Options
June gold and silver trading thread
roadrunner
Posts: 28,303 ✭✭✭✭✭
Time to say good bye to the May trading thread and start anew.
Gold closed at an all time numerical high for an end of month close - $979. Silver closed at $15.79. Silver put in the best percentage gain in one month than it has anytime in this 7 year bull run.
Note that gold has put in 3 consecutive weeks of rising prices. There have only been a couple of times in the past several years where 4 weeks was recorded and 1 time where 5 weeks was met (fall 2007).
Here's to abolishing the old "trading range" for good.
roadrunner
Gold closed at an all time numerical high for an end of month close - $979. Silver closed at $15.79. Silver put in the best percentage gain in one month than it has anytime in this 7 year bull run.
Note that gold has put in 3 consecutive weeks of rising prices. There have only been a couple of times in the past several years where 4 weeks was recorded and 1 time where 5 weeks was met (fall 2007).
Here's to abolishing the old "trading range" for good.
roadrunner
0
Comments
I am assuming this is related more to trading the ETF's and paper (or mining stocks), vs. physical metal, am I correct in this assumption?
Sorry if my ignorance is showing, I honestly haven't read much of the previous months trading threads , but promise to do better in the future.
Whelp, to me, both COMEX and GLD/SLV are manipulated as the Big Banking Ba$tard$ decide, ETF's have volume indicators during trading, the COMEX does not.
I think EBay is the best, purest pricing indicator for Bullion pricing.
Just account for Fees.
And to ring in the first trading day it seems that $990/$16 will probably occur on Monday with $982 already being taken out.
roadrunner
We hit $986 so no doubt a spike to $990 may be coming. R1 is at 988.5 and R2 is at 996, and R3 is 1017 per my charting program.
After Friday, I'm largely in cash, trying to pick a good re-entry point now. I don't think it would be wise to short at this point, but I'm not sure how much upside is left for this move. In the past I have been burned with my impatience. Getting to a point like this, I start to think that it's not going to correct and that it's going to keep going. I get back in, only to see it fall shortly thereafter.
S&P500 is on fire tonight.
There are always "false breakouts" and a violation of the trading range is often interpreted as a breakout which turns out to be a "false breakout."
Let's see gold trade above $1,000 and stay there for a while... now THAT would be convincing.
In the meantime, we are just at the upper end of the trading range. Of course, there is nothing wrong with that-- but we still haven't returned to the $1,000 level and that is the most important point.
www.AlanBestBuys.com
www.VegasBestBuys.com
ProofCollection, it still puzzles me as to what the move was from May 1-18. I can't really figure out how many legs are masked in there....or is just part of a longer one. While at this moment if sort of feels like a 5 wave move is complete or nearly so, we can't be sure. The move from 1 May to 1 June could be a 3 stepped leg. In that case we have a wave 4 correction to play out before another final move up. Either way, the total correction would only be $5-$10 difference over an entire 5 wave correction from 17 April ($126 move vs. a $109 move). Take your pick. A wave 4 correction might only last a few days. A wave 5 correction could be 2 weeks.
I think we'd have to break into the mid-$960's to start talking correction. Maybe the commercials were sifting for stops today down to $971. If a correction to this 31 trading days up move is now in play, one would assume we might need 8-12 trading days to counter it. Fib levels would be at $941, $926, $911. I've read where others say we are just in a smaller wave 4 correction now with another up leg to come. I think falling below $926 would be difficult considering how much resistance there was on the way up. Something in the $928-$940 range feels about right.
On the flip side, we still can't be 100% sure that the entire move since April 17th is just another part of an extended March 2008 corrective leg. Whether it's a corrective or impulse series we are currently in, it seems to want to go up more in the weeks to come. So I do intend to buy some more if we see those levels drop to $940 or lower. I think a wave 5 move from here by the end of the week makes the most sense. That would fit better with a small rebound in the dollar (before trending lower). The stock market looks to want to move up and continue taking commodities and PM's with it. That all fits, at least through June.
The gold/silver ratio is increasing after just making a new interim low. Silver can slow its ascent and let gold move stronger from here. None of the short, intermediate, or longer term charts for gold and silver show pending weakness or breakdowns. The gold and silver stocks took a hit today which only makes sense after so many days of strength. CDE was the only major minor whose chart seemed to indicate a major move coming immediately. All the others were pretty much "topped out," though they've been like that for weeks. CDE has been correcting for a couple of weeks, probably something to do with the 10-1 reverse stock split that now makes it a $14 stock rather than a $1.40 stock. That completed last week.
roadrunner
One other aspect... there are a lot of people who are bullish on gold who are calling for $1200-1500 in the next few months (myself included). I think gold needs to scare the bulls one last time before it's ready to launch. Looking at the markets, today's breakout was highly bullish and the start of another trend. I think this one will be huge, taking the market up about 10% from here to complete the Fib 38.2% retracement. I think that may coincide with gold's touch of $930's or so.
I like your $928-940 range - I think I'll put in buys at $935. I'll plan to weather any drops to $890's should it be that drastic, but I don't think that will happen.
The 2nd chart in the above article shows the gold/Dow ratio. Normally I've only looked at this from the inverse perspective so this is a fresh look for me. Seeing it like this made things easier to understand, esp. if one is trying to count waves. If one counts Elliot Waves (using RSI as a verifier) it shows the current upleg nearing its end, now in the 4th (corrective) leg before the final 5th move upwards. The 3 major up legs over the past 10 years have lasted approximately 2 yrs each and the current leg up is close to that point. The present short term correction makes sense as the Dow has overpowered gold for nearly 3 months now (ie leg 4 of the 5th and final leg up). The chart indicates that a final move of gold outpacing the Dow is within weeks or a few months away. At that point a longer correction in the gold/Dow ratio should occur.
The chart also displays an IH&S formed over the past 17 years going back to 1992. The neckline is at the .10 ratio. Should this play out, a rise to 0.4 on the chart (Dow 4X the pog) could be in the cards over the next few months. The final 5th wave up tends to be the most parabolic and the current wave is already clearly going parabolic. A strong correction from that move could take things back to .15-.20 again. But the base would be set for a potential 30 yr IH&S formation that could take the ratio all the way back to 1.0 again.
A supplemental budget appropriations bill is now ready for approval between the senate and house. Title XIII sect 66 requests approval to sell a small amount of IMF gold. So expect once again for the dreaded 403 tons to be trotted out one last time leading to a small pull back. Since it would be totally absorbed by long term central bank buying it will never hit the market and therefore have no affect on available supplies.
Some timers look at 6/3 and 6/4 as well as 6/11 and 6/12 as potential turn dates of one sort or another. 8 to 12 trading days would fall into the dates of 6/11 to 6/12. It's been 78 trading days from the 2/20 peak to 6/11. This last up move from 4/17 encompassed 31 trading days. That number comes up often. Using John Needham's DC timing of which 6 trading days encompass a week, 13x6 works out to be a Fib number. I also have been counting Needham's "DC" weeks since the last key date and 6/8 works out to be week #11 (1/4 of his 44 wk cycle). A lot of mush to decipher. I don't know if the current action can keep on cycling for another week or more. The GSR has dropped to as low as 61.5 indicating the likelihood of more upward PM moves.
roadrunner
Stocks Will Fall 37% or Gold Will Rally 60%
I can't argue with you. On an actual print, gold did reach 1033 and maybe a little higher in some other trading. but I look at the "channel of prices." As I said before, these violations of the trading range can be considered to be false breakouts.
But again, and this is MOST IMPORTANT, this chart reading is an art and not a science. I can easily accept your definition of the trading range as topping out at 1033. So from now on, let's see gold break 1033 and THAT will impress me.
thanks.
www.AlanBestBuys.com
www.VegasBestBuys.com
anyway this only reinforces my belief that a break out above 1,000 will trigger a new bull run... but we need the break out.
www.AlanBestBuys.com
www.VegasBestBuys.com
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>Proofcollection I prefer one year charts, and that has a clear cup and handle formation (bullish) and what might appear to be a head and shoulders. either way you look at it, gold must get above 1000 (or as roadrunner said 1033) to show the breakout. >>
You can prefer one year charts all you want, but you miss out on multi-year patterns if you don't look at bigger time frames...
I agree as well. I'm waiting patiently for a breakout or (small) breakdown in the next few days. A second attempt on $990 was made tonight. 3 or 4th time will probably tell.
roadrunner
I knew it would happen.
I did buy back in some mining stocks during this morning's sale, but I'm still hesitant to buy all back in. I hope I don't regret it...
I still think this will be a fairly short correction that will set up for a last and 5th leg up. A leg that has a good shot of being the $1050-$1100 haymaker. The end of this week should be a good opportunity for picking up some cheap miners. Some look inviting today, but it's only been 2 weeks since most of them took off from levels 20-30% lower. So a 5-10% one day miner's correction doesn't seem enough to start nibbling.
roadrunner
The big question is definitely where is the bottom going to be? Tomorrow's S2 level is ~$942, I don't have a reading for S1 yet.
I know RR called for the $950's... I think I'll wait and see how things develop. I just might get my $930's after all.
roadrunner
roadrunner
BTW, Uranium is heating up, and I like UEC as a play in this area. They have yet to produce any uranium so it is risky, but they've got some promising stuff going on and they are one of the few US-based pure uranium plays I have found, and I know one of the geologists who used to work for them - they are legit. Risky, but worth dabbling in if uranium continues to pick up momentum.
it seems to only get mentioned with any frequency when the price is going down.
when the price is going up we get threads with titles like "trading thread". when it
goes down we have other types of titles to threads
I was thinking that once we touched $980, that if $974 was violated to the downside that this could have been just a 62% fib retrace of the $30 drop with more to come. But gold held right around $976 and continued back up. Once we headed back above $977 I added a little more to my positions.
roadrunner
<< <i>I didn't see anyone here call the bounce down from $990 to $960 as manipulation, did you Proof Collection? A correction of some sort was due. There in fact could be manipulation on the way up. We're trying to trade it in both directions. What's the difference?
I was thinking that once we touched $980, that if $974 was violated to the downside that this could have been just a 62% fib retrace of the $30 drop with more to come. But gold held right around $976 and continued back up. Once we headed back above $977 I added a little more to my positions.
roadrunner >>
I am playing devil's advocate here. Please keep this in mind.
I think no one mentioned manipulation on the way down from 990 to 960 because mentally
they were quite satisfied with the recent run up. It was expected by many here and no one
scream manipulation because they prepared themselves mentally for it.
I am just curious that I am not seeing any speculation on possible manipulation upwards is all.
Who in the shady areas of big money could have a plan to bounce it up and reap the rewards.
We only hear about such things in the down direction.
my two cents.
<< <i>I didn't see anyone here call the bounce down from $990 to $960 as manipulation, >>
So Geitner goes to China the same day that Obama lands in Saudi Arabia, Hmmmmm. what do these 2 countries have in common. Maybe they own most of the US treasuries??? Hey, suddenly, the dollar reverses trend and finds support, for one day, of course PMs go down, a natural reaction to a rising dollar.
I dont think the 990 -960 drop was a PM manipulation but if you dont think there was some relationship between the visits and the dollar move, well then, maybe you need to put your money in long term T Bills.
Complaints about manipulation downward exist because most people (here) have an interest in the price going up. I would argue and speculate that most ordinary forum members have no interest in the price of gold going down. That is, very few of us short gold or have short positions. Most of us own at least an ounce or more for long term holdings, but none of us here have sold an ounce or more that we'll actually have to deliver at any time in the future.
Make sense?
RR, gold is bouncing between the pivot and R1 (972 and 984). A breakout from this range will be telling, but I'm not sure I'm ready to commit yet. I don't think we'll see any real price movements until tonight at the earliest, with a slim possibility for this afternoon.
If we can just get rates a little higher we wont need to sell bonds to China.
But of course, if rates go higher, most likely also will the dollar. I hope China wont mind.
Knowledge is the enemy of fear
Gold: Headed For A Bubble?
The Wall Street Journal perspective. It seems WSJ types are always bent by Gold.
Anyone who dumped their real estate in 2006 is sitting pretty right now. I think today is equivalent to 2003 or 2004 in the recent real estate boom. Buy anything and everything and you'll do just fine - as long as you sell before it all collapses.
BTW, California is "scheduled" to run out of money in the next 14 days or so. I think it is inevitable that the federal gov't will issue a bailout. But if the fed bails out CA, it will probably have to bail out other states as well. I think the timing on this move could work out to meet the projections that are calling for the gold breakout to occur later this month.
I was looking back through my notes and noted some predictions back in early April by Ron Rosen. He saw a medium term high centered around April 29th (gold hit $920 on 4/27), a follow on low centered at June 3rd ($880 low hit to the day), with a top centered at June 17th (5/13-7/22 range). A few weeks later he had updated that final medium term top to 6/10 (5/27-6/24). That 6/10 date fits well with the 6/11 or 6/12 dates already mentioned.
I expect a "good" jobs report number tomorrow since the Birth Death Model front loads +165K jobs into this month's equation, with probably a nice sprinkling of those in mfg, construction, leisure, financial, etc. You know, all the areas that are actually shedding jobs.
roadrunner
It was a nice setup this morning with the jobs report coming out at a far better than expected -345,000 (note that based on the May to June unemployment increase from 8.9% to 9.4% , that would approximate 775,000 jobs lost). As soon as the report came out gold sort of see-sawed for a couple of minutes by falling down to $975 then jumped to $984. From there it cratered almost immediately down to $955. A final pump and dump by the commericials? Oil responded the same way actually going up from $69 and breaking past $70, only to fall all the way back into the 68's. Stocks behaved basically the same way. At first it was great news for "everyone" then it was bad news for everyone. Curiously, platinum, palladium, copper did not see much if any fall from this.
Friday's weekly COT gold futures report showed the commercials increasing their already massive 3.5 short/long ratio to 3.8. Their total share of the short position increased from 73% to 78.6%. No wonder things finally tanked. They closed out 1,994 long contracts while adding 16,391 short contracts. Gold futures open interest actually fell a bit to 391,057 contracts. Curiously, the commercial silver and copper futures changes were evenly balanced for the week with longs=shorts.
From the June futures bank participation report the ratio's were 3.4X short silver, 5.25X short gold, 2.1X long copper, 2.4X long plat, 4.5X short pall, 3.5X short Euro. Last month, the bank gold short to long ratio was only 3.7X. They added approx 37,000 short contracts while subtracting 2700 longs over the past month....the equiv of around 125 tons of gold. 3 US banks participated in gold futures and 2 banks for silver. If one only looks at the 3 US bank short to long ratios they remained basically unchanged from 85.34 to 84.91 as they slightly increased their long positions. The 21 foreign bank's gold ratio dropped slightly from 1.22 to 1.14. One has to wonder why the US Banks need to maintain a 75X gold short to long ratio over what the foreign banks possess. Another way of putting this is that the foreign banks are 53% short gold while US banks are 97.7% short gold futures. In silver the ratios are more stunning. 12 reporting foreign banks maintain a contrarian 70% long position, while the 2 US banks who play here maintain a 99.9% short position (1100X). There are other ratios this wild as the US banks have an infinite short/long ratio on the Mexican peso while holding a large % of the volume. But in commodities I recognize, silver and gold lead the way with palladium around 30X short/long. Anyone know what a NYME CIG swap is??
June 2009 bank futures participation report
roadrunner
The USD is definitely climbing as well.
Frankly, I am a bit surprised that gold has fallen this much so quickly. I raised the question of another rally failure and rally failures have falling prices which are hard to stop.
Do you see something that says 900 will start a new base?
I see potential support at $875 but I never try to catch a falling knife.
www.AlanBestBuys.com
www.VegasBestBuys.com
I could have this mis-read, maybe the point is $875. All I know is that I don't want to miss out on the next movement because I was trying to buy it just a little bit lower. I understand what you're saying, but I think this energy level is going to hold up. Even if it does hit $875, I'll stick it out, because it won't be there long.
You got that right. It had better hold 865-875. Otherwise you will start to hear talk of a double top which would project to the 730 area. So far the trend is up so respect it, but watch MACD as it--so far--is a lower high.
Knowledge is the enemy of fear
The more time I look at the chart the more I feel that the blue support tend line won't be violated. The 61% Fib line comes in around $923. The 50 and 100 dma's both flow into that same general price range. We've already had several battles over the past several months from $918-$928. I see no reason to disagree with Katz's view that an ascending triangle has been built going back to November. The trend has been up so the resolution should be up. One touch near the blue trend line ($915-$925) and it's back up to challenge $1000 again. This time it goes on the way to $1125+. The weekly BB's have been slowly tightening ever since the Feb 2009 peak so a strong move is coming down the pike. My bet says up. The ensuing correction should retest our favorite area of $990. That would be a nice "low" to carry through the summer. For all this to occur, the dollar has to continue it's descent into the 70's again. Is it coincidental that the blue up trend line when paralleled into the Feb 2009 high ($1007) also perfectly touches the September 2008 high?
The inverse of Cohodk's caution should also be true. If the move from October/November was the start of a major 3rd leg up (following the March-Nov 2008 decline) then the momentum that just peaked should be compared to the start of the leg back in Nov/Dec, not necessarily the peak of it in February. Should the move from April-May just be another part of the 2008 corrective wave it could be compared to the momentum of similar waves from mid to later 2008.
roadrunner
<< <i>If this down leg is correcting a 3rd wave up from April 17th then it might be complete by the end of this week. If this is correcting an entire 5 wave move from April 6th, it could last a couple of weeks. Busting $940 downward would be the first step in breaking the current price channel to indicate a move further down. Regardless of where this is headed (ie $900 or $875), the gold stocks will be heavily discounted by $900 gold. $875 or $900 won't be all that much different for them, or for gold. ........... compared to the momentum of similar waves from mid to later 2008. roadrunner >>
Great Analysis, rr
Absolutely. Gold has already had a $70 move since I mentioned to you that I expect a $300 move in coming weeks/months.
My main momentum indicator (not shown) is still strongly positive.
Knowledge is the enemy of fear
I've since tossed out the idea of this being a corrective 4th leg from April 17th. The GLD and $Gold charts could have construed the middle pattern of that long move to be one leg. But it's bothered me that GDX/HUI/XAU and $Silver/SLV for example count out a very clean pattern of 5 legs from April 17th to June 3rd. That should have overriden the less clear wave patterns that $gold was showing. Now that momentum and other indicators have turned down hard out goes the 4th leg notion. But from a time standpoint we are only adding on an additional $17 and 2 weeks in the total gold move from $864 to $990. Same target range as before centered around $925.
I like Hoye's current analysis as well as Katz, Maund, Radomski, Ackerman, Gnazzo, and others. These guys are not always in alignment. But they all are right now. In fact I've found really no one that I typically track who is forecasting a break below the $865-$880 region and in most all cases only down to the lower $900's. Hoye compares the current gold chart to similar set ups that occurred in late 2002 and 1994 before strong up moves occurred. He was one of the few that called the deleveraging deflation in 2008 so he is not a typical pro-gold guy.
I think Red Tiger's preminition of an historic move for gold coming is right around the corner. Hoye gives it 10 weeks max before the next up leg begins. If this next move is the real deal, it could be a lot shorter than 10 weeks. Leg 1 advance in gold was $126. Leg 3 is typically in the 1.6 to 2.6X that move (ie $201-$327). From a correction to $925, that would give a range of $1126-$1252. I no longer think we'll have to wait until early 2010 to get to a new all time high. $1100 should be taken out this year along with the old trading range well before that. The only major obstruction I can think of would be another planned deleveraging event that could skew the price of gold as it did briefly from July-Sept 2008.
Bob Hoye's take on gold
Katz's gold commentary
Clive Maund on gold
roadrunner
I stumbled upon this one recently, what do you think about IAG?
Here's a futures chart. I'm starting to get really confident about $930-940 being the bottom for this pullback. Pullbacks often go back and touch the level of last resistance. I've drawing in the path that I expect it to take and a circle where the bottom should appear - around the 18th or a bit later. There's a lot of strength in this consolidation, I can't see it dropping any lower.
In reviewing charts today it seemed that BVN has broken upwards temporarily. It's been one of the early leaders in April and May. And in looking at all the other major unhedged miners most of them are hitting a weak bottom on momentum (W%R, CCI, StochRSI). Gld and Slv show similar characteristics. The gold to silver ratio appears to be about topping out as well with a shift due as its Boll Bands tighten once again. Gold first touched $943 yesterday then retested at $947 today. So it appears to want to retest its upper trading range again. I think Thursday's gold may start off with an initial head fake down followed by some strength once the bond auction completes.
Edit for Thursday update:
Gold did in fact open lower today hitting $943 for the 2nd time. The GSR ratio moved down sharply to 61.9 and stopped dead as gold peaked out around $962. Since then GSR has been rock solid going no higher than 62.2. This has the feeling that it's counting time before going lower once again. Just when I tossed out the notion "for good" that 5 legs were completed $990, I'm back to reconsidering that it was only 3 legs completed. Why otherwise are the charts indicating movement back up while indictors/osc are showing close to overbought? That's not typical behavior this early in an expected multi-week/month long correction. That means a 5th up leg that may already be in progress. This count is more consistent and somewhat even vs. using a 5 wave "all done" count to $990.
Leg 3:
1 $880-$925 5 days +$45
2 $925-$916 8 days 42% retrace
3 $916-$960 5 days +$44
4 $960-$946 3 days 45% retrace
5 $946-$990 5 days +$44
(21 trading days total)
Leg 4:
$990-$943 8 days 43% retrace
Leg 5:
$943-???? est 5-8 days? est +$45 to +$68 min (June 18-22)
The dollar has received another bout of weakness falling to the lower 79's where it could fall off the cliff again. It seemed for a while there it was headed quickly back to 83.0. Gold and silver still have that "want to go higher" look to them.
roadrunner
Gold hit one of my targets this morning, $936. I did buy some futures, but I think I might just sell for a quick $8-16 gain if I can get it. I also picked up some AUY at $9.55, but for my stock account I'm still mostly in cash ready to buy on further dips. I think I might get back out for a small gain and wait for further price reduction.
I thought these charts were compelling here:
Link
H&S formation for USD, and inverse H&S for gold. I do think a further pullback is coming, and I think we have at least another week before any strength returns to the pattern. With the H&S pattern, I think a touch of $915 is more likely.
I read Ackerman's "dithering is good" analysis last night. The one thing that it can't account for is successive up legs and retraces. There are always head and shoulders to be found there yet each one is eliminated as the price jumps up. I haven't tossed in the towel on a 4th leg in progress (hence the head and shoulders would be expected) but it's getting harder to swallow every $10 gold falls. Friday's $936 low is a 50% retrace of the $880-$990 move. Today is the 9th day down in this leg and one could come up with a count that would meet the 5 waves down, etc. criteria to call and end to the downward move. These usually don't go beyond 8-11 days for a smaller wave. If it extends beyond 11 days it will start to solidify the idea that a longer correction of the entire $864-$990 wave is in progress.
Worst case would be that gold needs to correct a $126 move from April 17-June 2. A huge 61.8% "Fib" bite of $78 would mean $912. That's not that likely imo since the first leg up peaked higher than that at $918. Considering that this could be a first wave i (of major 3), it's entirely possible that the entire move or at least most of it, gets retraced. $918-$925 still seems the most likely band.
AUY was buyable in the $9.40's today. It just may retrace all the way back to the 50dma at $9.00. This will essentially take all the PM stocks back to the point when they still felt like decent buys back in mid-April (KGC at $17, EGO at $8.50, IAG at $9, GSS at $1.50, AEM at $49, ABX at $30, GG at $30, etc).
roadrunner
In copper futures the Commercials shed some longs and added shorts indicating they are getting less bullish on the copper move. Last week they had been approx even.
COT report for 6/12/09
roadrunner