“All down the street, they’re standing in lie
With white lipstick and one thing on their minds.” Zombie Zoo, Tom Petty
“Whoever fights monsters should see to it that in the process he does not become a monster. And if you gaze long enough into an abyss, the abyss will gaze back into you.” Friedrich Nietzsche.
I am still working on the gold and silver cascade update I promised.
For the moment though, GLD, GDXJ and SLV all turned their 3 Day Charts down Monday.
We went long GDXJ late in the session based on the hourly Crouching Tiger basing pattern.
After the close GDXJ ramped 2 points from our entry.
GLD dropped 360 degrees from Thursday’s 509 Time/Price square-out into Phil D Gap.
Monday night gold is up over $200.
Amazing.
It would be nice if all setups responded to the Wheel like this.
I clearly was not looking for this kind of reaction.
But if you put in the time, it pays.
In addition to the geometric time/price considerations that perpetuated last weeks Flash Crash in the metals, we had the rare four planet conjunction mentioned in this space which historically correlates with abrupt trend reversals, profit-taking and a loss of momentum in commodities.
This conjunction was a factor in producing the short-term imbalance in market sentiment, leading to the fast drop that surprised many traders who expected the bullish trend to continue uninterrupted.
The Square of 9 Wheel nailed it.
The whoosh lower proved once again that positioning/sentiment trumps narratives.
Narrative follows price, not the other way around.
Friedrich Nietzsche argued that the human instinct to avoid the anxiety of the unknown drives us to prefer any explanation—even a false one— as it provides a sense of control and helps alleviate the terror of chaos—chaos that is personified by the market—especially a market where price discovery has become a clown car.
I mean seriously, the S&P futes were down 90 points a few hours before the open and went green with the cash rallying as much as 50 points before settling up 37.
Suffice to say that The Hand apparently never wants to entertain the prospect of a Black Monday.
Given the internals, the cycles, and last weeks price action following a ‘false breakout’ and the technical dominoes showcased in Monday’s report, there was potential for a Black Monday.
But that is why I put a question mark after the title of yesterday’s report.
That and the projection for a Trend Day by Mr. Roadmap.
Given the futures down 90 when I finished the Roadmap projection for a trend day was a surprise to say the least.
It was a stunning call by Mr. RM.
Glamous MAY BE mirroring last weeks action in silver and GDXJ…which had initial reversals on January 26, followed by a squeeze higher, and then the whoosh lower.
The first mouse got the SQUEEZE, the second mouse got the cheese.
SNDK, STX and COHR to mention a few may be echoing the debacle.
For example SNDK left a massive reversal on Friday shedding 100 points from session highs and today was right back up 89 points for a new record close.
Amazing.
It will be telling to see how the glamours act this week.
In sum, Monday was a ‘mad’ reversal of fortune for bears counting their money in the middle of the night Sunday.
But the bulls are in love and as they say, love is blind.
It seems apropos to end with another quote by Nietzsche, “There is always some madness in love. But there is also always some reason in madness.”
Tuesday’s Roadmap
More volatility.
A saw tooth pattern at highs, backing and filling until 10:00-10:15 when a pullback is indicated into 10:45-11:00.
A rally from 11:00 into 12:00 followed by a sell-off into 12:45 which is projected to be the low of the day.
From 12:45 a sharp rally is indicated into 1:15 where the market flat lines until 2:15 with a little pullback into 3:00 that pulls the rubber band back for a persistent rally into the close.