It's been my opinion for the last several weeks that gold formed an intermediate degree bottom on December 31. That being said I'm still a bit nervous that the sector could suffer another manipulation event (like the flash crash two weeks ago) so I haven't been willing to enter a firm long position just yet.
However there are definite signs that this bear market is probably over. The large momentum divergences on the weekly charts are one:
The heavy volume flowing into the Direxion Daily Gold Miners Bull 3X, (NUGT), ultra mining ETF is another sign that the smart money is positioning for a major bear market bottom.
Presently, I'm waiting to see if gold can break through the intermediate downtrend line and make a higher high above the previous daily cycle top. This would confirm the intermediate bottom. Coincidentally this is roughly the same number in both cases. Gold will need to move above $1268.
I would caution that a move above $1268 probably isn't a timely entry into the sector, however. As gold is going to be moving into the latter part of its daily cycle timing band by the end of next week, a better strategy would most likely be to allow gold to bounce off of the 150 day moving average and then retest the $1250 level from above at the next daily cycle low.
So I think a little patience is warranted over the next two weeks. Allow gold to confirm the intermediate degree bottom. If it does, then prepare to buy aggressively at the next short-term pullback.
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Signs Indicate Gold's Bear Market Is (Probably) Over
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