GOOD THINGS COME TO THOSE WHO WAIT

Here we have the Silver market in what appears to be setting up for a decline. If you look at my indicator at the bottom, you will notice how when we hit the standard deviation bands on it, peaks and troughs occur. You can see the last 3 times on the down side we hit the band, a significant low was at hand. Now you can see we just hit it or very close on the high side, which should mean a significant high is here. Yesterday a prominent Hedge Fund manager advised everyone to exit the Gold market claiming a top is here. Well I guess that now means there are 3 of us who think that, Soros being the third member of the trio.

What I would hope for now is a move back up and a false breakout to a new high that fails. This would also create a divergence in the indicator below on top of the price extension that we already have had. That would make this a sell with both hands situation. Typically I never get my exact wishes, so I doubt that will happen. Nonetheless, this is a market along with Gold and Copper that I am watching closely here. They are just crashing today, so this market could just rollover big and not look back. Nowadays we get V tops and bottoms everywhere, where it used to be more of an exception than the rule. This is why you need to learn how to trade reversals, often you are not given a test once markets turn. We also saw that at the stock low last March. Everyone said that would not be a V bottom, so of course that is what it turned out to be.

This is a chart of the Sentiment Index and you can also see we are up into the sell zone. Anything over 80 is a sell, under 20 a buy. You can see how nicely fading Sentiment works here. You can pull up any chart of anything you can think of and it will look just like this. Once everyone gets leaning one way, the market will go the other it is just a matter of time. Why is that? Very simple with everyone bullish there is nobody left to buy to continue to propel price upward. When everyone is bearish, there is nobody left to sell and prices rise. Anecdotally there has never been a bigger wave of bullish sentiment on anything I have seen in my lifetime that comes close to what is in place with Gold. Real Estate is the only thing that comes to mind as being a close second and we all know what happened there.

There is also a very strange relationship between equities and the metals right now. As I type this Gold is down $26 and Silver 65 Cents, and the Dow is down 50. During the past year they have correlated so closely and now finally they are separating. There never was a flight to quality nature in this market in spite of the marketing campaigns by the Coin dealers. The Flight to quality relationship has always been to Bonds from Stocks. Just look at a Bond chart recently and it is right there in front of you. It always has been there. There is not a consistent relationship in either direction between metals prices and financial crises. This is a theory that is manufactured to play on the emotions of people who are scared. Just do your own research and look at charts. You will see in 5 minutes this is bogus.