Wednesday, December 14, 2011

Gold - Has It Bottomed?

Like everyone else I am hoping to time the bottom of this vicious drop in the price of gold with a long trade - however short lived - in a miner ETF.  Today was day 17 of a daily cycle that usually ranges from 20-28 days. Using the 'normal' daily cycle metric would suggest we are getting close to a bottom. And if the cycle is short this time, perhaps we are already there. Indeed, it is true that daily cycles that include precipitous falls are often shortened - explained perhaps by human nature's inability to stand pain as long as it tolerates incredible gains.

In any event, the current situation is a test of faith for me. That is, the four hour cycle is presently on bar 24 and the data suggests that this little cycle - painful as it is - should endure to bar 40 or thereabouts. If true, then gold has not bottomed just yet.  It appears that Friday would be a reasonable time for gold to bottom - somewhere around bars 34 - 37 - shortened from the expected 40 bars due to the extreme decline we have had in price of late.

Anyway, I am going to try to buy on Friday. If I miss the bottom then shucks. And if I catch it about right then I will have a little more confidence in this four hour cycle. Stay tuned.


  1. John,

    Thanks for sharing your analysis with us. I missed seeing your postings and thought you went on to other endeavors. Glad to see you back.


  2. Hi Mr. Townsend,

    Can there be any possibility to write a script to be able to get GSR chart on TOS sw?
    If you can I will appreciate sir.

    Thanks a lot for your comments and sharings.

  3. Marc - yeah, I did somewhat go onto another endeavor - programming some ideas. Let's hope it helps us all.

    Remzi - what is TOS sw? I know what TOS is, but the sw addition does not make sense to me.

    I have written a version of my gold futures scripts to instead use stocks and ETFs - including GSR, of course. The main difference in the two versions is the recognition that gold futures trade 24 hours a day and have therefore 6 four hour bars per day while stocks have just 4 four hour bars per days. I adjusted the cycle arrows and BUY/SELL signal dots to account for this.

  4. Sorry for that. I tried to mean ThinkOrSwim software.

    I asked before how to get gold silver ratio chart on ToS and you had replied that "need to write script" but unfortunately I don't know how.
    If it doesn't take your too much time could you tell me how it might be possible?

    I just need to display GSR GOLD SILVER RATIO chart if you can help me I will gladly appreciate Mr. Townsend.

    Thank you so much. Have a nice day & trade.

  5. Remzi - I made a TOS script that compared gold with silver giving a ratio on the screen - then sent it to you in an email. Did you not receive it? this was many days ago.

  6. welcome back John....can you please share your insight on GPL

  7. Hi Mr. Townsend,

    Thank you so much for the script I did not know you sent an email actually I have been using my yahoo account ( instead of gmail. I use gmail just feedburner etc.

    Anyway I have copied and pasted your script as you said on ToS but I don't know why, it did not display anything.
    A new lower panel came to screen but it comes totally empty. There is no graph or price, just a new blank panel.

    The script can bee seen below and under the script you can see the errors.
    As far as I understood, it gave errors for every line except the first one (declare lower;)

    declare lower;
    plot closeOnly =3D close;
    plot highOnly =3D high;
    plot lowOnly =3D low;
    plot openOnly =3D open;
    plot ratio =3D close / close("/si");

    Invalid statement: plot at 2:1
    Invalid statement: plot at 3:1
    Invalid statement: plot at 4:1
    Invalid statement: plot at 5:1
    Invalid statement: plot at 10:1
    No such variable: closeOnly at 6:1
    No such variable: closeOnly at 6:1
    No such variable: highOnly at 7:1
    No such variable: highOnly at 7:1
    No such variable: lowOnly at 8:1
    No such variable: lowOnly at 8:1
    No such variable: openOnly at 9:1
    No such variable: openOnly at 9:1
    No such variable: ratio at 11:1
    No such variable: ratio at 11:1
    No such variable: ratio at 12:1
    No such variable: ratio at 12:1
    At least one plot should be defined

    I applied this script on /GC (gold) price chart but probably something is wrong related with commands on Tos, maybe I did something wrong.

    Thank you so much. I appreciate for your help.
    Have a nice night & good trade for tomorrow.

  8. Anon - GPL has a trend line break BUY signal on its 4 hour chart. That alone would not necessarily make me a buyer - but when gold's daily cycle bottom is in (and I think tomorrow is the day) - then GPL and everything else like it should start to move strongly higher. It was encouraging to see that GPL was running out of sellers today - several green candles where price would start to take off higher. The ball can only be held under water just so long and then control of it is lost. Should not be long now.

  9. Remzi - get rid of every 3D. There are five of them. That seems to be what the problem is. Let me know if it does not.

  10. That's it. You are my hero sir.
    Now GSR graph has been drawn as a seperate panel on the lower part of the screen.
    Is there any way to get indicator charts for GSR like macd or TSI for GSR.
    I mean now I can see GSR value is 53.842 but if I would like to see the TSI status of this GSR value, is it possible?

    Thanks a lot, you are wonderful.

  11. Remzi - all the indicators like MACD and TSI are in alphabetical order on the left side of - Edit Studies and Strategies. Just scroll down to the one you want to put on your screen, click on it once to highlight it, then below click Add Study. Then on the bottom right of that popup, click Apply then OK.

    When viewing a chart, click on Studies in the upper right, then click on Edit Studies....this will take you to the Studies and Strategies.

    Feel free to email me directly.....

  12. Hi Mr Townsend,

    Thanks but actually I tried and in this way ToS just plots (displays) TSI indicator graph for Gold (/GC) not for GSR value.

    I need to get TSI and other indicators for gold silver ratio. I can switch from gold to silver by selling all my gold or vice versa through this way.

    For example now, 4 hour TSI shows -50.33 for /GC and also 4 hour TSI shows again -50.33 for ratio (Gold silver ratio script indicator) that should not be the same as far as I know. I would like to see TSI, MACD and so on for ratio script indicator.

    Thank you.
    Have a nice trade sir.

  13. John,

    Did you buy today? If so, why? And if not, why? :-)

    My count has us at number 35 on the 4 hour bars. We're still 5 bars away from 40, so that will occur on Monday.

    If the low is in, it occurred yesterday on bar 28. That's a bit short, isn't it? In your study of these 40 bars cycles on the 4 hour chart, have you come across a cycle that was only 28 bars in length?

    Thanks much for this work and your willingness to share it with us. Exciting stuff!

  14. Remzi - I will look at it this weekend. I have an idea that just may work - otherwise, what you are asking is not in existence.

    pima - I could not resist yesterday and bought a sizable position in NUGT at $20.25. And indeed, I did not wait to see how the 4 hour cycle would work out. Hey, I'm human, OK?

    I have wanted to do a post but busier than I can stand with concerts and school and other stuff. Maybe in a few minutes I can do one finally.

    28 is short.....yes. No doubt about it. What concerned me was the tendency of cycles to run a bit shorter when they are concluding with a precipitous fall. I have some more powder dry and in the money today, so I cannot complain.

    Hey, if for some reason this gold cycle does end right about on 40 that will have me shaking my head for quite a while. And if doesn't, well, then I interpreted it correctly and that is OK too.

  15. makes sense, John. I bought yesterday too. May buy more today or Monday.

    Have a great weekend!

  16. Another round of treasury auctions could bring the price down the first of next week giving a more normal cycle length.

  17. John- Fascinating stuff. I will definitely take a harder look at 4 hr cycles.

    A quick (mechanical) question. How do you get arrows, dots and boxes with numbers in Think or Swim? If it's there in the menue, just tell me and I'll try again. I've spent a couple of hours scouring the app without success.


  18. Hi T.J. - your question was indeed quick. I wish I could say the same for the answer. That stuff you are asking about is no where near as easy as it sounds nor as easy as it should be.

    The most helpful resource is:

    There you will find programming snippets once you do a search for arrows, points and/or bubbles.

    Alternatively, you could outline some ideas and send them to me and I'll see if I can send you back the skeleton of something that works.

  19. Thanks, John- I'm surprised that a platform as good as TOS would not have this as a ready capability, but such is the way I guess it was constructed. More for trading than for research. It looks like I will need to stick with Stockcharts, although my ability to look at 4 hr data will be crimped.

    Thanks much.

  20. For the gold vs. silver thing, can't you just do a comparison chart of GC vs. SI? (Make sure to set the price scale to percentage.) Or you could do it in Prophet with GLD vs. SLV, but you can't chart futures in Prophet.
    It would be nice to have an indicator that showed the distance apart. You can chart the difference of two studies in Sierra, but I don't know how to do it in ToS. I guess you would have to write a script. I don't even see a way to make the skinny little fuchsia comparison line more visible.

  21. I just realized that study you scripted, comparison with SI, does work -- thanks! For other comparisons on ToS, you can do ratio charts in Prophet. SIL/SLV, GLD/GDX, TLT/SPY or whatever. But again, no futures.

  22. Yangui - Prophet is not a platform for which one can write their own custom script, as is possible with Think or Swim.

    I am totally able to view futures data via Prophet. Here are a couple posts where you can see this:

    For gold use: GC1600 (will get you back to 1974)
    For silver use: SI1600 (will get you back to 1970)

    If you need some script to do something, tell me what it is and if I can do it for you, I will.