metals (see pages 85, 89, and 93).
2. We've caught the late February / March lows in each of these markets (GO, SV, PA, and PL) virtually either on the very day of the low or, in the case of PL and PA, when the market was just beginning its breakout acceleration.
3. The ride has been almost straight up since.
4. The PA has even been suggested as a pyramid position.
5. Each of these markets (see Point # 1 of this COMMENT) has experienced a weekly "Inversion Cycle Index" signal recently.
6. It is rare that the signals across the entirety of the complex are so clear.
7. SV peaked 2 weeks ago EXACTLY during the weekly "Inversion Cycle" projection.
8. GO appears to have peaked 1 week ago Monday EXACTLY during the weekly "Inversion Cycle" projection.
9. PL appears to have peaked Tuesday EXACTLY during the weekly "Inversion Cycle" projection.
10. If you recall, one of the important factors in assessing the potential for these upmoves was the spring seasonal up move (see page 320 of "The 1998 $upertrader's Almanac - 1st Half Edition") coupled with (what else?) an "Inversion Cycle" peak (see, for example, COMMENT # 193).
11. Let's now turn to pages 318, 320, 322, and 324 in "The 1998 $upertrader's Almanac - 1st Half Edition".
12. Is the period immediately ahead one of strong up seasonals, flat seasonals, or strong down seasonals?
13. Wasn't that easy?
14. Now let's look at pages 349, 353, 357, and 361 in "The $upertrader's Book of Linear Time Cycles".
15. We're looking for the next series of peaks in each of these markets.
16. We want to use the "Inversion Cycle Index" projections (which means that you should view the dotted line in the bottom chart and should be focusing only on the peaks in that line).
17. If you can't decide whether a peak is formed or not, simply look to the "Cycle Lineups" chart in the middle of the page, go to the "WIC" (for Weekly Inversion Cycle) in the left column, and read across to the right to determine the week of the year in which the peak in the dotted line next occurs (this is the 16th week of the year).
18. Note that, when done, you will have obtained not just the next major weekly "Inversion Cycle" turning point projection for each individual market, but that the four markets "cluster" together during this period of time.
19. This "clustering" across the complex adds confidence to the projection just as the cluster of weekly "Inversion Cycle Index" projections (which have just now passed) adds confidence of a CONSOLIDATION or PAUSE in the uptrend.
20. This example is somewhat like the bond in COMMENT # 282.
21. There, we thought we were in an Elliott Wave 3rd wave explosion to the upside, but the move ran smack into the middle of the next weekly "Inversion Cycle Index" projection and petered out.
22. It was like the rally hit a huge stone wall.
23. The metals have done the same thing.
24. The lesson in this COMMENT is thus that, if the "Inversion Cycle Index" projections can get one INTO a successful position, the next set of positions should be equally valid at signalling, at the very least, a PAUSE (if not flat REVERSAL) of the move.
25. If the move originated off a monthly / weekly ALIGNMENT, a weekly projection by itself should be expected to signal but a PAUSE in the move (keep in mind that weekly projections, by themselves, are not as accurate or powerful as monthly / weekly ALIGNMENTS).
26. If the move originated off a weekly projection only, the next weekly projection should signal at least a PAUSE and, possibly, a REVERSAL.
27. If the next projection is a monthly / weekly ALIGNMENT, the projected turn is more likely to be a REVERSAL instead of just a PAUSE in a continuing trend.
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