Gold Market Hanging on a Razor's Edge
Accurate Market Calls
Avi Gilburt of Elliott Wave Trader has made a number of great calls on our podcast this year and we encourage our listeners and readers to consider his outlook when it comes to the stock market and an area that he is widely considered an expert—gold.
First, when it comes to the US stock market, here's what he told listeners in September, months before US elections and the recent push up to new all-time highs:
September 29, 2016: "The 2037 to 2090 region is very important support for the strong bullish move to be maintained to the upside...as long as that region holds as support, I'm looking for a take-out of 2200 with a straight shot up and then in that set up it'll be a very fast move to about 2350 to 2375 where we'll consolidate and pullback a bit; and then we'll be on our way clearly much higher over 2400 from there. For now, the 2037-2090 region is very important support..."
As you can see below, the S&P 500 bottomed in that region at 2085 and has now shot straight up since then by an astonishing 8%.
Avi is a traditional technical analyst, with an emphasis on Elliot Wave theory, Fibonacci mathematics, and sentiment evaluation rather than relying purely on fundamentals. When it comes to news headlines or future world events, he pays very little attention to these in terms of forecasting or how to interpret their potential influence on the market. Really, it's all about the charts, technical patterns, and sentiment. For example, prior to the US elections, Avi said, “I really don’t know who is going to win, but I’m going to tell you what the market (will) do no matter who wins.”
Forecast for the Gold Market
Avi primarily uses the gold mining ETF, GDX, as a technical barometer for the wider gold complex and believes the crucial support level is 19.80. If that level were to break, his calls for a multi-decade bull market in gold and silver are likely to be delayed. “If GDX moves below 19.80, silver below 16, and GLD below 111-112—if all three of those things happen—it opens the door, from a probability sense, that we could see lower lows in the market.” While remaining highly cognizant of these crucial levels, he bestows his confidence on an eventual upturn, with a 70% probability of a market bottoming and a 30% likelihood of lower lows.
Currently, only the SPDR Gold Shares ETF, GLD, has broken the support level he gave. With silver trading at 16.85 and GDX at 20.69, Avi's bullish position on the metals is still intact, though perhaps on a razor's edge.