Has The Gold and Silver Market Topped out?

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Tuesday, the 23rd of August.

Has the Gold and Silver market topped out? Have we seen the bottom in the equity markets?

I'm sure these are questions traders are asking themselves as we are halfway through the trading day.

It would appear that the downward momentum in the equity markets has abated for the moment and we should expect to see more of a two-way market. However that does not change the overall bearish longer-term trend.

The Gold market traded over the $1,900 level, before dropping dramatically and creating what could potentially be a negative engulfing line for the Gold and Silver markets. If this is confirmed on Wednesday, it would mean that gold prices have topped out for the short term and the $2000 level for Gold will have to be put on hold for the time being.

The Crude Oil market continues to be in a negative trend, and the Dollar Index and the CRB index are generally in a sideways mode.

Now, let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 90

The major trend is down for the equity markets and today's strong rally was probably an opportunity to go short. The S&P 500 should run into resistance between 1164 and 1175. Both of these levels represent Fibonacci retracement zones at 50% retracement and 61.8% retracement, respectively. We are still viewing this market in a longer-term bear trend.
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SILVER (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trend = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 90

The market action in silver leaves a lot to be desired. Yesterday we saw spot silver create a Japanese candlestick "Doji" which is normally a signal for the reversal. Today we're looking at a potential negative engulfing line, which is another bearish signal. This Japanese candlestick line would be confirmed tomorrow with a lower close in silver. Overall it would appear as though the silver market has topped out for the time being.
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GOLD (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 90

We would not be surprised to see the gold market trade back down to the $1,816 level or even touch the $1,800 level. The market action today has potentially created a bearish chart with a Japanese candlestick negative engulfing line. This would be confirmed tomorrow, Wednesday, with a lower close. Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.
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CRUDE OIL (OCTOBER)
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 90

Please be aware that our comments are based on the total contract. The rally has pushed this market back in to an area where you should find resistance right around the 85.30 level. This is a 61.8% Fibonacci retracement. We expect this market to come under pressure on Wednesday or Thursday. Long term and intermediate term traders should hang on for the ride and protect profits with money management stops. Short-term traders should be on the sidelines in this market. The longer term trend for crude oil is down based on our Trade Triangle technology.
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DOLLAR INDEX
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 70

This market has remained in a fairly well defined trading range for the last several months. There is good support for this index at 73.50. Resistance comes in around the 75 to 76 area. With a Chart Analysis Score of -70 we would want to approach this market using our Donchian Trading Channels and Williams %R indicator. The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.

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REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 55

While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario. We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside. Long term and intermediate term traders should hang on for the ride and protect profits with money management stops. Short term traders should be out of the market at the present time.

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As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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This is Adam Hewison for MarketClub and I'll see you tomorrow, right here at 1pm. Have a great trading day!

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

19 thoughts on “Has The Gold and Silver Market Topped out?

  1. Adam,

    I enjoy reading your comments and listening to your thoughts. But with gold currently (3:35 EST) down another $75 and Silver down another $2.50 it is fairly apparent that my earlier comment above (where I also quoted you) regarding timing is valid. Consecutive days of +100 and +90 were not enough to justify buying SLV. Since you forewarned of a potential fall with those two numbers in place, then shouldn't your Triangle recommendations also be tempered by other signals too?

    Crushed upon entry,

    Jack

  2. Dear Mr. Adam Hewison,
    Disculpe que no sepa escribir en Lengua Inglesa correctamente. Pero ayer por la tarde lei su excelente articulo " The Gold and Silver market Toppet out?" y le agradezco el catalejo que me regaló, porque estaba muy cargado de Call/Dic en Gold and Silver, y no me había percatado del la vela japonesa de "Doji". Fue gracias a Ud. que me abrió los ojos y al seguir la curva de precios toda la noche por Asia, pude comprobar que el "Doji" se había formado esta mañana, por lo que a las 9,00 horas en Madrid ( 3,00 a.m. N.Y.)vendí todos los Call y abri posiciones Put/ Dic.
    Gracias, Mr. Hewison. Y sí, creo con Ud. que quizas? hayamos tocado suelos en los mercados. El viernes nos lo terminará por confirmar el Sr. Bernanke?.
    Le reitero mi agradecimiento, Mr. Hewison.
    Sinceramente.
    Jose Rincón

    "Sorry do not know how to write properly in English Language. But last night I read your excellent article "The Gold and Silver market Toppeta out?" And I appreciate the telescope gave me because I was so full of Call / Gold and Silver in December, and I did not realize of the candle of "Doji". It was thanks to you that opened my eyes and follow the curve of prices in Asia overnight, I found that the "Doji" had made ​​this morning, so at 9.00 pm in Madrid (3, 00 am NY) sold all positions and opened Put Call / December
    Thank you, Mr. Hewison. And yes, I think that maybe with you? we touched land in the markets. On Friday we will finish by confirming Mr. Bernanke?.
    I reiterate my thanks, Mr. Hewison.
    Honestly."

    Translated using Google Translate

  3. FRIENDS,

    Each and every BULL LOVING TRADERS must check-up Past History of Gold, when it topped with $612.56 in 1980, and followed with $460.03 in 1981 and $375.67 in 1982 so one may not surprised to get same history again.

    Rasesh Shukla
    India

  4. On the crb it looks like the 50 day is crossing the 200 day? The death cross! Time for the repeat of 2008, falling equities and crb(including gold) and the usd to rally hard.

  5. Best overbought indicator is the number of posts on gold price thread at Zerohedge... >400, start fading or sell calls...

  6. I like going to different sites to get market perspective, but it seems lately when I come on to this site you guys are getting ready for the apocalypse.
    Perhaps that will happen on friday if Bernanke does not deliver the juice, but if he does provide another fix, the market will very likely take off sqeezing a lot of your short recommendations.

  7. Love the work and comments.

    Love to get base hits.
    Home runs are up to luck in this manipulated FED juiced markets.

    1. Izzy,

      We do not predict tops or bottoms we look for the fat middle of the move to make money. Our latest trade in gold produced a profit of $200 an ounce in gold. Now that is not chopped liver in anyone's language.
      Adam

  8. I just read your thoughts on the S&P with resistance at 1164 and 1175.

    At the close today, the daily and weekly stochastics appear to be turning up from lows and aren't far from crossing over. If they cross over, it suggests to me a buying opportunity. Additionally, the S&P is forming a "W". What do you think?

  9. Showing a +90 on silver and all trade triangles positive.

    So why are you saying it appears silver has topped out?
    Shouldn't your daily triangles at least have warned us to get out?
    Do we have to wait until silver falls another couple of dollars before it tells us to sell? By then it'll be right at the bottom, just in time for it to turn around and go back up.

  10. Prior to 8/22 I was on the sidelines.

    8/22: SILVER (SPOT)
    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Positive
    Combined Strength of Trend Score = + 100

    Our Trade Triangles kicked in perfectly with a buy at 42.20 basis spot. Based on this signal, all traders should be long this market or looking to trade silver from the long side.

    8/23: SILVER (SPOT)
    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trend = Positive
    Daily Trade Triangles for Short-Term Trends = Positive
    Combined Strength of Trend Score = + 90

    The market action in silver leaves a lot to be desired. Yesterday we saw spot silver create a Japanese candlestick “Doji” which is normally a signal for the reversal. Today we’re looking at a potential negative engulfing line, which is another bearish signal. This Japanese candlestick line would be confirmed tomorrow with a lower close in silver. Overall it would appear as though the silver market has topped out for the time being.

    If things go badly I will have properly traded via the Trade Triangles but potentially take severe losses over two straight days.

    $42.20 certainly was not the perfect place to buy or for all traders to get long. I'm hoping for recovery tomorrow...

  11. Too many analysts who don't understand why Gold is rising, so they keep looking for a top using the tools they use when they look at stocks or commodities. When in reality it is the ominous global economic fundamentals driving gold skyward, and these are all the same or worse than they were 5 years ago.

    After a major rally, there will always be profit taking and a price retrace. However, this is a bull market for Gold, and it will not end until we have some semblance of solid footing for the sovereign debt crisis in Europe, the sovereign debt crisis in the US, and an extended bout of sanity on the part of western government leaders...

  12. The video page won't load for me and I get a page not found error. Anyone else having the same problem?

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