Buttonwoods Newsletter

Price did nothing to confirm a change of trend upwards, instead price dropped in March and the complex correction the market has been in appears to be forming an “A-B-C-D-E” flag pattern as it tests the previous lows of December 2011 and May 2012 in the 1520-1530 area. That price level is key to maintaining the current trading range gold has been in since September 2011 (1520-1804) and overall since August 2011 in a range of 1520-1922/

This is now the 4th major test of this trend line.

Until a breakout at the upper downtrend line occurs, price remains in a trading range inside the large triangle pattern from just under 150 to the 165 area in GLD.
If price does not rally as we expect, and breaks the lower boundary of the triange the next support levels would be the 1400-1470 area in spot gold.

If our outlook is correct prices should hold very close to this lower trend line and form a bottom that would carry prices higher.
This interaction with price can help understand where price may be heading on a longer term basis. A series of two or three clusters (arrows) marking the peaks (or lows) of an extended price move can hint that the general direction of price is in the process of a trend change. Looking at the current situation, one could observe that GLD has had two spike lows in a row and might be hinting of a turn higher in price on the chart above.

       Buttonwoods Newsletter
          March 2013 edition
                   By Randy Johnson

Future Buttonwood Dates:

Daily Dates:
March 6-8, 15-18, 25, 29
April 2, 5, 11

Weekly Dates:
March 13

Weekly II Dates:
March 25

LTII Dates:
Next Date in May

Market Recap:





The expectation is that the cycle low in January has now past. Until the trend turns up lets be flexible.



Here is a GDX medium term cycle. Price dropped sharply into a late January low. This cycle projects higher prices into late April or even the middle of May.  Let's see if we get some action that confirms.



Both Gold and Silver bottomed in early January and are now slowly making their way higher. Price did confirm the breakout of the smaller triangle pattern in December 2012 by dropping and touching the red declining trend line. Our focus is now on the top red arrow in April 2013.

 If price cannot breakout at the upper declining blue trend line in April, price may get stuck inside the large triangle pattern.

So our focus is in April (or May) – waiting for a price high then.
 If price does not rally as we expect, it could be signalling weakness and we would watch to make sure price does not break through the lower blue trend line.

For the next couple of months we want to see prices heading higher to give our short term picture some validity.


Current Market Outlook for March:







Price did nothing to confirm a change of trend upwards, instead price dropped. It appears that price is continuing to form the “A-B-C-D-E” flag pattern as it drops to the previous lows of December 2011 and May 2012. That price level should provide firm support.

Of course we need price to confirm that projected support by bouncing higher from it.

The next chart should give strength to that argument...






This is a chart of the bullish sentiment for the Precious Metal (PM) stocks. According to the latest reading there are only slightly higher than three percent of investors that are bullish in their outlook for PM stocks. That is one of the lowest readings I have ever seen. I did not think it would get this low. Used as a contrary indicator, it supports the fact that Gold should be near a price low of some importance.






Here is another chart showing a triangle pattern with price at support right now. Price could turn higher now or drop slightly and still fit within our idea of price turning higher soon. However, a break of the strong support of the last two lows could mean much lower prices in a rapid drop.



This chart shows a high level of shorting by what many experts consider dumb money. This could also be a sign that a price low is nearby.






Many of our cycles pointed to a January price low. What we are seeing now, is a February or even March low. Taking into account the late cycle low, the next price high is projected into late May or even June. May 21 -28 is our preferred date for a price high.




We want to see price break above the upper declining trend line in May or June. A break higher will foreshadow a strong market, while price turning down from that trend line could be a worrisome sign going forward.  A close below the low established on the trend line break would signal a correction/pullback is underway.







The US dollar shot higher from the Head and Shoulders neckline like it was on fire. The oscillator appears to be starting to roll over, so a high could be near.

General Equities Outlook for March:


The QQQ dropped out of our rising channel just long enough to make it look like a decline might happen. Now price is back in the channel.  When it comes to channels, its not the penetration that counts but what gold does right after that counts.




While the Daily date of March 6-8 may be the low we are looking for in the PM market, there is a chance that the same date may affect the general equities market – as a high. This is not a high probability event, as both markets would be marking extreme price points while going in opposite directions. But stranger things have happened. We are still looking for a break of the ongoing channel to provide future direction clues.

 Summary and Outlook for March 2013:
We are expecting higher Precious Metals prices into late May or even June. Early March may see the price bottom finally come in. There are some geomagnetic cycles that suggest June 2013 could be a price high. Our focus will be to monitor price as it interacts with the various triangle formations. We should get a good idea of the strength of the spring rally using these patterns as a measuring tool. A high level of caution will be warranted if price cannot break out of the flag or triangle patterns by May or June.

General equities continue to trend upwards in a channel formation. Prices have been stuck in a trading range since November 2012. Sentiment readings remain very bullish. Used as a contrary indicator, a drop in prices is expected. We will be watching early March for a signal that perhaps price is ready to decline. However, price could easily continue its march higher as well.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

Buttonwoods Newsletter
          February 2013 edition
                   By Randy Johnson

Future Buttonwood Dates:

Daily Dates:
February 4, 8, 14-15, 27
March 6-8, 16

Weekly Dates:
February 4, 19-24

Weekly II Dates:
February 4, 18, 25

LTII Dates:
Next Date in May


Current Market Outlook for February:




The expectation is that the cycle low in January has now past.  Until the trend turns up lets be flexible.




Here is a GDX medium term cycle. Price dropped sharply into a late January low. This cycle projects higher prices into late April or even the middle of May.  Let's see if we get some action that confirms.







If price cannot breakout at the upper declining blue trend line in April, price may get stuck inside the large triangle pattern. So our focus is in April (or May) – waiting for a price high then. If price does not rally as we expect, it could be signalling weakness and we would watch to make sure price does not break through the lower blue trend line.

The bullish scenario would have price break above the top blue trend line and test it as support later in the summer – and then on to new highs in December 2013/January 2014.

The bearish scenario could see price turn down inside the triangle around late April or May and break down through the lower blue trend line. The possibility of a panic type situation could become very real at that time. An important low could develop in late summer much like the 2008 low.

For the next couple of months we want to see prices heading higher to give our short term picture some validity.



A simple elliot wave count on GDX.





Triangle chart of GLD.
Notice the 14-15 week cycle has a hit around the May time frame. And also notice that the apex of the triangle is at that time as well. If price follows within the triangle and heads into the May time frame, price will have to break out – one way or the other. If price trends higher within the triangle to the apex, that would be considered a price top. A price drop lower afterwards would be more likely.

The April/May time period appears to be a place to expect a medium term change in price trend.



The US dollar appears to have nearly completed the right shoulder pattern. Price now could drop down past the neckline at any time. Price could also bounce off the neckline. A break lower should give Gold and Silver the boost higher they need.  Here also we need to see price confirm and make the forecast more likely.




The various general equity indexes have been in a weak uptrend trading range since the mid November low. Measures of smart money traders say they have been shorting the market for the last two or three weeks – as prices continue higher.






The sentiment numbers are historically high and a price high should be expected. We have a cycle low in late March. We are watching the uptrend channels for a price break downwards.


General Equities Outlook for February:


The various general equity indexes have been in a weak uptrend trading range since the mid November low. Measures of smart money traders say they have been shorting the market for the last two or three weeks – as prices were moving higher.

The sentiment numbers are historically high and a price high should be expected. We have a cycle low in late March. We are watching the uptrend channels for a price break downwards.

Summary and Outlook for February 2013:
We are expecting higher Precious Metals prices into at least late April or late May BUT WE NEED TO TURN THE TREND BACKUP as the trend is down right now as of this update. We need a close back above 1672-1685 for price confirmations.

 There are some geomagnetic cycles that suggest June 2013 could be a price high. Our focus will be to monitor price as it interacts with the various triangle formations. We should get a good idea of the strength of the spring rally using these patterns as a measuring tool.

If price breaks down through the lower trend lines, then expect lower prices. This would be an indication that Precious Metals are weak.

General equities are trending upwards at a decreased angle. Prices have been stuck in a trading range since November 2012. Sentiment readings are very bullish. Used as a contrary indicator, a drop in prices are expected. Our measures of smart money show they have been building short positions during the weak price rally.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

    Buttonwoods Newsletter

          January 2013 update

                   By Randy Johnson





Current Market Outlook:




Our indicators are telling us that the imminent likelihood of a PM low of significance is high. We are waiting for price weakness to begin purchasing metal next week.



Our date of December 28 – January 7 for a low appears correct. The actual price low may stretch past January 7 by two or three days. As long as the bottom channel is not broken to the downside, we will remain bullish into a high in late January.




The SLV should break down through the blue horizontal support level. That will be our clue to begin buying on weakness. We expect price to stay above the lower channel. A break below that channel could mean much lower prices ahead. The next target would likely be near $22. - $23.

Current General Equities Outlook:



The general equities market seems to be doing the exact opposite of the PM sector. A price high appears likely at around the same time the PMs are expected to bottom.


Summary and Outlook for January 2013:
We are expecting an important CIT (change in trend) this week in both the Precious Metals and general equities markets. Our indicators are telling us that the PM market should bottom and the general equities should top. As always, if you trade the markets use wise money management techniques in case the market does not cooperate with our dates.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

      Buttonwoods Newsletter
          January 2013 edition
                   By Randy Johnson

Future Buttonwood Dates:

Daily Dates:
December 31         January 4, 7, 10, 18-21, 25
February 4

Weekly Dates:
January 4, 17      
February 4

Weekly II Dates:
January 7, 26
February 4

LTII Dates:
December 31  (Next Date in May).

Market recap:




The big picture has not changed. Major support is the red declining trend line. And the green declining trend line below.




The next major cycle is due January 2013. See the red arrows.

Current outlook for January/early February 2013:






A look at our major cycle for GDX shows price still declining towards the early January Buttonwoods cycle low.





Let’s start with the more bearish scenario. This is an alternate Elliott wave count for some practitioners. The main thought is that the multi month long correction has not ended, but will finish with the attainment of the projected low marked “E”.





Cycles on the GLD chart suggest a price low in January 2013. Price has come down as far as the 61.8 Fibonacci retracement level. Price has still not touched the declining green trend line.



(Chart courtesy of Stockcharts)

Sentiment indicators are declining towards levels that have seen price bottoms in the past, but there appears more room for decline. The question that needs to be asked is after the extremely dismal sentiment readings of July 2012, how far do bearish sentiment levels need to go. The low seen last July does not happen very often. I view sentiment reading like July as places in time when smart money fills their longer term accounts with assets – in this case PM stocks and metals. From those places in time when the smart insiders accumulate for their longer term accounts, the price trend usually moves higher for months. To see another extreme sentiment reading as low as July 2012 in the next month or two would be rare and unexpected. Having said that, unexpected occurrences do happen in the financial markets on a regular basis.
We have already seen a number of momentum based systems and advisory services start to purchase a variety of long PM positions this past week. Most are just starting to buy with the idea that if/as price continues to drop, they will continue adding to their long positions.






SLV looks like it could drop further going into the January low.


Our Buttonwoods date of December 30 – January 7 is fast approaching and it continues to look like a price low.



Notice the low position of the oscillator – price could still fall further, but will probably stay within the channel lines shown.





Here is a similar chart of GDX with price channels. Any price break below the lower channel line of either SLV or GDX would signal that price may be headed lower than we are expecting. What we are looking for is bottoming action at or above the lower channel lines within our December 28 –January 7 date.



Here are a couple of dates going forward in time. As stated earlier, we saw some extremely bearish (negative) investor sentiment in July 2012. We view those extreme levels to be similar to late 2008. At the end of 2008, we believe smart money insiders filled their accounts with long term long positions in the PM sector. Subsequently, prices rose for more than 2 ½ years. Another fundamental fact that we think should firm prices going forward is that January is typically the most bullish month for PMs over the years.



The last two signal dates of the GDX system came in as highs. If prices drop as we think they will, the January 4 date should be a price low.



The head and shoulders pattern is still in the building process before the drop below the neckline occurs. Notice the symmetry of the left shoulder. It has two “mini” shoulders on either side of the main shoulder. Right now, we are expecting the $US to rally into early January 2013 to build the equivalent of the February 2012 “mini” shoulder. After that, the red arrow shows the expected decline.

General Equities outlook:



The two charts above show the likely scenarios going forward. The second chart seems more likely based on the fact that the December 17 date appears to have come in as a price low (also shown on the QQQ system chart below. However, an argument could be made for the first scenario with the December 17 coming in as a high.



The best position for the December 17 arrow is as a price low because of the dip in the level of the blue, short term oscillator. Price has gone sideways since the early December date. So the short term price trend going into the first week of January 2013 should provide a good clue as to the price direction for the rest of the month of January.

What we are looking for as a hint for future price action is the date around January 3-7. If price rallies into early January and then turns down near our CIT date, then expect a declining market through January. If price drops going into early January and then turns higher near our date, we would expect a price rally through January. Those are our thoughts going forward.


Summary and Outlook for January 2013:
We are expecting one more drop in PM prices into January 2013. Most of our cycles point towards a low in the first week of January. We must keep our plans flexible and nimble in case the market does not give us exactly what we expect, when we expect it. A PM low anytime in January would fit within our plans, however we must also recognize that January is seasonally usually the most bullish month of the year for Gold and Silver. Once the month of January begins, time may be short before prices begin going higher. We are even planning to start buying in increments, on weakness during the final days of December if price continues to decline. While we view this opportunity as possibly being near the end of the multi month PM correction and do plan to buy in larger quantities, we will still stick with prudent money management standards. If prices do continue to erode in 2013, we will make sure that “dry power” is available to buy at even lower prices. Having said that, our current view is for much higher prices into mid 2013.

For general equities, we expect the early January time frame to be important to showing us price direction for the rest of January and maybe into February. The trend that starts after the first week of January should continue for several weeks afterwards.

 Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

     Buttonwoods Newsletter
          December edition
                   By Randy Johnson

Future Buttonwood Dates:

Daily Dates:
December 3, 10, 14, 21, 31
January 4, 7

Weekly Dates:
December 7, 12
January 4

Weekly II Dates:
December 3, 17
January 7

LTII Dates:
December 31

Market recap



Here's what we wrote in November.


  BUTGLD3DEC



While price did not drop as far as the 50% retracement level on GLD our target for GDX 48-49 was hit as we reached 45 at the lows. We did purchase metal on November 2 as price dropped sharply through the .38 retracement level.  Its still possible to reach that 50% retrace.

Our Major support remains the green downtrend line from 2011.  If we’ve not made the lows, then the 50 and 61% Fib levels on the chart also offer support.   The bottom of the chart has the medium term cycles and the next turn point is January 2013.





BUTGDX7DEC




The November 19th date is a MINOR turn point signal and thus there are two scenarios to watch for.  The first is this might just be a bounce this week with another low point due on Dec 3rd that would favor a higher December after that date and be in line with the seasonal average which has been up 8 of the last 11 years.

BUTGLD2DEC


Current  Outlook for December/early January:






The big picture has not changed. Major support is the red declining trend line. And the green declining trend line below.





The next major cycle is due January 2013. See the red arrows.







Here are another set of major cycles for the GDX. As you can see, January 2013 is a focus point for our different major cycles.






Here are the long term cycles we follow in SLV. Again, we see a major cycle due in January.

Using the triangle trend lines as long term support and our cycles support comes in around 155 for GLD and 25 for SLV.






Now we are going to take a look at the Buttonwoods medium term cycles. Notice that each one of the cycle dates was a price high. The next cycle date is very late January 2013. The previous cycles converged in the first week of January 2013.





This chart shows mixture of high and low cycles. Price has declined (for the last 4-5 trading days) into the latest cycle date of December 3. We are looking for a change in trend (CIT) after price has declined into the December 3 CIT date.






Here is a downward sloping channel showing the shorter term  cycles with December 3 coming in as a low and December 17 as a high. Note the top trend line channel at December 17.







Here is an upward sloping channel of a shorter time span. Again, note the approximate price of GDX at the top channel and December 17. If December 17 is a price high it may occur similar to the two channel charts shown. If price drops down through the channels, a decline into very early January is likely.

-------------------------------------------

Let’s try and put all of the ideas of the previous charts together.  First, the Buttonwood CIT dates that we are focusing on are December 3 and 17. The next date after that is January 4-7. A major cycle is due in early January. It could be a low for Precious Metals (PMs). A price break below either of the GDX channels could mean that price is already heading to a January low. However, if price continues higher in the GDX channels, then the next date of December 17 may be the price high CIT where price turns down and heads toward a January  low.

 Right now, price appears to be dropping into a December 3 low.  That fact makes it look like price will rally in those GDX channels towards mid December from where price is now. So, we are watching for price to turn higher from December 3 and lower from December 17. A New moon occurs on December 13. Often New moons occur near price tops – so a high could happen a few days earlier than December 17 and start down into January.

There is the possibility that December 17 comes in as a price low. What happens then? That would open up the possibility that early January would be a high. So far, the price action inside the GDX channels looks corrective, so a continued price move past December 17 does not look likely. But price is the master and we must follow what price does.



 

This chart of UUP ($US) shows the Head and Shoulders pattern that we have been forecasting and tracking for a couple of months. The pattern looks pretty good. What appears to be the next move for price is lower to meet the Neckline in mid December. The oscillator is pointing down – we are just waiting for price to drop through the middle red trend line to the Neckline. That price move should correspond to a price rally in PMs to a mid December peak.

 Because the UUP price has dropped into the December 3 date (as did GDX, etc), we really need to watch and see how price reacts to the middle red trend line.
If the price of UUP breaks higher from December 3 (and the middle red trend line), then perhaps the PM price will be peaking on December 3 and get ready to drop down from the GDX channels towards a January 2013 low.





Here is the current GDX Weekly II chart. December 28-29 is the system date that equates to the December 3 date already mentioned.

The following PM stock charts are an attempt to illustrate what we consider the most likely price movement scenario with Buttonwood dates, Elliot wave theory and channels. They show a possible mid December price high at point 4 within the channel formation and subsequent drop into early January 2013.






NEM price has been very weak.






Here is ABX with the channel only.









First Majestic price has been incredibly strong. It has formed a channel above a larger channel.

One final thought about price movement possibilities. One idea that needs to be stressed is that PMs are in a major bull market. The price of gold has been climbing since 2001 and we believe will continue to climb in the years ahead. At any time prices could again launch higher and restart that major up trend. The bigger picture risk is not being invested with a solid core position.



General Equities:



QQQBUTDEC


October 19 stopped the recent price decline in QQQ, although the date was thought to be too weak to be included in the report. Price is strong coming into the December 3 date. The price action for the December 3 date is telling us a price high is due here. However, larger cycles suggest higher prices into mid December (and perhaps into late December) similar to PMs. Perhaps what we will see is a set of two price highs – one now (December 3) and another near our December 17 date.


Summary and Outlook for December:
Short term we believe that Precious Metal prices may have further to rise – possibly into December 17. We are going to let the channels shown with the GDX charts guide us within the framework of our dates for December 3 and 17. We are alert for a move lower into January perhaps even before our mid December 17 date, due to a New Moon on December 13.  Odds favor a low Dec 3rd and a push into mid December.  We'll have to see how it plays out.

Longer term our cycles are showing January as a key CIT time area.
We continue to be on the hunt for a price low in order to accumulate more metal – we think early January might be that time frame if price cooperates.

The general equities sector cycles show a similar pattern as the PM sector. Short term higher into mid December. The longer term cycles are slightly favoring a rally into year end.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

      Buttonwoods Newsletter
          November edition
                   By Randy Johnson


Future Buttonwood Dates:
Daily Dates:
November 6-7, 11, 19, 23-26
December 3, 10
Weekly Dates:
November 1-2, 7
Weekly II Dates:
November 19
LTII Dates:
None




Current outlook for November/Early December





While price did not drop as far as the 50% retracement level on GLD our target for GDX 48-49 was hit as we reached 45 at the lows. We did purchase metal on November 2 as price dropped sharply through the .38 retracement level.

Our Major support remains the green downtrend line from 2011.  If we’ve not made the lows, then the 50 and 61% Fib levels on the chart also offer support.   The bottom of the chart has the medium term cycles and the next turn point is January 2013.  The rotations for December will decide on whether a high or low point takes place. We say that because the outlook into December has mixed indications. We can build a case for either side with about equal weight, each having their plus and minus.  From a seasonal standpoint December has had 8 of the last 11 years as up so it’s something to keep in mind.  On the inverse, last year December dropped 180 dollars for the month.

We are going to present two scenarios and let price pick the most valid.
Let’s take a look at where price may go from here.


GDXBUTTNOV



The pattern for 2012
 
The powerful rally in August had a turn at each buttonwood date but each date produced only a pullback of 3to 4 days as the power of the rally produced a Gann 89 day peak to peak cycle.  The September pullback so far has played out.  The only date of significance since the high on the 22nd was the October 27th date. We were looking for a low then but an inversion occurred and signaled the date as another bounce and turned out to be the high of the bounce and price took another leg down.  Price got very close to some important support lines I’m watching near the 42-44 area.

GDXBUTTNOV1



 All of the GDX weekly II dates have been producing high points on the chart pattern.  The next turn points of Nov 19th look to be putting in a low with a bounce.

The November 19th date is a MINOR turn point signal and thus there are two scenarios to watch for.  The first is this might just be a bounce this week with another low point due on Dec 3rd that would favor a higher December and be in line with the seasonal average which has been up 8 of the last 11 years.

The 2nd scenario would be for price to continue higher from here into Dec 3rd and potentially turn down from there. That scenario would actually play with the GLD cycles that call for a turn in January of 2013.

So depending on whether there’s a low or high on Dec 3rd should provide guidance.
In either case the real key is going to be whether GDX can now get above its key resistance level in the 48-52 area where we’ve highlighted in Green the key price zone and channel lines we need to overcome.  That’s really the bottom line. We can plug in the turn dates, but its price that has to perform.  If price is going higher in 2013 it has to overcome this bull/bear line first.

HUIBUTT20NOV


 
Bull flags are usually continuation patterns and the odds usually do not favor price dropping out of the “bull flag” channel as it did with the PM stocks.  
 Interestingly, the metals are starting to show what looks like a bull flag pattern quite a time after the PM stocks developed theirs.

Because of the strong nature of the decline, we must be alert that after late November/very early December price may fall again.  One clue will be to see what price does at HUI 450 where that lower channel line resides.  If price can’t get above there, the Dec 3rd will most likely provide the low.

SLVBUTT20NOV


 
Another chart I keep showing is SLV which also fits the scenario of GLD cycles that project a January low.

One very important aspect the large multi month triangle chart pattern that is not being discussed by newsletter writers is that to validate the breakout of price from the long term triangle correction pattern, price SHOULD retest the upper declining trend line. As far as I can see that has not happened. This brings us again to the scenario of the possibility of lower prices. The one caveat here is that the strongest trends do not have enough energy to retest the downtrend lines.  Since its silver we’re talking about, we do have to take that into consideration as well.

NEMGGBUTT20NOV

 

Newmont and GoldCorp have chart patterns that might be following an Elliot pattern that projects and early 2013 low as well.
Goldcorp is showing a similar pattern where we might be able to count out a “5 wave C” occurring.  It also opens the potential that a bounce once wave three is complete could lead to a mid December higher and then the final low in early 2013.   We do have a DAILY Buttonwood date on Dec 10th .    Perhaps that’s where the wave 4 bounce could occur.

GOLD MINER’s BULLISH PERCENTAGE


BULLPERCENTAGEBUTT20NOV





Gold miner share sentiment is nowhere near extreme bearish despite the recent deep price drop. So, theoretically sentiment could get much more bearish. However, the premium to net asset value measured by Sprott’s fund PSLV is a sentiment indicator that is at very low levels.  The lack of bearishness on the PM’s may very well be because of the seasonal move higher that everyone is geared too.  That would keep them bullish just long enough to get the shaft as has occurred on some of the gold stocks.

GLDBUTT20NOV2



The metals also have a bull flag pattern.  We mention it because often PM stocks lead the metal in price direction, so we need to pay attention to thi bull flag just in case the gold stocks have given for warning.  If we break out from the upper channel line, we’ll cast that thought aside. 

Dates
Our November 19 date may provide a price bottom, but we are more concerned about how the next date and timeframe of November 30 to December 3 play out.
If the next two weeks produce a sluggish rally or corrective sideways type price action, the above trend line cross may be a spot to look for a price Change In Trend. Our focus is on the very early December date being some kind of price high CIT but that is as long as November 19 provides a PM price low. So the most important dates going forward are November 19 and November 30-December 3.

IF PRICES BREAK DOWN BELOW the lows established on the 19th and or cannot get above the resistance lines, then it will be possible for a Dec 3rd low.  Even a December 3rd low can still play out in the oscillations for the early 2013 timeframe to be the turn point for this downtrend. 



NASDAQ QQQ’s
We have made some minor improvements to the QQQ system from last month. There are slightly different oscillators and internally the date choosing process was tweaked very slightly.

The oscillator is in an extreme low position, so expectations are that price will turn up soon. Any price below 61-62 would alert us that price may fall farther than we expect.
Time cycles are hinting relatively strongly that December 3 should be a high. Looking further ahead, we have a very strong date (December 30) on the radar. Unfortunately, the late October date did not catch the price low. Again, watch the low 60’s on the QQQ. If price falls through that level, price could drop farther than we expect.




Summary and outlook for November:
We expect prices in the Precious Metals (PM) will favor a bottom around November 19th or December 3rd and regardless of which we favor the key turn low for the metals is in early 2013. The key is to watch where price is on these next dates and how close to resistance it is occurring at and whether Dec 3rd is coming in at a high or a low.

Last month, Metal prices did not decline quiet as much as we favored, but PM miners dropped further. Prices now appear to be making the decision on this current move.  So far Nov 19th had gold trade at 1736 --- just 4 dollar short of the November high.  A close above 1742 would favor higher into the December 3rd date.  If we can’t get above 1742, the downside potential will still be in play.

There are still valid arguments among the respected analyst that PMs may suffer further price weakness into the later part of 2012/early 2013. The COT short position and longer term cycle studies are among those arguments.

While this bearish scenario should be considered carefully, we think a close above 1742 tilts the trend is now up possibly to very early December and then we will update after we see how the December 3rd date played out.

The general equities sector may bottom soon as well, if it hasn’t done so already. Our indicators are hinting at further price strength into possibly December 3. We are encouraged that the QQQ stopped declining at just above 61. A price drop below 60 on the QQQ index would nullify that scenario.

We feel for our personal investment goals, that buying on weakness at specific time and price areas will be a successful strategy in the longer term.

Bottom line
We’ll have to see how the Nov 19th – December 3rd date’s play out as to cycle highs or lows.  The one other Date we’ll watch is December 10th (but we’ll watch from a distance). 


The key regardless of the turns in the next two weeks is that our weight of the cycles favor the first days of January 2013 as most likely providing us with another opportunity to purchase metals on weakness.
We’ll follow up in early December once we see the pattern of December 3rd.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.

      Buttonwoods Newsletter
    Mid October edition
                
  By Randy Johnson

Future Buttonwood Dates:

Daily Dates:
October 1, 5, 12, 22-23, 29-30
November 6-7, 11

Weekly Dates:
October 18
November 1-2

Weekly II Dates:
October 8, 29

LTII Dates:
October 23-29


Welcome to a mid month edition of Buttonwoods. Because of the timing of the expected low in the Precious Metals sector, we though an update was in order.






The decline we had been expecting through much of September has finally arrived. The purpose of this mid month update is to focus on where the price low may occur.
The above GLD chart shows the large corrective triangle pattern. Price broke out decisively in late August. In many cases, a pullback to the top declining trend line occurs. That would measure approximately at the .618 retracement level (in red). While it would be nice if price pulled back that far this time, I’m not sure it will. The first price pullback level should be the .50 level. Both of these targets could be bought by someone buying as price weakness occurs, in increments. Some investors might buy larger amounts at increasingly lower levels.




The most likely buy zone for the GDX is between 48 and 49. An investor could watch the GDX to gage the correct retracement level for GLD. That may help focus your buying. Our next time target for a low CIT is October 25-26. As you can see by the above chart, our time targets have a few days wiggle room, so price could mark a low as far as the first few days of November.





The HUI chart date is October 27 and price near 460 - 470.







The 460 price target would occur if price fell from the wedge pattern as shown above. The distance of the widest part of the wedge is approximately the distance price would be expected to fall.






SLV is falling from our late September and early October dates. Price is expected to continue falling through the rest of October. If prices fall hard, our dates will help guide us.






We have shown this SLV chart before. Price could drop and touch both of the red and black declining trend lines, but may only hit the red trend line to stop the decline. Notice that the low cycle does extend into early November.






Remember that the black declining trend line is the ideal price target for the previous breakout from the month’s long correction. There are some respected market watchers that are nervous about the strong COT short position in PMs right now.






We are still expecting the $US to make a charge higher soon.







The October 19th date was considered a price high that occurred two days early. The oscillators were not at extreme levels so no system signal was taken. It appears that both price and the oscillators are headed down into the late October date.





The QQQ system also appears headed lower. The short term oscillator marked the October 8th date as a high as shown. Again, no system signal was given. The next date after late October is November 19. With some of the “cliff” drops that some equities such as AAPL, IBM and GOOG have had, it is conceivable that prices continue lower into the mid November date. We will have more on that in the November Buttonwoods newsletter.

Summary and outlook for October:

We continue to want to add more PM long positions and think that the time is near. Late October is an LT II Date. LT II Dates can sometimes be markers of medium term price changes in trend (CITs). January 2013 is on our radar as well. There is still the chance that PM prices could fall further than what we expect in October. If prices drop into our retracement levels in late October, I will be buying. However, I will also MAKE SURE that I have some additional funds available to buy in January 2013 as well if prices continue to slide past October. I DO NOT use leverage. Never, ever.
Remember my investment strategy is to accumulate at medium to long term price lows. Late summer 2013 continues to look like a strong high point for PM prices. With those expectations in mind, buying on weakness, in increments, at possible CIT areas continues to be my strategy.

Disclaimer:
Please be aware that any information in this letter is for entertainment purposes only. This is not investment advice. We are not investment advisors. Do not invest any money unless you seek the advice of a qualified investment advisor. Markets are very risky and you can lose money.