The Daily Chart is updated for T Theory Forum members after the close each Wednesday and Friday evening.  The chart below was provided to Forum members on November 4, 2011.

Daily Chart Nov 4 2011

The Volume Oscillator hit a high of 119 on August 31 that started a cash build up phase.

The rising bottoms pattern in the Volume Oscillator was -91 on September 22 and -86 on October 3.

My studies have shown that splitting the rising bottoms pattern as a center post produces a target that’s usually a couple of days early, and using the actual price low (October 3) as a center post produces a target that’s usually a couple of days late.

So the split bottom target top is October 24.

The October 3 center post target top is November 2.

I would not be surprised if the top occurred somewhere in the middle.

Gold has been in a long-term uptrend since 2001.  Most of that time has been spent in intermediate uptrends.  As such, there is ample opportunity to swing trade gold during intermediate uptrends.  On a relative basis, you buy when the price is cheap, and you look to unload when it’s frothy.

When gold experiences an intermediate downtrend during this long-term bull market, panic lows occur in gold which are excellent long-term buy and hold opportunities.

The Gold Meter is based on a combination of proprietary analytics.  It answers these questions:

1.  Whether the intermediate trend in gold is UP or DOWN

2. When the intermediate trend is UP, whether the gold price is:

• CHEAP (look for low-priced long entry)
• FAIR (don’t sell, maybe buy)
  
• EXPENSIVE (don’t buy, maybe sell)
• FROTHY (look for lucrative long exit)

3.  When the intermediate trend is DOWN, whether the gold price has hit a PANIC LOW  (a wonderful buying opportunity) or not.

The Gold Meter will be updated on the right-hand side of the Home page. The intermediate trend is UP since January 23, 2009.  The current price is FROTHY.

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In the fall of 2010, Parker discovered Money Flow Ts™ while writing a financial blog called PositionSizing which generated 70,000 page views a month at its peak.

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The small gold extension discussed in the midweek update looks to be holding gold up near its record high with potential to move higher.

As of the Wednesday, July 6 close we are beginning to see market toppy signs. This topping is likely to last another week or two, thereby finishing out the short time duration T at cycle low number nine (#9) in today’s Daily Chart.

A warning that this topping had begun at this relatively early stage came from Parker’s chart posted earlier, of the Arms ratio on a weighted basis. Whenever this daily indicator drops to very low numbers, like 0.8 to 0.5 over a five-day stretch, an Arms Sell Warning is developed. This implies “too much” money has been spent in an emotional buying panic resulting in an unhealthy condition. Typically this warning produces a couple of weeks of churning in a top pattern. This is what I would expect going into mid-July.

This warning implies that a real top is forming. Therefore we should expect that in time a new decline will result into a new oversold condition during August. It wouldn’t hurt to start thinking about how one might take advantage of this upcoming change in trend.

A new project we are working on is forecasting equities based on commodity cycles.  One conclusion we have reached is the stock market decline may be very sharp in line with its ongoing negative view.  We are working to resolve the “How and Why” of this  technology but it appears  that a low should occur in the first half of August.

The TRIN (Short-Term TRading INdex) or Arms Index (discovered by Richard Arms in 1967) is the ratio of advancing to declining issues divided by the ratio of advancing to declining volume.  As a breadth oscillator, it can be used as an overbought-oversold indicator.

The 5-day average TRIN is a popular way to smooth the indicator.   You simply add the final daily TRIN for each of the last 5 days and divide by 5.  Accordingly, each day counts the same in the 5-day simple TRIN average.

Some people prefer to use a 5-day exponential moving average of TRIN, which weighs the TRIN days in order of recency.

However, neither method accounts for volume.  I will update the Volume-Weighted TRIN chart on a weekly basis, and will update the TRIN data daily.