Gold is down, at one point, 0.6% on Monday, but traders and investors alike need to understand that this really is not a big move, said Chris Vermeulen, chief market strategist at https://TheTechnicalTraders.com. “Today, we’re just this tiny little red bar, this average, usually we see a quarter of a percent, or half a percent move in gold, and today we’re down only half a percent,” Vermeulen said. Gold miners, which usually lead the bullion in price action, have another 10% or so of downside before prices rebound, he added.
We're talking latest market news with Christopher Moolah and chief market strategist@thetechnicaltraders.com. Chris, welcome back. Every time I have you back, gold is down. This is not by design. Of course. It's just the way it is. I mean, this is where in a bear market or are we in a bear market? I jumped the gun there.
Could you characterize this as the bear market? What are we in Chris? Um, you, you could argue kind of gold is in a little bit of a bear market. I mean, we've had a pretty significant pullback from the highs. Price is under the 200 day moving average kind of had that, uh, that bearish cross where the, the 50 day cross below the, the green 200 day moving average.
Uh, so yeah, you could argue we're in a, I wouldn't really say it's a bear market. I actually think we're, we're in a major cyclical, like a bull market here, a major commodity bull market, but this is a big pull back in a pause within it. Like when you look at this chart that we can see here, This is a very strong pattern.
It's actually called a bull flag and more or less, we've seen this massive run to the upside, and now it's flagging down against the trend. And this is what we really want to see. Uh, eventually it should resolve and start to break to the upside and, and have a much higher, uh, price board. Uh, going forward.
So I like this pattern. I still think there's a little bit a weakness in the precious metal sector. It's not over yet. Especially if we see the stock market rally to new highs, I think that's going to keep people's money flowing into equities versus kind of the defensive precious metal sector. But overall, long-term, I'm very bullish on gold short term.
I think it's got a lot of work to do to break out of this downtrend and start to move higher. Okay. When you say long-term like, what, what do you mean by that? How long is that time horizon for you? And how would you read that just by looking at your chart? Right. So LA long-term, this is a, this is a big bull market pattern.
This has taken years to build this base. Uh, we've rallied for, you know, um, Uh, one, two years we're in this first major, major pullback, uh, more or less, this was a, uh, one to two and a half year rally to get to where we are. If this unfolds, we're looking at at least another two and a half years probably to, uh, to the upside.
So I think this is a long-term pattern to me. That's long-term anything a year or longer. I almost look at it kind of like options. It's like a leap it's anything over 12, 12 months is a longterm trade up and investment. So. I think over the next two, two and a half years, we could see gold, you know, rally up to the $2,600 level, uh, based on technical analysis, that's kind of the first major resistance area.
Uh, I think it could go potentially a lot higher, but that's where the chart and this pattern is pointing to is $2,600 an ounce over the next two years for gold. Okay. 2,600 announced for the next two years. Now this chart pattern that. The way you're reading that that could be applied to any asset. Right?
If I, if I gave you the exact same chart and that happened to be, let's say for another stock, you would still say it's bullish longterm. Yup, exactly. Yeah, just like that game. You and I played last time we were on, uh, uh, when I'm trading the charts. It doesn't matter if it's a one minute or a monthly chart throughout all the patterns are the same.
It's just knowing, um, kind of the timeframes day trading is a little different. You got to get out at different times of the day. There's turning points in the day. So a chart pattern is a chart pattern. Doesn't matter, the timeframe you, uh, you, you trade it the same way. Okay. And when you look at gold in particular, do you look at any other macro variables that may have an impact?
I don't. I look at just the price action. I used to do fundamentals and look at all the economic data. Uh, but you only have to go through one or two bear markets and realize, you know, stocks or companies or, or, or when the market is favorable for stocks it's they can still collapse. And so I totally gave up on fundamentals a long time ago.
Um, simply because. They, they don't for me, they don't play out. I like to follow price. It's the only way we get paid as a trader or an investor is price has to go in our favor. It doesn't matter if the news is good or bad, it's just the price. So that's a hundred percent what I follow and you'll, you'll realize like the news typically follows price.
There's a big kind of disconnect between news and price, uh, in, in general, sometimes months off. So. I like to just follow the price. Cause it's like a real time data. It's real time profit and loss. It's the current trend. And that's what I like to focus on. Not economic data, that's delayed weeks or months and people are forecasting it.
And I think the forecasts are fudge to try and make numbers feel not so bad. So, I mean, I just don't give in to any fundamental or news. Right. So when you're okay. So based on your experience, looking at gold, what is the average daily volatility of gold? Is that something you've, um, looked at. Well, what do you mean in terms of volatility?
Like I'm just dealing with, she doesn't usually move on a daily price. Yeah. The price on a daily basis is to move usually one to 2%. Like what's the media movement there on a daily basis because I'm looking at the reason I asked is because we're down 0.6% today. And I'd like to know whether or not that's a significant move for gold based on purely a price movement in the last a couple of years, you've looked at.
Right. So the best way to just get a feel for it is because we're in a downtrend. Typically volatility is a little higher. You're going to notice the red bars are a lot longer than the green bars, which means, you know, when price falls, it falls usually four to seven times faster than it rises, which is why it's really tough.
It's important to manage positions. If something starts to go sideways or it looks like it's about to roll over, you're better to get out. Cause these red bars, if you look how long these red bars are, Uh, typically they're, they're a lot longer than these little green sideways bars. Now, when you look at today, we're this, we're just this tiny little red bar.
This is average. Usually we see like a quarter percent or half a percent move in gold. And today we're down, you know, only about a half a percent. So this red bar is tip is, is typical price range. It's actually a half percent is a pretty decent move for gold, uh, because we're in a downtrend, we do get some of these larger bars.
But, um, if we go back in time here, today's move downward is not even that significant compared to what we've seen in the last couple months. Right? It's nothing it's very low volatility. Gold down half percent is, is nothing. When it's, when it's over 1%. That's when I start to actually look at it. And, uh, and see what's going on 1% for gold is a significant anything over 2% for silver, uh, is something to start looking at.
But, uh, other than that gold is very low volatility. I mean, it usually moves like a quarter percent, maybe half a percent. Um, it's going to have the occasional big red bar, but that's because we're in a downtrend. Uh, but overall it's a very narrow range. It's a good point. You're brought up because gold investors.
They get, they get worried when things move down to 3%, of course, in some other assets to 3% is a, is nothing really, it's an a day in the, you know, and then another day in the office, really for gold it's significant weight. When you do see a big red bar though, Chris, what's your immediate reaction for gold at least.
Um, do, do, do you just wait in the sidelines for it to recover, whereas this a buying opportunity for you or perhaps you'd like to sell on a momentum downward? What's your play usually? It depends on the strategy, my main strategy. I'm more of a swing and position trader now cause it's, um, it's not as active.
Um, when, when we have a big red bar down on gold, I typically look around to see where that money is going. So typically when we got a big down day in gold, it's actually fear in the stock market. We're actually seeing people sell stocks. And when they're selling stocks and there's fear, they, they typically sell gold as well.
Uh, it gets pulled down and, um, typically if I see the stock market collapsed, Or, or sell off, say, say the stock market falls 2%. And then I look and we look over a golden it's fallen 1% or more. Then I know there's actual, real fear in the stock market because gold will do well when people are nervous.
But when there's fear, they, they liquidate, uh, all their positions, including gold. So when you see the stock market fall, you see gold fall dramatically as well. You know, there's actually panic in the market and panic is what we're looking for. For market bottoms and, and to see a bottom put in place for the stock market when, uh, when we're looking at it.
So we want to like buy into fear, prepared to, to get long stocks. When we see the stock market fall, we see panic selling and the stock market. We see gold collapse. Um, so I don't look to trade or take advantage of falling gold prices. It's in a major bull market. I don't really want to bet against it. I'm waiting for price to turn around, start to turn higher and make a series of higher highs and higher lows.
And then I'll start to get interested in, um, in gold and, and miners. I mean the gold miner chart I could pull up, I could show you, it's starting to show signs of life. If we take a look at the GDX, it's usually leads the price of gold and you can see here, let me zoom out a little. That's what I've heard as well.
That gold miners typically lead, uh, lead gold. Tell us about the pattern that you would see. You talked about a reversal. Tell, tell us about the pattern for reversal that you would be watching out for and what that would look like. Um, okay. So in the stock market, let me just fix this chart here. Uh, so minors.
Yeah, let me just pull up, pull up the S P 500. If we take a look. Um, I, I'm not sure if gold gold sold off. I have to take a quick look here, but more or less, we saw two big days of selling in the stock market last week, Thursday, Friday. Uh, if we go over to, um, the Vicks real quick, we saw the VIX spike up.
It's spiked up over 12%, 13% from the lows. So there's some fear in the stock market. When the VIX spikes, it wasn't a huge spike, but it was still a spike in the VIX. And then, um, we can go look over at gold and gold ended up having. It doesn't look like a whole lot, but gold rallied up. You can't see that wick.
And then it's sold down and closed near the lows. The next day it had some pretty good volatility. It's just a sign that when we start to see the stock market sell off and we see gold and silver and miners sell off as well. Typically it's just a sign like this. Isn't a perfect example, but we're looking for them to all collapse and sell off together.
Uh, and that's the sign of a bottom. Um, I'd have to fish around for the last one on the chart, but, uh, more or less, if we go back to gold miners real quick here, I'll just show you what I wanted to, uh, share. So gold miners are in this very clear down channel by just gonna kind of lock the price in between this channel.
We can grab these lows it's channeling it's way lower, and it's worked its way to the upper end here the 50, 50 day moving average. And if we zoom into the price action, uh, if this can start to break above this yellow kind of falling trend line, uh, I think we could be at the start of a new, significant move.
So they've been holding up really good. Gold miners have had a very nice run. Actually, if you look at these lows, we've seen, you know, 11% move in gold miners. Um, well, you know, they're leading, they've got a very strong chart pattern here. I think we could see them start to break out and move higher. Now we still have to clear this 200 day.
Moving average is green line. This is a very important level. Um, gold miners are still below it. Um, gold. If we look at the gold chart real quick is clearly below the green line as well. Um, and then when we look over at silver, Silver's got. A much stronger chart where it's kind of put in a little, kind of a rounding base.
It's trading sideways, it's above the 200 day moving average. It's actually making, doing the opposite of gold. It's making a series of higher lows. It's making a series of higher highs. It's above the 200 day. So I like silver. I still think short-term gold and silver have a little bit of weakness, uh, within them.
We've got this drop and a bear flag, and then we had some more of that drop right down to a support trendline. And now we're, if we formed another drop and a bear flag, so silver could still continue. The last time we talked, I talked about. $24, potentially $23 silver. And I still think that is really viable because I think we got a new kind of stock market, uh, a rally about to start going into April.
I think April could be a big turnaround for stocks, but I think we could rally into there. And if the stocks rally, we're probably going to see money flow out of the precious metal sector, some more shake things up and put everyone into a panic for the precious metals. And then they'll put in a bottom probably in April.
So it's going to be interesting to see how this plays out short term. I'm bearish on gold, silver, and in miners at this point. Cause they're all in a downtrend with short-term bearish patterns. Uh, but overall I do think they're going to do really well. Uh, probably, uh, in April, late April, I think they could come to life and start to lead the market, which is what we see gold and silver do just before a market correction.
All right. Let's talk about stocks in just a minute in that rebound you're talking about, but first, uh, for those of us at home, we're watching who don't have the, uh, T uh, technical chart tools that you're using. Chris, can you just give us levels for what you're looking for? Cause you're talking about, um, move movements up to support lines and, uh, just give us levels for the GDX silver and gold key support levels that, uh, would indicate to you or rebound.
How much further do we have left to fall is what is what I'm trying to say? Yeah. Okay. So a long story short is right now, the price of silver, uh, on the continuous contract is $25 75 cents. I think it can still fall another five. To 10% potentially. And that would be a very good level. So we're looking at, um, $23 or $24 on silver to me is a screaming buy there's a long-term investor.
I also think it should be a swing trade low, where it's going to have a bounce in a rally potentially back up to the 28, um, 28 or 30 level. So that's what we're looking for on silver 23, 24. If we look over at gold. Gold is still got a little bit of some work to do here. I think gold could still come actually all the way down to the M 1640 and potentially the 1600 level, which is quite a way as a way.
Gold is definitely out of favor. It's a weaker of the metals. Uh, I think as still. Some more downside potential, but when we start to break above 1800 on gold on the upside, I think that's going to be a strong level where it's shifting its momentum to the upside. If gold gets up there, we're probably going to see gold miners have already broken out and they're, they're leading the market and that'll be a really good sign for gold itself.
We want to see. The gold miners lead the way, and then gold will typically get dragged up or follow up behind it. So, uh, gold miners and silver miners are kind of keep your eye on. And then the physical bullying and price you'll usually move up after the miners there and 10% drop. Yeah. Yeah. I mean, if we look at GD, if we look at GDX, we really want to see it, you know, above.
Probably above 35 50, um, to, to really kind of break to this upside and, and give us, uh, a new, a new high and, uh, momentum to the upside. So, uh, I think GDX could still fall all the way down to roughly 30, um, potentially even, um, a $29 area. So there's still a lot of volatility. I mean, they're all in, they're all in kind of a downtrend.
The odds are they're going to actually go lower from here and that's why I'm embarrassed. Short-term, uh, going forward. Right. Okay. Now, uh, let's finish with the stock market. Last time you said, uh, on the show a couple of weeks ago, you were bearish, you said that stock markets could see a breakdown now. Um, we haven't seen the breakdown yet, but you're saying that it could happen in April.
Yeah. So looking at, at, uh, there's a bunch of different types of technical analysis without getting into the details, GaN and Fibonacci arcs and all kinds of things like this, uh, They, they they'd show us cycles in the market. They give us timing of how long patterns should play out. And overall, I did some analysis.
Um, months ago we posted something saying, you know, April is when we're looking at potentially a more significant pullback in the stock market. Very similar to what we saw over here in, uh, September, October of last year, where the market. Finally reached a peak, it reversed and then shopped around for, you know, two and a half months.
I think that could be what could happen going forward into April. I mean, that'll bring us somewhere over into here. So this stock market I think, is going to continue to grind. I think the S P 500 is trying to get to that $4,000. Um, Mark on the upside. I think we're going to see this continue to kind of grind around.
I think a lot of the upside in the stock market though is done. I think the key here is to be in the market leaders. The stock market could struggle and chop and kind of grind sideways or higher. Over the next two or three months, uh, and the market leaders should continue to move higher. So the key is to be in the right sectors going forward because even when the stock market goes sideways or down, the leading sectors will, uh, can it usually continue to rally and hit all time highs because the market's always, always has money flowing into it.
So you want to make sure you're into those sectors where that money is flowing in day in and day out on average, don't tease us, Chris. What's. What are these leading sectors? All right. Well, I liked, I liked the energy sector, like the oil, energy sector. Uh, we saw some pretty big moves, uh, in, um, in oil. Uh, obviously oil has been on a tear.
If we look at oil, the trend has been significantly to the upside. It's showing some volatility, but when we look at the oil sector stocks in general, they are performing exceptionally well. They're leading the market higher. Um, so really you want to look at like XLE or anything related to the oil, energy sector.
Also like the retail sector, which is, you know, very heavily weighted with GME, obviously with the price of it really skyrocketing. Um, if we, if we take a look at, um, let's, let's pull, wait, are you, are you suggesting GME pulled up the whole retail sector? It did. Yeah. It's like, uh, it was like 5% of the index.
I think it's like 12% of the index now. So, uh, so this huge spike in the whole retail sector was. You know, a big part of it was GME. And then of course they had another big pop and it pulled up, but this is a very, very bullish chart pattern still. I mean, it's rallied up, it's flagging down. Uh, it's a bull flag.
The trend is up. All the moving averages are slipping up. So the retail sector is doing really well. It carries a little more risk because one stock is very, really, very heavily weighted and can't control it, but it is a leading sector. Um, going forward. So I like those two plays. I think they're, they've got lots of opportunity when you look at, um, let's take a look at XLE real quick here.
Uh, the energy sector, uh, has had a series of rallies and pullbacks rallies and pullbacks, and it's doing the same thing. Again, it's just taking a wave of profit taking, we've seen a little pop in technology stocks, and so that money has come out of the energy sector has gone into, um, NASDAQ, some technology plays, but I think the, the market's going to rotate back into the energy sector and we're going to see that continue to go higher going forward.
Awesome. Thank you very much, Chris, for your update and we'll catch up with you. And again, in a few weeks. Sounds great. Thanks for having me, David. This is David Lynn for Kitco news. Don't forget to subscribe. If you're watching this on YouTube and stay tuned for more coverage. . .