Pendulum Experiment: The Weakest Metal Vs. The Strongest Future

Aibek Burabayev - Contributor - Metals

Dear readers, I hope things are good if you are short both top precious metals as per my Gold and Silver updates and you are enjoying the rising gains. As nothing unforeseen has been happening, let us do an experiment.

Do you know what a pendulum is and what the effect it has on an instrument? When something moves one way and then swings back and we push it harder forward, it will move back deeper for the distance that is equal to the distance between equilibrium and the forward point. Swings and waves are a normal part of our everyday life, and that is true for the markets as well.

Chart 1. Comparative Histogram Of Year-To-Date Futures Performance (November 10, 2015)

Futures YTD Relative Performance
Chart courtesy of

Looking at the chart above you can judge for yourself that it was not a performing year at all, you can count the gaining futures by the fingers on just one hand, and it’s frustrating... unless you are a weakness hunter and sold short some of the red labeled futures. But it’s, of course, a useless hindsight game.

I put this chart here to find the top performer and the top losing future. To this date, the winner is the Japanese Nikkei index and on the opposite side the loser is Coffee, and among the metals it is Palladium.

What is the purpose of this experiment? I would like to test, if let’s say by the end of the first half of 2016, the top gainer (Nikkei) would be beaten by the top losing metal (Palladium) in a pendulum-effect back-swing or at least they would meet at the zero point. At the beginning of July 2016, I will post the result of the test.

Let’s look at each instrument’s chart for clues.

Chart 2. Nikkei Weekly: Double Strong

Daily Chart of The Japanese Nikkei Index Futures
Chart courtesy of

This super future has been in a double uptrend; the major uptrend is green, and the short term uptrend is blue. The finishing time is highlighted in a red dashed vertical line to show how much time is left. It will be hard to change the current strong steep uptrend, but time will tell, and we could still witness the change of the trend from the 24000 level and the fall of the Nikkei below the uptrend. For instance, in case this is the last move up exhausting the whole uptrend.

Chart 3. Palladium Weekly: Temporary Weakness In Upside Move

Daily Chart of Palladium (NYMEX:EOD:PA1!
Chart courtesy of

Palladium has been falling for most of the year, and we can see on the chart above that it could stop falling shortly (maybe when Gold gets bottom) ahead of the red vertical deadline. Nevertheless, this weakness is within the green ascending channel, so this metal can still hit the upside by the end of the experiment and beat the Nikkei.

Again, it is just an experiment to see how this approach will work.

What do you think will happen?

View Results

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Intelligent trades!

Aibek Burabayev Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

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