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dummass
05-10-10, 08:38 AM
Icm63 suggests the possibility of a double top in gold at 1200 here: http://www.itulip.com/forums/showthread.php?15437-Sell-in-MAY-and-run-away-FAST..&p=160145#poststop

Here's the gold chart:

http://http://finance.yahoo.com/echarts?s=gld#chart2:symbol=gld;range=1y;indicator =volume;charttype=line;crosshair=on;ohlcvalues=0;l ogscale=off (http://finance.yahoo.com/echarts?s=gld#chart2:symbol=gld;range=1y;indicator =volume;charttype=line;crosshair=on;ohlcvalues=0;l ogscale=off)

So, what is a double top? Definition found here:

http://www.trending123.com/patterns/double_top.html

1. Uptrend Preceding Stock Chart


As mentioned previously, the double top is a reversal formation. It begins with prices in an uptrend. Analysts focus on specific characteristics of that uptrend when searching for a valid double top. The trend upwards should be fairly long and healthy. Bulkowski maintains that an investor will want to see prices trending up over the short to intermediate term - approximately 3 to 6 months. Further, he states that "the price trend should not be a retrace in an extended decline but generally has a stair-step appearance. Schabacker confirms this approach, explaining that if the stock has been in a long, healthy uptrend, the double top is more likely to develop into a reversal. If the uptrend is short, the double top may not hold and the uptrend will continue.


2. Time between Tops

Analysts pay close attention to the "size" of the pattern - the duration of the interval between the two tops. Generally, the longer the time between the two tops, the more important the pattern as a good reversal. Schabacker warns investors off of a pattern where only a few days intervene between the two peaks.Analysts suggest that investors should look for patterns where at least one month elapses between the peaks. It is not unusual for a few months to pass between the dates of the two tops. Murphy mentions that these patterns can span several years.


On the other hand, Yager notes that patterns that are too long may be unmanageable, and she looks for tighter, shorter patterns. Yager believes that shorter patterns are viable as long as you can see the volume in the right top forming.


3. Decline from First Top


According to Schabacker, this element is even more significant to the validity of a double top than volume. He argues the decline in price that occurs between the two peaks should be consequential, amounting to approximately 20% of the price. In fact, he states that it could even be more than that but should not be much less.Other analysts are not so definite or demanding concerning the price decline. For some, including Yager, a decline of at least 10% is adequate. All agree, however, that the deeper the trough between the two tops, the better the performance of the pattern. 4. Volume
As mentioned previously, volume tends to be heaviest during the first peak, lighter on the second. It is common to see volume pick up again at the time of breakout.


5. Decisive Breakout


According to Murphy, the technical odds usually favor the continuation of the present trend.This means that it is perfectly normal market action for prices on an uptrend to peak at a resistance level a couple of times, retreat, and then resume that uptrend. It is a challenge for the analyst to determine whether the decline from a peak is the indication of the development of a valid double top or simply a temporary setback in the progression of a continuing uptrend.Analysts, therefore, advise cautious investors to wait for the price to fall back and break through the confirmation point before relying on the validity of the pattern. Many experts maintain that an investor should wait for a decisive breakout, confirmed by high volume. Others, like Bulkowski, are not so reliant on high volume at the time of breakout but do agree that the higher the volume at the time of breakout, the further the decline in prices that the pattern will register.


6. Pullback after Breakout


A pullback after the breakout is usual for a double top. Bulkowski argues that the higher the volume on the breakout, the higher the likelihood of a pullback. "When everyone sells their shares soon after a breakout, what is left is an unbalance of buying demand (since the sellers have all sold), so the price rises and pulls back to the confirmation point."


As you can see, the criteria for a double top has been met. This would appear to be a good call. What do you think?

dummass
05-10-10, 08:41 AM
Can someone fix the link to the chart? It would be nice if the chart could be viewed on the thread, if possible. Thanks

ThePythonicCow
05-10-10, 08:55 AM
Can someone fix the link to the chart? It would be nice if the chart could be viewed on the thread, if possible. Thanks
You can edit your own post, but the rest of us ordinary members can't. You can fix that link by removing the "http//".

Change:
http://http//finance.yahoo.com/echarts?s=gld#chart2:symbol=gld;range=1y;indicator =volume;charttype=line;crosshair=on;ohlcvalues=0;l ogscale=offto:
http://finance.yahoo.com/echarts?s=gld#chart2:symbol=gld;range=1y;indicator =volume;charttype=line;crosshair=on;ohlcvalues=0;l ogscale=offHere's the chart of GLD as a static image
http://ichart.finance.yahoo.com/z?s=GLD&t=1y&q=l&l=on&z=l&p=s&a=v&p=s&lang=en-US&region=US

dummass
05-10-10, 09:08 AM
Thank you, humble cow. The link is now working, but I like your static image better.

chr5648
05-10-10, 09:10 AM
You won't know its a double top until price moves up or down, at this point a DT is just a guess.

ThePythonicCow
05-10-10, 09:16 AM
Thank you, humble cow. The link is now working, but I like your static image better.
You're quite welcome, good sir.

dummass
05-10-10, 09:24 AM
http://www.kitco.com/LFgif/au0182nyb.gif

dummass
05-10-10, 09:38 AM
You won't know its a double top until price moves up or down, at this point a DT is just a guess.

The idea of this exercise is to analyze the possibility of a double top, before gold hits 1060 and confirms the hypothesis. So far, we know that the second advance to 1200 happened with lower volume (see chart of GLD above). Gold has also been dropping this morning. Is this an advanced warning?

thisandthat.nowandth
05-10-10, 07:58 PM
The bulls perspective courtesy of Clive Maund 5-9-10

http://www.clivemaund.com/charts/gold1year090510.gif

medved
05-10-10, 09:27 PM
The idea of this exercise is to analyze the possibility of a double top, before gold hits 1060 and confirms the hypothesis. So far, we know that the second advance to 1200 happened with lower volume (see chart of GLD above). Gold has also been dropping this morning. Is this an advanced warning?

I don't care. I already sold some of my gold mining shares and plan to sell more together with some mining share calls and SLV calls ( I sold my GLD calls earlier and missed reentry point).

If gold drops, I will wait, then buy back some of the stuff I sold. If it goes higher, I will sell more. Booooriiiing...

FWIW, I am expecting the usual annual gold takedown sometime between now and mid-July.

flow5
05-30-10, 12:41 PM
Try a triple top. I got the first two.

Minion
05-30-10, 06:19 PM
I don't care. I already sold some of my gold mining shares and plan to sell more together with some mining share calls and SLV calls ( I sold my GLD calls earlier and missed reentry point).

If gold drops, I will wait, then buy back some of the stuff I sold. If it goes higher, I will sell more. Booooriiiing...

FWIW, I am expecting the usual annual gold takedown sometime between now and mid-July.

I want to thank you for this post and another you made, showing a curve fit of gold price. You seem to share the philosophy of a certain retired investment banker I subscribe to. :) The main lesson: buy weakness and sell strength.

zenith191
06-03-10, 07:43 PM
It's already blown past any possibility of being a double top in some other currencies such as the Aussie, Kiwi, Pound, Euro and Yen. That's the interesting thing about TA and gold - it depends which currency you are looking at it in.

Chomsky
06-03-10, 08:09 PM
Maybe that's because TA is little more than Tealeaves Analysis -- just saying.

Chris
06-04-10, 03:23 AM
Maybe that's because TA is little more than Tealeaves Analysis -- just saying.

What is this? You mean you can't predict the future price of a commodity by drawing straight lines over a squiggly line? No wonder i've been losing so much money in the market! ;)

Finster
07-15-10, 08:10 PM
Icm63 suggests the possibility of a double top in gold at 1200 here: http://www.itulip.com/forums/showthread.php?15437-Sell-in-MAY-and-run-away-FAST..&p=160145#poststop ...

I spotted the title of this thread with amusement because it recalls the double top we saw at $400 and then the double top at $700 and then the double top at $900 and then $1100...

dummass
07-15-10, 10:53 PM
I spotted the title of this thread with amusement because it recalls the double top we saw at $400 and then the double top at $700 and then the double top at $900 and then $1100...


http://www.kitco.com/LFgif/au95-pres.gif


http://www.kitco.com/LFgif/au75-79.gif

You have to admit, the pattern is very similar. We all know what happened in Jan 1980. Perhaps we are not there yet, but one should not be so quick to dismiss the possibility. If we get a moon shot... :eek

jk
07-16-10, 06:42 AM
http://www.kitco.com/LFgif/au95-pres.gif


http://www.kitco.com/LFgif/au75-79.gif

You have to admit, the pattern is very similar. We all know what happened in Jan 1980. Perhaps we are not there yet, but one should not be so quick to dismiss the possibility. If we get a moon shot... :eek

the graphs look similar because of manipulation. although both depict a tripling in price, one takes 5 years to achieve that, and the other takes 15 years.

dummass
07-16-10, 08:45 AM
the graphs look similar because of manipulation. although both depict a tripling in price, one takes 5 years to achieve that, and the other takes 15 years.

Yes, the pattern has taken longer to develop (this time). Does that make it irrelevant to our analysis?

JK, your response seems a bit guarded. Clearly, many of us here, at iTulip, have a large investment in gold. We have been led to believe that we will have advanced notice at the turning point; that we can beat the market when it is time to sell. EJ has certainly made that claim. Are we relying on EJ's analysis for timing this event? As far as I can tell, EJ has never clearly shared his thoughts on how to time this event. Perhaps your aware of something that I have not considered. What should we be watching for? When will we know?

Jim Nickerson
07-16-10, 09:23 AM
Yes, the pattern has taken longer to develop (this time). Does that make it irrelevant to our analysis?

JK, your response seems a bit guarded. Clearly, many of us here, at iTulip, have a large investment in gold. We have been led to believe that we will have advanced notice at the turning point; that we can beat the market when it is time to sell. EJ has certainly made that claim. Are we relying on EJ's analysis for timing this event? As far as I can tell, EJ has never clearly shared his thoughts on how to time this event. Perhaps your aware of something that I have not considered. What should we be watching for? When will we know?

I'm sure jk will come forth with his opinion, but here is another. IIRC in the past couple of weeks Hussman suggested the possibility of a 20-30% correction in the price of gold. If I had a million dollar portfolio (and that was the majority of my invested assets) and 30% in gold, then a 30% loss would equate to a 90K loss or 9%. Personally, I prefer to avoid that if I could. I disagree with reliance upon anyone else to make my investment decisions--EJ or any other pundit. I like knowing their opinions, but unless I had a contract with a pundit to trade my account, I wouldn't get stuck on waiting on their advice as to when I should make a buy or sell.

Jim Nickerson
07-16-10, 09:33 AM
Considering that someday there probably will be some sort of price correction in gold, here is a chart I ran across a few days ago. http://dshort.com/articles/Kimble/100708-GLD-support.html

If you care to look at that link and blow up the chart, you will see Kimble highlighted the price of GLD on the y-axis to be ~116.39. A break below that would break that trendline going back to late 2008. A break would not in any way dictate that a 5, 10, 20 or 30% correction was in the offing, but it definitely represents a breakdown of the trend, as also would have occurred in March or April of this year only then to see prices go to new nominal highs.

jk
07-16-10, 02:45 PM
i think the time frame of those charts are a significant difference. it's not just a matter of taking longer to show the same pattern. i think because of the very different timeframes, they are different patterns, not the same pattern.

in the mid '70s gold was cut in half before going on to much higher highs. these are markets, and anything can happen. for me, the issues are twofold: 1. is the long term case for gold still solid? 2. can i time shorter term movements? my answers are yes and no. [respectively]

dummass
07-16-10, 07:26 PM
for me, the issues are twofold: 1. is the long term case for gold still solid? 2. can i time shorter term movements? my answers are yes and no. [respectively]

That's a curious comment, JK, coming form a guy who involves himself on every gold thread.

(FWIW) I'm not good at timing these thing either, but I do like to try. Perhaps some day, with a little bit of effort and even more experience, I might get better. Who knows?

I've learned to do a lot of things in my life and I didn't start out good at any of them.

jk
07-16-10, 07:30 PM
That's a curious comment, JK, coming form a guy who involves himself on every gold thread.

(FWIW) I'm not good at timing these thing either, but I do like to try. Perhaps some day, with a little bit of effort and even more experience, I might get better. Who knows?

I've learned to do a lot of things in my life and I didn't start out good at any of them.

i've outsmarted myself too many times in the past to think i can time shorter term movements. i don't try.

if you look at the chart in the '70s, you'll see that gold was cut in half at one point along the way. if you'd had the prescience to get out before the drop, when do you think you would have had the nerve to buy back in?

dummass
07-16-10, 08:22 PM
Here is a "Double Top" at $640 (Jan 1980), just before going to $850.

http://goldnews.bullionvault.com/files/1980spike.png