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One Chart, One Question

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Just for fun, let's look at one chart and ask one question: is this stock continuing its downtrend or is it in the process of reversing? To avoid any bias, I've removed any clues to its identity.

 

 

Glancing at three common indicators, MACD, stochastic and RSI (relative strength), we note they have all turned up or are starting to turn up.

We also notice that what looks like a key line of support/resistance was broken sharply to the downside, and price has reverted equally sharply back up to that line.

So far, this could be interpreted as a bounce back to resistance, a move that will be followed by a resumption of the downtrend, or it could be interpreted as a classic Bear Trap, a sharp move below support that sucks in all the Bears who are anticipating a further collapse in price.

Which interpretation is most likely to be correct? It's too early to say, but the possibility that price has traced out a falling wedge suggests that the Bear Trap/reversal scenario might well be in play, as falling wedges are classic reversal patterns.

Now that we've conducted an unbiased overview, I can reveal the mystery stock: it's actually not a stock, it's a commodity: bat guano, a highly valued natural product.

Like many of the commodities, bat guano has been in a free-fall, and the majority of financial pundits have been calling for further declines. Even bat guano Bulls have reluctantly conceded the inevitability of further large declines.

Very few bat guano analysts are calling for a reversal here.

The sentiment, in other words, is uniformly negative--everybody's on one side the boat in the bat guano trade.

Add the overwhelmingly negative sentiment to the falling wedge/Bear-Trap spike down/recovery, and it seems the majority (Bears) might be surprised by a major reversal here.

OK, the chart isn't actually bat guano. That was another way of maintaining an unbiased view. As far as I know, there is no bat guano index.

So what's this chart of? Everybody's favorite emotional trade: Gold.

 

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Sat, 11/08/2014 - 16:17 | 5427683 royal
royal's picture

More intriguing to me from a bullish perspective, was that a bullish outside candlestick pattern was formed on the daily, and on the weekly chart, a pin-bar formed.

Additionally the battered gold mining stocks look to have bottomed out; the GDX had record volume last week, formed a spinning top, and was positive for the first week since Sept.

Both gold and the miners look poised to continue moving up next week, and pershaps beyond. 

Sat, 11/08/2014 - 16:23 | 5427696 max2205
max2205's picture

I call bat guano on that

Sat, 11/08/2014 - 16:37 | 5427724 Pinto Currency
Pinto Currency's picture

 

 

 

Price of gold and silver falling while backwardation indicating physical metal shortage:

http://www.zerohedge.com/news/2014-11-03/gold-and-silver-supply-and-demand-2-nov

 

The virtual gold and silver trading markets have it wrong.

Get ready for major price volatility. 

 

 

Sat, 11/08/2014 - 16:57 | 5427768 Atlas_shrugging
Atlas_shrugging's picture

Rat shit bat shit dirty old twat.  69 assholes tied in a knot.  Hooray, lizard shit, FUCK!

Name the artist

Sat, 11/08/2014 - 17:06 | 5427795 palmereldritch
palmereldritch's picture

LOL

Definitely link worthy!

http://www.youtube.com/watch?v=UTNi48f567E

Sat, 11/08/2014 - 17:27 | 5427850 Manthong
Manthong's picture

What was that, late 70’s or early 80’s?

I still have his AM FM on vinyl.

Sat, 11/08/2014 - 18:12 | 5427980 palmereldritch
palmereldritch's picture

Looks like 80's to me.

Had his Class Clown album on vinyl as a kid...scandalous!

:)

Sat, 11/08/2014 - 16:58 | 5427771 wallstreetapost...
wallstreetaposteriori's picture

GDX chart looks the same.   Look for a yen rally against the dollar to break the /gc shorts.  Gold is going up my friends... NOT interest rates.

Sat, 11/08/2014 - 17:16 | 5427817 ebworthen
ebworthen's picture

You'd think with the price of oil plunging the miners would catch a bid, in a sane world.

Alas, we are not in a sane world.  Intangible binary data is seen as the savior of humanity. 

*cough*

Sat, 11/08/2014 - 17:42 | 5427887 Greenskeeper_Carl
Greenskeeper_Carl's picture

you would think, UPS has notched up a good bit too.

Sat, 11/08/2014 - 16:42 | 5427699 Headbanger
Headbanger's picture

No doubt it's going to bounce cause there's a clear 3-3-5 zig zag pattern from the peak

Which agrees with the fun-duh-mentals of a currency war starting now

Plus the fact that USDJPY has peaked out after completing five waves up starting early 2012.

Take a look:

http://www.marketwatch.com/investing/currency/USDJPY/charts?symb=USDJPY&...

BUT THE BOUNCE WON'T LAST VERY LONG AS SEEN ON THIS CHART FROM DANERIC'S BLOG:

http://stockcharts.com/public/1890263/tenpp/2

I suspect a massive epic huge nasty ugly deflationary depression will be in full swing early next year.

Sat, 11/08/2014 - 17:15 | 5427811 daveO
daveO's picture

Deflationary depression?

Is the FED going out of town next year?

http://www.youtube.com/watch?v=I6KC0PAvJZw

Sun, 11/09/2014 - 10:25 | 5429237 Headbanger
Headbanger's picture

Yes while your head remains up and locked in your ass!

Sat, 11/08/2014 - 16:26 | 5427706 thunderchief
thunderchief's picture

How can you chart a rigged paper market with historic physical demand?
It is about as stupid as putting on a paper ring that says gold on it.

Please quit using paper charts to show a paper rigged criminal market.

My suggestion?

Learn Chinese charts and wait until next decade. It will be physical and priced in RMB by then. That is all you have to know about gold...

Sat, 11/08/2014 - 17:48 | 5427913 Ban KKiller
Ban KKiller's picture

If China can survive their current corrupted system....same as us. Charts are helpful in a rigged game? I suppose...

Sat, 11/08/2014 - 20:27 | 5428307 markettime
markettime's picture

Shhhhhhh...don't say anything about gold or silver.....the banker cabal might hear you. Get ready for another week of early morning hammering if you speak to loud. 

Sat, 11/08/2014 - 16:20 | 5427684 Sudden Debt
Sudden Debt's picture

I KNOW HOW WE CAN FIX THAT MARKET!!!

Okay, here's the plan...

We buy up 500 tons of prumes and we fly them over to Gotham city and transport them to the bat cave.
Bats love that shit!
Relax, I know what you gonna say: "yeah but the bat cave is hidden blablabla..."
NO PROBLEM, I SAW THE MOVIE, THE CAVE IS BEHIND A WATERFALL!
We wait about a week...
AND BAM MAN!! MONEY MONEY MONEY!!!!

Who's in? Come on guys! We can do this! I need a few poop scoopers!

Sat, 11/08/2014 - 17:31 | 5427860 waterwitch
waterwitch's picture

Holy batshit Guanoman!

Sat, 11/08/2014 - 18:10 | 5427974 screw face
screw face's picture

Oguano.....bitchez

Sat, 11/08/2014 - 16:16 | 5427685 symtex411
symtex411's picture

I know I've stared at a chart to long when, I knew what it was before the reveal.

Sat, 11/08/2014 - 16:21 | 5427694 kaiserhoff
kaiserhoff's picture

A chart only a Momma could love.

Sat, 11/08/2014 - 17:45 | 5427897 Greenskeeper_Carl
Greenskeeper_Carl's picture

haha no shit, I thought the same thing before I clicked on the article "thats gotta be gold".

Sat, 11/08/2014 - 16:18 | 5427689 metastar
metastar's picture

Short Batman
Long The Joker

Sat, 11/08/2014 - 17:44 | 5427891 Ban KKiller
Ban KKiller's picture

Comic controlled congress concurs.

Sat, 11/08/2014 - 16:27 | 5427708 debtor of last ...
debtor of last resort's picture

In a year or two, nobody will look at paper gold. Today, it's nonsense too.

Sat, 11/08/2014 - 16:36 | 5427721 NoWayJose
NoWayJose's picture

Forget the bat guano. What we need to do is capture the American bats, fly them to West Africa (on commercial flights), and open up a chain of McBushMeat restaurants. Of course, we will deliver - but only to anyone infected with Ebola.

Normally this idea would be impossible due to quarantine restrictions, but its OK now because under our new mutual guidelines, US bats would not need to be quarantined once they got to West Africa.

Sat, 11/08/2014 - 16:37 | 5427726 Consuelo
Consuelo's picture

Learn how to trade foreign policy, because as it pertains to gold and Western central banks/governments, geopolitical power shifts and 'engagements' that affect economics, are what the drivers are for gold from here on out.   In this regard, I am in agreement with Thunderchief above - only, I scarcely think we will have to wait until the 'next decade' for $USD hegemonic perversion to be sorted out.  

Sat, 11/08/2014 - 16:42 | 5427733 wattie
wattie's picture

Surely someone out ther can produce a graph showing Physical demand vs actual price over the last 3 years!!!!!!
Let's face it, everything is manipulated. Banks are virtually criminal organisations, they fund politicians, they manipulate data, we all suffer!
Bout time this fiasco ended.
Cheers Wattie

Sat, 11/08/2014 - 18:11 | 5427748 Keyser
Keyser's picture

I could tell it was gold right away... The rhombus / double-humped camel vomiting pattern gave it away... 

 

Sat, 11/08/2014 - 16:50 | 5427749 theprofromdover
theprofromdover's picture

Well, yes, there is bat guano -giant caves in SE Asia. Very good fertilizer, high in posphates and nitrogen. Buy some, will increase your crop yield when food and water become the new gold 'n silver.

Sat, 11/08/2014 - 16:50 | 5427750 Al Huxley
Al Huxley's picture

Is it a bear trap?  Well, ask yourselves, who's been forcing gold down since 2011 (and controlling the price prior to that)?  Who has to deliver physical gold if the price starts rising again, not just to the east, but western buyers?  Who has the Swiss referendum coming up, with it's potential impact on demand - both directly to meet Swiss requirements (although really not an issue for at least a few years) as well as the possibility of sparking western demand?

 

So why would the guys who control the market, and have been forcing it down for years, and have a vested interest in a weak gold price, why would the biggest bears in the market spring a bear trap and kick off at least a major rally, if not a new bull market?

 

I think there's a reasonable chance this is actually a bull trap - outside reversal, big volume, miners leading the metal - all sounds like capitulation rebound, but if you look at the charts, the miners, and gold are just hitting the 10dma in most cases, and that's pointed down sharply.  I think this might be a warning that a turn is imminent, but I'd be surprised if all the resurrected bulls aren't taken to the cleaners one more time this coming week.

Sat, 11/08/2014 - 17:48 | 5427907 cigarEngineer
cigarEngineer's picture

Just like BTFATH, sell the new low. Don't catch falling knives. Everybody in power is invested in the price of gold to go lower; don't fight it until there's blood in the streets.

Sat, 11/08/2014 - 16:49 | 5427751 Hamm Jamm
Hamm Jamm's picture

YES, thats the Shit !!!

Sat, 11/08/2014 - 16:52 | 5427759 thunderchief
thunderchief's picture

Do not worry folks. If this gets too far out of hand the CFTC can jack margin rates every day of the week! Does that jog memories? Margin hikes?

Hoping these paper clowns get this thing up is about as effective as shuving viagra up a horses ass..

This market needs to default and handed to Shanghai.

FU Comex/CFTC. Know one cares about your paper price anymore.

Sat, 11/08/2014 - 17:10 | 5427806 ebworthen
ebworthen's picture

+1

Wonder if the horse's tail would get an erection?

Sat, 11/08/2014 - 16:55 | 5427765 golddigga
golddigga's picture

I know this was the chart of gold, surprise surprise - the only thing that matters here. 

Sat, 11/08/2014 - 17:06 | 5427794 cherry picker
cherry picker's picture

A plant manager I knew in Commerce, CA took off on the weekends prospecting for gold in Death Valley.

He talked to me about, it was his hobby.  Told me that the hobby paid better than working as a plant manager.

He got his gold for free aside from the stuff he needed to prospect and seperate the gold from the dirt.

Its always been there and there is more where that came from, just got to know where to look and have patience.

That is a fastest way to make a buck without worrying about margin calls, but then people have gotten a little soft as of late, haven't they?

Sat, 11/08/2014 - 17:49 | 5427910 cigarEngineer
cigarEngineer's picture

What do you think of doing that in the Andes... you figure there's more gold left there as the locals are too poor for such hobbies? Or the opposite...?

Sat, 11/08/2014 - 17:09 | 5427800 ebworthen
ebworthen's picture

Poor Gold, it can't shine because it is covered in the bat guano of paper gold ETF's and undeliverable intangible paper promise ponzi scheme "funds".

Sat, 11/08/2014 - 17:10 | 5427804 umdesch4
umdesch4's picture

The price of gold at all the coin shops and currency exchanges in my part of the world hasn't really changed though. As this bullshit spot price dropped, the premiums just went up to make up the difference. I'd say the actually purchase price of an ounce of gold (bullion bar or coin) hasn't actually moved more than about 1 or 2 percent from where it was about a year ago.

Sat, 11/08/2014 - 17:12 | 5427809 debtor of last ...
debtor of last resort's picture

Fruit bat guano, bitchez.

Sat, 11/08/2014 - 17:38 | 5427877 djcando
djcando's picture

Deatdown coming!

Sat, 11/08/2014 - 17:45 | 5427903 Snoopy the Economist
Snoopy the Economist's picture

The fed/banks are killing gold so the miners will go bk and the banks will buy them on the cheap. Isn't that the way they operate?

Sat, 11/08/2014 - 17:46 | 5427905 prefan4200
prefan4200's picture

There actually IS a bat guano chart.  Although everyone else calls it a silver chart.  I'm long silver and it feels like I own a bunch of bat guano right about now.

Sat, 11/08/2014 - 18:04 | 5427916 CHX
CHX's picture

They paint their chart - and this chart IS THEIRS for the time being - as they please. My best indicators right now are 1) negative GOFO rates, showing some scarcity in the fizz market, 2) the US mint suspending sales of silver eagles, 3) a generally extremely negative sentiment suggesting that the weak hands have or are getting shaken out, 4) backwardation in silver on the Shanghai PM exchange, 5) across the mining industry prices are now at, close to, and for some below the cost of production, 6) future mine supply will not substantially increase from here on (lower ore grades and higher costs, and fewer and fewer discoveries of high quality ore bodies) and 7) a never-ceasing appetite for fizz from China, Russia, and India (i.e. half the planet is buying).

This suggests that there is a bull market in demand, and yet it is a bear market in price. The ETF GLD has lost like +400 T of its holdings and is down to ~720 T now - this was all shipped to the east most likely. GLD is the banker's stack, together with the tiny CONeX inventory (~870k registered, and ~8M total ounces of Au - if one believes this is all there - compared to the actual open interest of contracts in the neighbourhood of ~38 M ounces). How much gold has the FED (left) ? 

Could they possibly drive the price (much) further down? In the short term I believe they could. But the lower they drive the price, the more bullion they bleed to stackers outside "their system", and for yellow bullion China is a black whole. In it goes, not to leave for a LONG time.

In summary, this is all not sustainable. The longterm price direction is higher, much higher (IMHO). Have we seen THE low yet or not, only time will tell. If/when this paper PM ponzi blows up in their faces it will be too late to buy any. The lower they drive the price, the higher the chance it will break the current fraudulent pricing mechanism. Will they let this happen? Is this their plan? I believe we're close to finding all this out. Good luck to all, we'll all need it.

 

 

Sat, 11/08/2014 - 21:18 | 5428430 lasvegaspersona
lasvegaspersona's picture

If you sold paper gold and the price started to rise would you A) panic and hedge or B) sell even more and drive the price even lower?

What if you were TBTF and you knew that the paper market would be declared broken if things got out of hand?

This paper market is going towards zero. It'll break before it gets there but as long as suckers will take paper it will continue lower.

Get some physical...soon.

Sun, 11/09/2014 - 09:02 | 5429167 CHX
CHX's picture

Agreed on fizz. I think the big paper shorts are both China and the FED. China hedges and welcomes the lower prices to get more fizz, and the FED profits since this supression is life support of an otherwise dead dollar. Maybe, and that's a big maybe, they can keep the paper ponzi of PMs alive with one more upeg to say ~2.2k in the hope to get enough fizz out of stackers in a renewed bull run? I think it's all FUBAR and they are trapped (the FED) with no way out. If they drive the price further down, they will loose all their remaining holdings of fizz before the break and the following repricing (and loss of $ hegenomy). If they run the price up here the dollar looses it's credibility too. If they go sideways here they bleed to death slowly... So maybe they the latter is their best option for now? We'll see. Monday and next week might show if Friday's reversal is a paper bull trap or the beginning of an epic short squeeze. Was 1130 THE low?

Sat, 11/08/2014 - 18:25 | 5428008 BingoBoggins
BingoBoggins's picture

I bet the farm and rode the last leg down into the DUST: nearly shit my pants, but made a killing on cashing in. Hedged back just a pittance on NUGT s immediately afterward, then noticed the leg up late on Friday. Dismayed, I previewed all the other gold leveraged ETFs but they had only moved for squat. My summation is - the sentiment is don't fight the manipulators. They are Gods.

I'm keeping my DUST dry.

Sat, 11/08/2014 - 18:59 | 5428073 frankinpetca
frankinpetca's picture

Wish I had the bucks to put in a buy order $20 below the market.If no blast then no purchase. If a blast, immediately place a sell order up $10 and it will fill in a short time. Small potatoes, but good profit potential, without much risk. It is terrible to be so good at gambling and so poor that my winning bets are not enough to buy an Iphone 6.

Sat, 11/08/2014 - 19:04 | 5428085 saveUSsavers
saveUSsavers's picture

Arsewhole Miestro's Greenspasm bounce

Sat, 11/08/2014 - 19:45 | 5428183 nostromo17
nostromo17's picture

http://pragcap.com/quantitative-easing-the-greatest-monetary-non-event  

QUANTITATIVE EASING: “THE GREATEST MONETARY NON-EVENT”

2009

Sat, 11/08/2014 - 19:51 | 5428200 KingFiat
KingFiat's picture

What is the difference between gold and bat guano?

No, seriously. This is not going to make me change my positions in precious metals. I hold them as financial insurance, and the need for this insurance is greater than ever before IMHO.

Sat, 11/08/2014 - 20:48 | 5428359 eXMachina
eXMachina's picture

Knew it was xauusd from the thumbnail lol.

Sat, 11/08/2014 - 21:07 | 5428405 lasvegaspersona
lasvegaspersona's picture

I would call that the gold derivative chart. It seems the real metally thingy is soon to become in short supply. Actual physical, as measured by the GLD inventory is falling as fast as it was in 2013.

Actually the real gold inventory never falls. It always grows, about 1.5% annually on average.

The trouble is that once it is bought it tends to stay bought especialy as the price falls.

We are nearing that interesting period when the price falls to below the level when more can be mined and way below the level when anyone who has a clue as to why they hold real gold would ever sell.

When that day comes it will surprise a lot of people....especially those who hold 'paper gold'.

Sun, 11/09/2014 - 00:06 | 5428786 Kina
Kina's picture

Gold isn't emotional or is it a trade, or is it a market. This is the mistake critics of gold advocates continue to propagate, even when they know the real story behind the gold price.

Now if we wanted to do an honest analysis of the price of gold we would factor in questions of why with  record demand for physical gold for some years nows, its price dives? You have increased strong demand creates increasing prices......when it doesn't you should ask questions.

Then we would come up with answers like the Fed dropping 400 tons of gold in a day, or the BIS dropping 30 tons in minutes and so forth. Or the dropping of millions of oz of silver in the off market.

And then they would come up with smart questions of..Why? Why is it soo darn important to TPTB that they have go this deeply in corrupting the gold and silver market.

And after some digging we would discover way back in 1974 and before it was the strong determination of TPTB aka Kissinger and co that everything be done to demonetise gold because of its threat to the USD as the global monetry system. And with trillions printed and trillions in debt, one can understand their current panic with gold and letting it show any exhuberance.

Sun, 11/09/2014 - 01:27 | 5428883 knowshitsurelock
knowshitsurelock's picture

So, does that still mean that 3 out of 4 people make up 75% of the population?

When you whipsaw the bears like that, they are most likely to go back to sleep until the wedge tightens.

Sun, 11/09/2014 - 03:46 | 5428995 Wild E Coyote
Wild E Coyote's picture

The price of gold will continue going down. That's for sure. I see only hopless hopefuls still dreaming otherwise. Most likely they are those who bought it when it was too high. 

2 years ago, the market was full of pretty girls running aroud selling Gold. Yes. indeed.

I asked a simple question. Can I redeem it at any time for actual gold? The answer was "No Sir, Why do you want to take gold? don't you want to make money? Look at the Gold price for last few months. This is a trend that is going to make you rich. Just buy now and sell in a few weeks for a big profit".

Further more she made an offer that was difficult to refuse, "And you dont have to worry about cash. Just pay 20%. the rest you can pay after selling." 

I said, wow.... but no thanks of course.

All my friends who bought the paper Gold, waited a little longer to get an few extra buck. I think, you should know the rest of this story. Some poor fellows even added more personal cash to hold on to the paper Gold. Others simply lost good money when they were forced to sell at a loss.

That program, was clearly created by some financial institution. It was a clear dirty game. 

The game is not over. Gold will continue moving down. 

 

Sun, 11/09/2014 - 03:54 | 5429000 bunnyswanson
bunnyswanson's picture

Buy Diamonds - Pawnshops are buying so we should be too.

Fresno Coin Gallery Jewelry & Loan 12 hours ago We are still buying diamonds at our highest prices! Come by any of our locations, with your diamonds. We will give you a no-obligation offer on the spot.
Sun, 11/09/2014 - 03:47 | 5428997 Seer
Seer's picture

It's official, markets are Bat-Shit crazy!

Mon, 11/10/2014 - 04:45 | 5431602 Keyser Sose
Keyser Sose's picture

"Charts are marvelous tools for predicting the past."   -- Eliot Janeway

Do NOT follow this link or you will be banned from the site!