As convincing as this rally has been I am confident this is an ending phase and not the start a new secular bull market. Actually the bear market began last year in May but was temporarily aborted by massive central bank printing. Let me explain.
How this cycle plays out is going to determine the path for all other assets. The current daily cycle topped right in the middle of being right or left translated. As long as the impending cycle low holds the pattern of higher highs and higher lows will be intact.
Today is a classic example of why I have been warning traders not to push the long side of the stock market. When these creeper trends finally break they often generate a crash or semi crash type of profit-taking event.
That seems to be the question that everyone has been asking themselves for two months now. Analysts have been trying to pick a top in this stock market for weeks. All the while I've been telling, actually begging, people not to sell short.
Once the stock market begins moving down into its intermediate cycle low it will almost certainly force another rally in the dollar, possibly (probably) back to new 52-week highs. That should, at the very minimum, pressure gold to retest the December lows.
I figured out early in my career that arguing with the market more often than not ends up costing one money. If you are one of those people who are unable to change your mind, this business will almost certainly chew you up.
It seems like most analysts, and gold bugs are now assuming that the reversal on Dec. 29 marked the bottom of gold's D-Wave decline. It's certainly possible that we saw a bottom two weeks ago but it's still too early to make that assumption.
I know that during a correction of the magnitude we are seeing right now it seems more like the gold bull is dead than on the verge of moving into what I expect will be one of the greatest parabolic moves in history.
Despite what is happening in the stock market gold is clearly still in a secular bull market. That being said the days of easy money from the gold bull are probably over for the next year as stocks move down into their four year cycle low.