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Crude Oil short term analysis

January 25:  In looking for where crude oil might pause or reverse in the short term, this chart shows two clues.  Using fibonacci extensions based on prices of 65.65, 57.36, and 59.77, the 100% projection predicts 51.48.  Price did pause briefly at the 50% level as shown on the chart, which shows that the pattern has some validity.  Price then proceeded lower so the 100% level is still in play.

However, there is now a divergence with the ultimate oscillator indicator with a higher low as crude made a lower low.  This gives a higher probability of a coming reversal to the upside, or at least some bottoming near this level.  If you look at the chart when price went above $64, the ultimate oscillator made lower highs at that time, which gave a signal that the rise was finishing.  These divergences should be met with caution by considering stepping aside, selling a portion of positions, or at least tightening stops.

Silver daily chart with Andrew's pitchfork and price targets

December 26:  Spot silver has broken out above the fibonacci extension entry point of $17.94, shown as a green line on the chart.  This gives an elevated probability of reaching the 50% target of $19.31.  If the 50% target is exceeded, then that makes the 100% target of $22.05 likely.  This pattern would be broken on a drop below $16.56.

The tines of the fork act as magnets, attracting and repelling price action.

January 25: The fibonacci setup mentioned above remains in effect.  Price today is above the green buy level on the chart.

SPY Fibonacci extension next predicted price level

January 14:  The setup in the chart predicts that the price of SPY is set to reach 337.79.  This is based on the lows and highs marked as 1, 2, and 3 on the chart.  The buy trigger is marked with a green line.  The 50% level is marked with a blue line.  The obvious magnetic attraction of price to the buy level and the 50% level plus the decisive moves above those levels support the validity of this setup.  The 100% level at 337.79 is pulling the price up.

January 25 update:  The high to date was 332.95.  Price fell to 328.77 January 24, which was blamed on news events.  We will watch to see how this longest and most overvalued bull market unfolds.

Long Term Palladium Chart

“A precious gray-white metal, palladium is extremely ductile and easily worked. Palladium is not tarnished by the atmosphere at ordinary temperatures. Thus, the metal and its alloys serve as substitutes for platinum in jewelry and in electrical contacts; the beaten leaf is used for decorative purposes.”

January 18:  Recently the major online brokers have reduced their trade commissions to zero.  This gives traders a great opportunity to test their trading skills on real trades with modest amounts of risk.  You can now actually make a few bucks by trading one share for short term gains while getting real world experience with various trading systems.  

Also, don’t discount the value of short term scalp trades that only make one percent or so.  Making one percent every two weeks equals around 25% a year.  Sure you have to share that with the tax man, but you no longer have to also share it with your stock broker.

Gold Daily Chart with Andrew's Pitchfork

October 3: The tines of the fork act as magnets, attracting and repelling price.  Note how price followed the lower tine, then jumped to the middle tine, followed it for a while, then jumped to the upper tine and followed it for a while.  Now it has bounced off of the middle tine.

October 15 update: Gold returned to the center tine of this fork.

October 30: Chart was updated today with trend change trigger line added.  Price continues along the center line of the fork.

December 18:  Chart was updated today.  The bottom tine has been acting perfectly as support.

December 28 update:  Fibonacci extension targets have been added.  Upon a move past the green trigger line at 1520.93 the 50% target at 1595.65 and 100% target at 1745.10 become probable.  This is based on a low of 1267.3, high of 1566.20, and a low of 1446.20.

December 31 update:  The game is on.  Spot gold reached 1524.80 overnight, predicting a rise to 1595, then 1745 during the next few months.

January 8 update:  Spot gold went over $1600 overnight, which decisively crossed the 50% target.  This makes the 100% target at $1745 likely in the next few months. Normally we would expect a slow grind back and forth to stay above a big even number like $1600.  Trades based on this setup would raise stops to the green line trigger point now.  Selling half at the 50% level while raising stops would have been good money management in this case.

January 18 update:  There is a similarity between this chart and the charts of silver and mining share ETFs that offers encouragement to fibonacci extension traders.  If you look at the corrections from February 2019 to May 2019 and the correction from September 2019 to November 2019, these two corrections look similar in duration and depth.  So this proportionality gives added probability that the fibonacci targets listed above on December 28 are valid.   The same pattern can be used on silver and mining share ETFs at this time.

DBA Weekly Chart

September 13: The weekly DBA chart (agricultural commodities) had an outside day key reversal to the upside. The last one back in May resulted in a multi-week rally that eventually failed. 

October 15 update: DBA closed at 15.99.

November 12 update: DBA closed at 16.24.

December 13 update:  The uptrend is still intact with a high of 16.79 today. 

January 17 update:  Looking back, this reversal to the upside topped out in mid-December at 16.88.  This pattern would have been successfully traded with a trailing stop and/or using the fibonacci targets listed in the DBA chart below. 

DBA Fibonacci Extension Targets

October 11: By decisively crossing above the first fibonacci level, DBA now has a target of 16.85.  This setup would be broken if price goes below the 0% level.

October 15 update: DBA went as high as 16.01 today.

October 20 update:  We notice that the ultimate oscillator is divergent, in other words trending down as DBA goes up.  This often portends of a coming correction.

October 30 update: Price went as low as 15.76 then entered sideways action and closed at 15.97 today.

November 4 update:  DBA had a high of 16.13 today, just shy of the 50% level, and a new high for the move.

November 5 update:  DBA had a strong move to $16.20, touching the 50% level, and increasing the probability of reaching the 100% level.

December 2 update: Price still hasn’t been able to reach the 61.8% level.

December 6 update:  DBA made another high today at 16.31, then fell back to 16.26.

December 9 update: DBA made another high today at 16.39, then pulled back.

December 12 update:  DBA made it up to the 78% level this morning.

December 13 update:  DBA had a high of 16.79 today, just shy of the 100% level, close enough to call it. 

January 17 update:  The 100% level at 16.88 has been the high so far.  Price is now in consolidation mode since December 16.  We now look for new patterns to emerge.  Ultimate oscillator was down as the top was reached in mid December, which also predicted a coming correction.

GDX Daily Chart

October 2:  GDX trends down while Ultimate Oscillator trends up.  This gives an elevated probability of a bottom forming.

October 15 update:  GDX dropped below support, but ultimate oscillator divergence remains.

November 18 update: 25.98 is the low so far.  Ultimate Oscillator remains supportive.

November 20 update:  We have edited the chart to show new patterns developing.  The ultimate oscillator continues to trend upward.  An Andrew’s pitchfork pattern is shown in blue with the trend break trigger line in red.  The fork pattern is negated if price drops below the trigger line.  If the pattern is valid, the tines of the fork will act as magnets attracting and repelling price.

Additionally we have calclulated fibonacci extension levels to watch.  If price breaks decisively above the 23.6% fibonacci level at a price of 28.65, then the 50% level at 31.32 becomes probable, and a break above that level makes the 100% level at 36.66 more probable.  This fibonacci pattern is negated if price falls below the 0% level at 25.98.

November 28 update:  Price came down to the trend break trigger line, but hasn’t clearly broken below it and has remained above the November 12 low of 25.98.

December 13 update:  GDX remains above the trend break trigger line on the chart.

December 20 update:  The chart was updated today.  GDX price continues to ride like a tightrope along the trend break trigger line.

December 28 update:  On December 26 the high was 29.25, which, as predicted by the bullish rounded bottom, decisively broke above the fibonacci extension trigger line shown in green on the chart.  This gives an elevated probability that price will reach the 50% level of 31.39, then when that is exceeded, the 100% level of 36.80.  These numbers are slightly different from our original calculations due to price adjustments for dividends, etc. by

January 17 update:  The fibonacci targets of 31.39, then 36.80 remain in effect.  Price continues to dance precariously on the Andrew’s pitchfork trend break trigger line.  The original round bottom drawing is still on the chart, but it has been drawn out a bit and remains valid. Ultimate Oscillator fell with price on Jan 8, which is concerning.

Traders would have entered a buy on the break above the green line with a stop just below the November 12 low of 25.79.    Bold traders would buy the dip with stops at the above mentioned level.  When price reaches the 50% target, prudent traders would sell half and raise stops to the green line.

VNQ Real Estate Divergence

December 14:  VNQ is showing a divergence between price and ultimate oscillator, which indicates probable bottoming.

December 20 update:  VNQ had a high of 91.97.

December 28 update:  VNQ is still moving up, with a high this week of 92.18.

January 17 update:  VNQ remains bullish with a high of 95.03 today.

Gold Futures Daily Chart Fibonacci Levels

September 13: Using fibonacci extensions on futures charts, the projected price targets are shown.  These targets are triggered when price goes through the 23.6% line.  Each fibonacci level acts as a magnet which attracts and repels the price.

October 1 update: Gold futures had a low of 1465.  A break above the 0% level before dropping to 100% would be a bullish indicator.

November 8:  Gold futures had a low of 1457 this morning, which completes the fall to the 100% level.

November 11: Gold futures took a quick visit down to 1438.60, touching on a support area from July, then rebounded back up to the 100% level on the chart.

November 14: Maybe too soon to call it, but so far the 100% level is holding as a solid bottom.

November 28 update: The previous low has held so far , and price is currently still hovering around the 100% level.

December 6 update:  Gold dropped back to the 100% level with a low of 1458.50.

January 9 update:  Gold went above the 0% level this week, which ends this bearish setup.

Crude oil futures fibonacci extensions

October 11:  Crude oil looks likely to at least hit the 50% level.

October 23 update: High for the day was 56.07.

November 4: Crude oil had a high of 57.43 today, meeting the 50% level.  The ultimate oscillator indicator had a bearish divergence though.

November 15: Crude had a high of 57.97, decisively crossing the 50% level. Volume was light though.

November 21: Crude had a high of 58.67.

December 6 update:  Crude made another new high for the move at 59.85, still targeting the 100% area.

December 13 update:  Spot crude oil briefly went over $60 this morning.

December 20 update: Spot crude made a high of 61.40 on December 19, keeping the 100% target on track.

January 3 update:  Crude oil hit $64.09 today, completing the projection to the 100% level.

Silver long term chart predictions

December 28: Using fibonacci extensions, we can project future price action.  Using a starting point of the lows of 1993 or 2008, both give a projected price of $55 to $60 after the trigger price of $25 to $26 is exceeded.  

Silver observers should be aware of the high probability of a sharp correction after the projected prices have been reached.  This could be short and quick, or slow and drawn out.

Silver futures daily chart

September 27: Silver broke down and triggered new downside fibonacci targets  Silver more than most vehicles “always” returns down to previous support levels on the way up.  In this instance it touched on that, then went up and now back down for a second, deeper test of support.  See our article on silver retracements.

October 1 update:  Silver futures had a low of 16.94 so far.

November 8 update:  Silver futures had a low of 16.66 this morning, just shy of the 100% level. Bulls hope that was the bottom.

December 6 update:  The pattern still holds, with a low today of 16.47 before rebounding slightly above the 100% level.

Price Forecasting

Be skeptical whenever anyone makes a price forecast for a specific time interval. We have seen it in many cases over the years where the biggest experts made a specific price and time prediction. Most of these predictions turn out to be wrong, sometimes catastrophically wrong. This is a big pitfall when basing forecasts on economic and political factors. All of the conditions might be met, but price can go the other way in spite of all that. So if an expert gives a prediction, we need to look under the hood to find out what factors went into making that prediction, then look at the probability that these factors will indeed influence price within the time frame given. Factors that “should” affect price often don’t for many years on end.

It is better to think of it in terms of probability rather than opinion on what should happen. That is why we here at prefer technical chart probability factors and patterns when looking at where prices will go in the future. We look for patterns that more often than not increase the probability of price moving in a certain direction, and/or to a certain level. With the judicious use of stops, price targets and trailing stops, we can use these probabilities to our advantage. The advantage is that when the chart setup is broken down, the forecast is nullified by definition and you can exit. This automatically changes expectations.

The point here is that instead of relying on the opinion of an expert, just look at the probability factors and work from there. You have to be prepared for a prediction to be wrong in spite of what seems to be common sense.

November 24: Worrysome for gold bulls is that the commercials (insiders, e.g. HSBC custodian for GLD) remain massively short on the futures market. They are either in trouble here or they know something. We would only use GLD for short term trading, not for investing.

November 10:  Rumor has it that China is working on a gold backed cryptocurrency.  No info on timelines, so it could be later or not at all rather than sooner.  We can only speculate if it might be a plan for international trade payments only.  It is clear that the Chinese have been increasingly replacing the dollar with their own currency for some of their energy purchases.  We do not see how this could be seen as a positive development for bitcoin, as the market seems to have indicated when bitcoin jumped on the news of Chinese government interest in blockchain systems.

October 23: For the first time in 21 years, Germany has openly bought gold into its reserve holdings. -Bloomberg

U.S. Dollar Index Long Term Chart

October 17:  The index is currently calculated by factoring in the exchange rates of six major world currencies, which include the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc.

September 17: The repo rate overnight spiked to an all time high of 10%, an indication of interbank liquidity problems.

September 16: “JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says.”  -Bloomberg

September 12: Russia So Flush, Could Pay Off ALL Debt – Foreign, Municipal, Regional, and Domestic – With Cash! ‘Net Debt’ Falls to Zero, -Ben Aris “If Russia suddenly needed to pay off all its debts immediately, it could do it just by dipping into the cash on account at the government deposits with the central bank and commercial banks,” writes Ivan Tkachev, the economics editor at RBC media.

Meanwhile, the U.S. government owes $22.5 trillion. 

Long Term Real Estate Chart

August 16, 2019: VNQ, is the Vanguard Real Estate ETF “tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments.”
Make of it what you will. 2007 was considered by many at the time to be a real estate bubble.

Chart updated September 10.

Gold:Silver Ratio starting in 1980

The chart shows the historic gold/silver ratio from 1980.  The ratio was 16 in 1980.  The dotted line shows the median level of about 62, which at $1500 gold would mean $24 silver.  A ratio of 16 would mean $93 silver.

Silver seems unlikely to return to the historic 16 to 1 ratio now that governments are no longer drawing supply for minting silver coins intended for everyday use as money.  

Chart updated September 10.

Gold Long Term Fibonacci projections

Using fibonacci extensions on a 20 year gold chart we can see that a projected price target of $2714 has been triggered as the gold price surpassed the 23.6% fibonacci level.

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Market Views

Market commentaries and charts