I'm only mildly concerned at the moment, but I'm watching closely. I don't think the drop was that signficant. We were pretty steady at 1017-1020 before a quick jump up to 1025-ish and then a drop to 1013-ish (Dec Gold). Futures did almost touch 1010 but it spring back up to 1014 quickly. I don't see it so much as a $10 drop as I do a $5 swing both directions.
Gold had quite a run and needed to consolidate. Now that consolidation is done and gold is ready for another move (up or down). I expect it to be upward, and I expect it to start tonight or tomorrow. It may just be a move to bring us to the 1025-1030 range. I don't expect 1010 to crack. I don't expect the move from there over 1040 to be immediate, although any news event or announcement could spark it.
I am battling with whether or not to take some profits at 1035 or so. It seems to me that would be the prudent thing, but it also seems to me that gold is going to breakout, and once that happens gold could "melt" upward rather quickly. Fear and greed... RR's information concerns me, causing me to think I should take profits, but then something else tells me that none of that will matter and/or some of those events will spark the breakout somehow.
I read the Beavan article over at Kitco commentary. A lot of folks try to game the equity options at expiration. GLD is one mid-sized fish in a sea of a thousand of expiring options. Moving the gold market just so GLD hits 96 or GLD 98 just so a few options get pinned seems rather far fetched. GLD tends to follow the futures, not the other way around. GLD option traders are really tiny fish in a big ocean. There are a thousand other stock options expiring to try and game, without futures to worry about.
For Beavan's scenario to unfold, it would be like the guppies running the world for a day. It could happen, but the odds seem tiny to me. Certainly gold could fold on Friday for other reasons, but to pin it on options market makers on GLD seems far fetched. September 24 is when options on gold futures expire. If there are any games, that day or the day before would be the more likely day. For equity options, most of the fireworks seem to occur on Wednesday before expiration, and we got them, with the spike in gold. Options related moves, tend to fade quickly, and are more like hiccups than events worth trying to trade.
Like I wrote elsewhere, a pullback to the 50 day moving average is common after a breakout. That would shake out a lot of folks, and would be a decent entry point for longs that aren't already in. Like I wrote on my blog, while September is the best month for gold, October tends to be flat to down. For gold stocks, on average, October is one of the worst. As always, seasonal tendencies are one of the weaker indicators. Also keep in mind that virtually every pro gold trader knows these calendar tendencies, so a few may jump the calendar, and take profits or head to the sidelines before October.
GLD is the one stock that WB mentioned. But there are dozens/hundreds of others in the gold and silver sector that add to the pie. The goldies are guppies, but the totality of the guppies help drive gold and therefore the dollar. Why give gold a chance to get a leg up before next week's G20 meeting and bond week? And why allow a second weekly closing >$1000, esp. a higher one than last week's $1007?
For now, gold and silver still look to be trending down over the past 24 hours. The dollar bottomed at around 76.0 and had several touches around 76.1 before proceeding into a cosolidating triangle. It has now broken out of that triangle and put in a new daily high. It may try to make a run to 77+ or 78 which could turn gold for the very short term. Treasuries also have that look that they want to turn up again. Hence gold further down would be my bet for the next 24 hrs even considering that both the gold and silver stochastics are locked in >80. Even most of the better miners are now locked in >80.
I'll just throw this out there... One of the things I've heard is that if you're going to read charts you gotta kinda ignore the news and other information. The charts are supposed to do what the charts are supposed to do.
As far as the seaonality, it's easy to look at the strong historical record and believe that it's going to repeat again. But there are alwas exceptions, so I have a hard time putting to much stock into seasonality. I've personally been burnt too many times relying on historical tendencies and seasonality or similar factors only to have it "be different this time."
Anyway, support is at 1008.7, resistance at 1017.3, 1023.8, and 1032.4 for Friday.
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"Why," asked Ike.
The soldier pointed at Fort Knox and said, "Because there's nothing inside that building."
Ike shrugged, spun on his heels, and yelled back over his shoulder, "Double the guard!"
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<< <i>I'll just throw this out there... One of the things I've heard is that if you're going to read charts you gotta kinda ignore the news and other information. The charts are supposed to do what the charts are supposed to do.
As far as the seaonality, it's easy to look at the strong historical record and believe that it's going to repeat again. But there are alwas exceptions, so I have a hard time putting to much stock into seasonality. I've personally been burnt too many times relying on historical tendencies and seasonality or similar factors only to have it "be different this time."
Anyway, support is at 1008.7, resistance at 1017.3, 1023.8, and 1032.4 for Friday. >>
Yes, articles like the WB article are noise and are a distraction for a trader, adding nothing of value. Everyone and his brother knows it is option expiration Friday, it is not news. If by some luck, gold tanks today, WB will claim hero status, when the reasoning behind his article is fundamentally flawed. Where is the history of other big gold moves on options expiration to make the case? How can a few GLD options and a few options on tiny cap gold stocks have sway over the much larger gold futures market? If option market makers really had that kind of muscle, they would target much easier, much more lucrative targets like Apple or RIMM, where the option volumes are much higher and there is not a huge futures market to flick them away like fleas.
I'm the one who emphasizes the charts. I do look at seasonality, but it is way down the list, though way ahead of noise articles like the WB one. The calendar tendencies are more of a concern for those in gold stocks than those playing GLD or futures. How gold reacts to new news can give indications. That gold may close up for the week when a top analyst basically yells "fire" in the theater (the top rated UBS gold analyst publicly telling folks to sell) is a positive.
Sentiment is useful for calling turns. If virtually all the gold newsletter timers come on board late in the move, that would be a danger signal. One forum newbie posted his first gold buy, and that is a minor negative. If there get to be lots of those kinds of posts, that is when the forum becomes most useful. I often find that newbies have an uncanny ability to call tops and bottoms when making their first buys or selling everything. Right now the small fish on BST seem to be mostly selling and that is a minor positive.
I caution those that place too much weight on the COT (commitment of traders). Back in September 2006, I was long GLD, selling for a small profit just before a COT report came out and gold tumbled. The tumble only lasted a few days before GLD resumed a huge six month up move, that ended up at a 50% gain from the breakout. We are only up 7% from the current breakout. The commercials had to cover at much higher prices (as ProofCollection has been writing about).
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How can a few GLD options and a few options on tiny cap gold stocks have sway over the much larger gold futures market?
I follow gold stocks rather than the futures/options so my opinions tend to be slanted in that direction when I say "gold." And miners are in a 5 leg down series that probably will complete today though more could follow after a bounce back. A few of the weaker gold stocks started turning days ago as a warning shot. The big sweep downs at the open or during the day on some of the gold stocks the past several days indicated problems/weakness might come (ie GSS, AUY, TRE, etc.). Gold may only move down 1-1.5% but it can wreak havoc on the miners. I'm still concerned that gold touched $1008 yesterday and then to $1005 today. I don't suspect gold is going anywhere until the miners end this funk.
The COT short comm. numbers in Sept 2006 were not near a record % high of total open interest. On the JS website today is a chart of COT short interest showing a similar % position back in August 2005 before the big run to $730 occured. In essence the COT lowered their short interest % all the way from the $400's to the $700's. But as Hoye has demonstrated this week via historical charts, every time the COT short interest rsi(>70) has hit extremes like this in the past 13 years (about 6 instances) there was a pullback first within days/weeks. We've been at that point since last week sometime. We just don't know if it's days or weeks for the switch to get thrown. The Sept seasonality could already be over on Sept 18th as half of September certainly qualifies for a Sept seasonal rally but I would concede it still looks like gold wants to finish up closer to $1033+ before the month ends. Next week is really the end to seasonality for gold with everything coming to a head by Thursday/Friday (G20, bond sales, expiration, USA seasonality, etc.)
Edit: I miscounted the waves down in GLD because it can sometimes be confusing. There is usually less scatter in the GDX and SLV charts when it comes to counting. And the SLV charts shows a much more clear 4 waves as of 1:00 PM est today. So I expect another down wave later today. And with silver hanging just barely over $17 and gold around $1007 it would seem to suggest that. The big question is if that's it for the correction or is there more to come?
As JS noted the price of gold was "allowed" to close just under last week's $1007 close by 1$ simply for TA purposes. No coincidence either that silver closed a few cents under $17.00. But 2 weeks straight over $1000 is causing people to get more used to the magic 4 digit number.
COT report for 9/18/09:
As expected the commercials sold lots of longs in gold and silver and piled on shorts. The gold short to long ratio climbed from an already massive 4.12 to 4.50. But that was on Tuesday. Open interest only climbed +16K contracts this week vs. +57K last week. Quite a slowdown. But the banksters were doing what they do best, profit on longs and continue packing on the shorts to try and turn the tide. As mentioned in the post above, they owned a similar massive % short position in August 2005 but were unable to do anything but sell down shorts all the way into the April/May 2006 high. Maybe this is setting up for a repeat.
The dollar continued with last week's reversal to the long side by increasing the commercial's long to short ratio from 1.62 to 2.53, a healthy jump. Open interest dropped by 3,750 contracts due to selling more shorts than longs. It would seem that the banksters are looking for a rising dollar real soon.
RR, I'm not seeing quite the same thing on futures charts. For GC, last week's close was 1007.6, and this week is 1008.0. It is a verry small green doji (0.3 body). For YG, the mini contract, last week closed at 1006.4 and this week closed at 1010.3, but it's also showing a last transaction of 1008.9, which I think is the difference of closing the price at 1:00 (when SM closes) vs 2:00 (when futures market closes).
Today's move was not the start of a trend. A trend is ready to start Sun or Mon though, and of course, can go either direction.
My instincts tell me gold is going to decline further, although I have yet to sell anything. I am still playing with "house money." I'll be anxious to see what happens Sun night. A decline under 1008 will probably mean a re-test to 990 or so. Maybe something interesting will happen in the world.
I also wanted to re-visit the moving averages. 5 day: 1004.6, 30day: 1011.3. 50day: 961 200day: 923.
In the end, a day like yesterday and today are perfect for whipping up negative sentiment which I think is good for gold. I do think that the dollar might need to reverse and bounce upward a bit here soon though. We had 10 straight red candles for DX (dollar futures) and today was green.
The one thing I keep reminding myself with is the fact that when gold finally breaks out over 1040, gold will likely (but not necessarily) be de-coupled from any trade relationships with the stock market, the dollar, oil, or anything else.
All in all, not a bad week for gold but next week is critical.
The stock market is also holding in there - it's holding 1060 quite well, and this level is significant because it is the 38.2% retracement of the big decline. Looking at the weekly ECRI index, it continued to climb yet again. I think stocks are going to continue to climb.
<< <i>I was looking at the world stock market closes of $1006.5 and $16.98. >>
Right, my question has always been, when you have multiple "things" that track the same thing (gold) but vary by a little, which one is proper to analyze and go by? For instance, if you're a trader of GLD, are the GLD charts adequate or should you use futures because the data covers more time? You might have gaps when looking at GLD, but not so much with something that trades essentially 24h/day.
GSR starting out Sunday night at 59.7 is heading the wrong way (gold $1003, silver $16.80....both new lows on the sweep downs). Dollar heading the other way is supplying the impetus. GSR into the 60+ range will almost certainly mean a revisit to higher digits such as 62-64. Both the GSR and the $USD had reached very oversold levels on the RSI/Slow Stoch. A good note is that plat and pall are unchanged.
The pog trades several more hours after the early afternoon Comex close. So shouldn't one consider another several hours of trading activity on the NY Globex that runs until 5:15 PM? I guess one can make a point that many of the big guns are done by 1:30 PM but gold has made some major moves up and down outside of Comex hours.
While we all agree that SLV has been a good trading vehicle...just don't be the last one holding it when the music stops and the world finds out it is more derivatives than physical. The author brings up some points we've discussed before. Such as it has always bothered me as to why the very powers that have been tring to keep PM prices down and the dollar strong for so long would have ever dreamt up ETF's to support long positions by investors. It never did make sense...unless those ounces have just been a diversion away from honest bullion and into derivative paper. I do find it interesting that after world silver stocks fell from 2.2 BILL ounces in 1990 to 0.2 BILL onuces in 2005, that they have since tripled to 600 MILL ounces....partly because your SLV ounces are now part of world inventories.
PA and PL are down also at the moment (-8.2 and -2.5).
Support for gold (GC) is at 1004.1 and resistance is at 1011.8. As the next trend is ready to start, I'll be looking for the next definitive move above or below these levels. One other indicator for me is going to be the S&P500. It's currently between support and resistance of 1055 and 1061, with 1060 being an all-important 38.2% fib number. If the S&P gives up its support, I think gold will too. So far it's hanging in there, but I can tell I'm not going to get much sleep tonight.
I know it seems that you (RR) are a fan of looking at the GSR, but I'm not sure it's a valid approach to look at a chart that is comprised of two other charts in the short term. I'm not saying it isn't, but you are talking about two commodities versus each other and I would just think it's more meaningful to look at each separately - especially for the short term. I can see definite value in looking at the GSR for a long term play.
On the other hand, you can'd discount a move in the dollar. It has quite a negative streak going that you'd think almost has to bounce a little. Looks to me like there is strong resistance at about 76.80 (DX futures), so a solid breach (upward) here would be a negative for gold as well.
With a lot of potential anti-gold events culminating this week it's a good time for a dollar bump (even if just to 77.5 to 78) and PM drop. The GSR is like the VIX of the PM's. It shows if money is flowing in or out of the market. Right now GSR is moving very close to the 60.0 number from a low of 58.2 late last week. If it swings 2 points (60.2) there's a better than even chance it will swing more. While I can't explain the relationship between G and S in the GSR it seems to work even for short term moves on the order hours. Taking 15-20 min GSR snap shots as the trading day progresses can help tip a trade in one's favor as the GSR sways back and forth. Silver is typically the driving metal since when money is free-flowing it moves strongly in silver's favor. Gold can hang in there for a while, but as silver drops further it almost always pulls gold down with it.
<< <i>With a lot of potential anti-gold events culminating this week it's a good time for a dollar bump (even if just to 77.5 to 78) and PM drop. The GSR is like the VIX of the PM's. It shows if money is flowing in or out of the market. Right now GSR is moving very close to the 60.0 number from a low of 58.2 late last week. If it swings 2 points (60.2) there's a better than even chance it will swing more. While I can't explain the relationship between G and S in the GSR it seems to work even for short term moves on the order hours. Taking 15-20 min GSR snap shots as the trading day progresses can help tip a trade in one's favor as the GSR sways back and forth. Silver is typically the driving metal since when money is free-flowing it moves strongly in silver's favor. Gold can hang in there for a while, but as silver drops further it almost always pulls gold down with it.
roadrunner >>
Looks like Roadrunner's scenario is unfolding, strength in the dollar attributed to the upcoming G20 meeting and Fed comments, gold falling in part due to extreme readings on the COT with commercials continuing to short heavily.
As for trading, I had a short GDX put expire Friday for a profit thankfully. I also took profits on a GLD vertical call spread much earlier in the move. I am taking on water on my remaining GLD vertical call spread initiated at GLD 99.0. The best it got to was a tiny profit after commissions, now it is down about 33%. With the benefit of hindsight, the spike last Wednesday would have been a good time to exit. My other position of short GLD puts are at a 50% profit on the dollar value (more like 5% on amount invested when factoring in the margin requirement). The vertical spread has "limited" downside of 100% (can't lose more than the spread cost) or about another point, so I think I'll just leave it. The short put is at the 94 strike, so it has a bit of room before it becomes threatened (with all downside if GLD drops to zero).
/Oops, edited to correct misuse of the term "notional value." The notional value would be the entire amount or the full $98 per share of GLD. What I meant to write is 50% on the dollar value of the option.
I didn't want to say anything earlier and jinx anything, but I don't think the next trend has started. It was looking bad earlier, but since then everything's recovered to about where it all was when markets opened Sun night. Gold is still ready to move in either direction - the trend is still undecided as far as I can tell. I don't know when Bernake's going to speak, but I'm guessing he'll say something that will send the market up, and I think gold will follow.
Gold stocks took some more beating today. Yeah, I should have sold Yamana Wednesday like Norseman instead of Thursday after it weakened a bit. Hail Norseman...sorcerer of Yamana! I wasn't convinced this morning that another leg down is not on the horizon so I only bought one beaten down junior that over the past week is down 23%, basically to it's summer lows as if gold were still back at $904. I'll take the gift. One thing I've noticed with watching a number of the gold miners is that often one or two of them might lead the pack early (either up or down). And others might not correct at all or even advance while others are getting smacked. So all of that helps to put together a picture. Last week's rally started with increasing volume then trailed away. The amount of many gold shares trading is still staggering nonetheless.
The GSR did bounce back up to over 60.2 before the NY open but it was only for a few hours and then scurried back to the mid-59's. Looking at the GSR trend it still looks down which is bullish. But the daily gold/gdx chart seems to be saying there is more downside to work out before heading back up. It could be as little as Tuesday. More to figure out here with bond auctions starting tomorrow, the FED meeting mid-week, and then G-20 on Friday along with gold futures expiration. Concur with PC that gold and the dollar look to be able to go either way right now with H&S's on the charts. Gold and silver only barely rebounded back to their Friday closes indicating probably another leg down. I'd still be leaning that way considering the COT levels and the multiple events transpiring this week tip the scale to the bearish side imo. I'm ready to buy more on weakness and hope things don't pop right now and leave me at MoneyLA's train station with ticket in hand but no seat (as far as my paper trading account goes).
This whole movement is looking like a consolidation to me, and it is fitting as gold energizes for a push over 1030. We had a re-test to $996 last night, but it was VERY quick. Gold is holding the $1000 line very, very well. I don't think gold's going to decline significantly from here... There is a lot of strength. Gold has had several opportunities to give up $1000 and it hasn't. Likewise, the stock market continues to show strength and resilience.
Resistance levels are 1010.6 and 1015.9 with support at 1003.1, 997.8 and 990.3.
I think we'll definitely see 1010 tonight, but mostly I just expect meandering and languishing.
Stewart Thomson's current weekly gold chart showing many similarities in the oscillators vs. Sept. 2007. Gold was overbought then and stayed that way until March 2008. A number of analysts have recently posted similar comparisons. It's not a guarantee of a forthcoming breakout and new ATH.
It's been a while since I've seen anything worthwhile from DN. His fractal energy chart shows gold with a huge amount of potential to relieve. It is very similar to fall of 2007 and support's ST's analysis above. PC, you'll also take heart in his chart of the leading economic indicators (ECRI) being the most bullish they have ever been since they have been recorded. DN sees this as economic recovery looming for the next 12-18 months, an environment he believes is needed to send gold to $2000. This is somewhat different than JS's thoughts that the dollar's devaluation over the next 1-2 years will propell gold to those heights (ie a currency event, not necessarily deflation or inflation). But both views get gold higher by 2012.
<< <i>Stewart Thomson's current weekly gold chart showing many similarities in the oscillators vs. Sept. 2007. Gold was overbought then and stayed that way until March 2008. A number of analysts have recently posted similar comparisons. It's not a guarantee of a forthcoming breakout and new ATH. >>
Yes, what I've learned and observed is that stochastics and MACD are generally only useful indicators for trading sideways or range-bound patterns. While a trend is actively moving, the indicators stay in overbought or oversold territory, and can stay there for a long time. So those indicators do not weigh much on my decisions.
The dollar is now back below 76.80 and gold is flirting with 1009, and silver back over $17. If gold breaks 1010.6, the next stop is 1016. I think we could be spending Tuesday between 1003-1010 or 1010-1016. I think I might sell a small portion of my position with the hopes of re-loading lower, for a small gain. I don't feel that gold is ready for the next move, although I will reiterate that I think we're in for a world event or a big announcement that will spark an upward cascade.
One ore more of the following are due soon, and any one of these can send gold soaring: -Raising federal debt limit -Passing of health care bill -Chinese announcement regarding trade war and/or health bill spending -FHA and/or FDIC formally announcing running out of funds/reserves -Announcement regarding expansion of AfPak effort
Edited to add:
It will be interesting to see how the bond auctions go. I'm not expecting anything particularly bad, namely because you never know if the reports are honest or if the fed is just monetizing behind the scenes. But, I'm very interested to see if China shows up, giving the developments in the "trade war" and their interest in IMF bonds. This combined with a record amount for 2, 5, and 7 year bonds ($112B).
I am conflicted. The ECRI shows recovery is coming, whether genuine or not, and I do see other anecdotal signs. PLus, logic tells me that inventories are now tight and that any kind of spending increase will cause increased economic activity resulting in more employment. However, I do know that the proverbial "other shoe" is about to drop: commercial real estate. That coupled with other articles I've read about how the money supply has actually been shutoff since Jan or so, and that it takes about 8-9 months for this to take effect. 8-9 months puts us right about now. This teoretically would mean a corresponding economic crash. I wish I could get my crystal ball fixed.
Besides commerical RE starting to ramp up, the next wave of residential mortgage defaults is also beginning following a lull from 2008 through part of 2009. The residential RE defaults will not peak until mid-2011.
Bonds should do well because the Fed/Treasury is buying back a significant portion of them. One account I've read estimates 50% of all bond auctions this year have been purchased by the house.
GSR back to 59.0 which is very bullish on how quickly it came back. The dollar has now reached another new low for 2009 negating the idea for now of an extended rally. Gold is set up pretty well to challenge the all time high today or tomorrow....if it wants to go.
The $USD dipped into 75 territory today just begging for gold to make a run at $1033.
So the consolidation continues, and we're right back to where we started before the foray down to $996. Gold is almost completely consolidated, and should be ready to go Wed or Thurs. The bullishness of the past few days is encouraging... gold has shown very little weakness, IMO, especially in the face of lots of adversity (or potential adversity) this week.
I think we've seen that last of sub-$1000 gold. Worst case, a test to $1010 may happen, and if it does, it's a good chance to load up. A drop under $1000 now would be a huge red flag.
The USD is hovering at 76.20 tonight. A breach of 76.0 could send gold up nicely. 2-year bonds sold well today, but I think those are an easy sell compared to the longer term notes. Regardless, the fed seems to have no problem finding buyers or making it look like they have buyers. Bernake's expressed support for an alternative global reserve currency were surprising and it seems bearish for the dollar.
That was Geithner about being open on a new reserve currency. Followed by a "clarification". A lot of mixed signals and confusion coming from the higher ups. Could be a realization sinking in that the economy is not recovering, the US Dollar is in deep trouble, and we may have a really rotten President who can't lead us out of the mess.
<< <i>Could be a realization sinking in that the economy is not recovering, the US Dollar is in deep trouble, and we may have a really rotten President who can't lead us out of the mess. >>
The fed kept interest rates unchanged and sent the markets and gold soaring. Well gold at least recovered to where it was, 1018. I'm waiting to see if it will go higher from here, and I think it will.
I loaded up to a full position on the first dip to $14.30 last night, but I should have waited for the quick dip under 1010 this morning. Oh well, you'll never pick the bottoms or tops exactly.
We're looking at resistance at 1023 and then beyond that at 1030.8 with support at 1014.3. The S&P is now at resistance at 1075, if it breaks that, we might hit or break through 1023 with gold.
A whipsaw day for almost all markets. Fed rate days are sometimes like this, so I usually don't trade on Fed days. It is difficult to get a clear read, because there are so many traders jumping one way and then the other. I prefer to wait for the dust to settle.
When Fidel Castro praises you, something is really wrong. It's a sad day when we have to hear the truth, not from our own country but from countries like China and the Czechs.
The good news is that the coming economic collapse will send gold and silver to the moon and put an end to the nonsense of government health care, endless entitlements, and climate change buffoonery. But bad news is we may have to destroy our country to get there.
Totally agree Red Tiger. Unfortunately I nibbled on Yamana this morning and then saw things soon getting worse as the pre-announcement whip saw effect came in. So I took a small hit and bailed for the rest of the day. Then with the FED announcement things perked things back up which would have negated my loss. But I had the feeling things would turn right back down. And in the last hour of trading all that euphoria of the FED announcement came crashing down with the DOW tanking and hammering the gold stocks. Yamana finished 4% down after being even at 2:30 pm. I should have just abstained.
In looking at the 15 min charts of GLD, GDX, and SLV over the past 5 days I'm not convinced there still isn't more downside in either gold, the miners, or both. We've either just completed the 3rd or 5th leg down of an ABC correction from the peak 5 days ago. GSR headed back and SM looked terrible in the last hour today. Oil down and the dollar trending up. With options expiration starting to take hold doesn't look particularly bullish for PM's to me. The Aden Sisters have the ball right now. But on a bullish note, a rather nice cup and handle formation grew from September 17th to date. Tea anyone?
Degraaf shows an interesting graph of Gold vs long bond that is sitting at a break out point. It's very similar to the graph of Gold. Another graph of the Central Fund of Canada vs. GLD is shown. Interesting that since November 2008 CEF has outpaced GLD by quite a bit. One of them conducts semi-annual physical audits of the entire fund and has 30 yrs of sound management.....the other? He suggest that people are slowly getting the idea that GLD is at least partially papered over.
TLP: What if you wanted to invest in a tulip trust that managed hundreds of gardens around the country with the finest and prettiest of tulips. The only problem was no one ever conducted physical reviews of the sites but they all got good reviews by major banks and leading auditors. With your share of stock you got a picture of the tulip(s) you had invested in. Everything is rosy and these thing trade like hot cakes on line. Hit the enter key and you own some tulips. The price of TLP has more than doubled since its inception. What a great way to get J6P involved in tulip ownership w/o all the hassles of growing them. Best of both worlds. One day someone accidently walks into one of the gardens during the guards' coffee break. He discovers there are no tulips....just the photos of tulips that were probably computer created. What would happen to the share price of TLP?
The consolidation continues, and volatility is increasing markedly.
I actually see a loose penant forming with lower highs and higher lows on the hourly chart. Well, until this hour and the culmination of a $25 drop. It remains to be seen where this hour closes out at, but I'm guessing it will close out above 1005, in which case the penant will still be there. The penant
1045 is a key support level for the S&P500, and we're hoving about there now. Regardless I don't see gold going below 995 today, and I expect the S&P to bounce off of this level.
Gold is charged up and ready for a move. I don't think this $25 drop qualifies as a trend. I'm still waiting for a drop below $990 or a breakout over $1033.
The Aden Sisters have sung.......tra la la la. Does this complete the ABC from the $1028 peak or is just the start of more to come in October?
A number of market timers had 9/22 to 9/24 in their sights back in August including the YuYangers. All spot on. YY shows a downtrend into the first week in August but no doubt volatility up and down along the way. Looks to me from the daily chart (3 months) there is still more downside to play out in the days ahead.
A gdx negative momentum cross just occured yesterday and reconfirmed today. The same chart shows this as the 3rd leg down in the big picture...with usually another leg down to follow before it finally bottoms. Doesn't mean we can't rebound back over $1000 one more time. The knife is falling. Is it ready to be caught?
So far typical attempt to test the wedge breakout. Today touched the 20dma. Nothing out of the ordinary. Also does not portend to a major upward movement as the all-time highs have not yet been breached. Consolidation continues.
My take is that gold and the S&P will go the same direction. 1045 is a big level for the S&P500, and I don't think S&P is ready to breach this level. If it does then we could see gold hit $960 or so, but my instinct tells me that $998 gold and 1045 S&P are going to hold.
I don't quite have my cash position ready to buy, but I would like to use this occasion to thank the gold banks for providing yet another buying opportunity in precious metals...
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I bailed out of both my GLD positions on the spike down so am now flat. I don't like fast markets, especially in a short put position where the potential loss grows exponentially in a water fall decline. The net is a modest loss on the pair of trades, about a 40% gain on the short put (Oct 94), and about a 40% loss on the vertical call spread (Oct 99/104), the call spread is for a larger dollar amount.
Someone up thread mentioned touching the 20 day moving average, which is where one pundit said the COT readings projected. I have mentioned that a pull back to the 50 dma is normal behavior after a breakout and would be a decent entry point. I also mentioned today (September 24) as a day to watch for wide swings because options on futures are expiring. I didn't expect this.
The 50dma coincides with the DT line portion of the wedge and would represent a good buying point, if it gets there. A break below and I would become extremely concerned of a break in the entire pattern.
The Aden's track record is almost impeccable. Except for a correct call in mid-July as the market picked up steam for a bit, they have been 100% on the money warning about impending gold moves when their articles hit the websites (ie sell when they say buy). This goes back into last year and beyond. This time it was the secondary peak of 9/22/09. Way to go gals! Ironically, because they finally called a move correctly back in July I was figuring just maybe they could be trusted...nah!
Nice chart Cohodk on gold's current standing. A number of options for the pullback include the triangle apex, the breakout point, the top of the triangle back tested, and some Fib number of this last wave up. Best I can see right now was that this was the 3rd wave down and a quick one at that. Gold just loves to do 5 wave corrections after a major up move. So I suspect we have 2 more legs to complete. I don't see anything above the $980's as the end point since that would correspond to a 50 or 62% retrace of the final leg wave up.
A number of the miners got whacked good today. They tended to be the ones that didn't take most of their lumps during the past 2 weeks and continued right up until the 17th to 22nd. Equalization in progress. High-flyer EGO was about the hardest hit so far. Now looking for a good entry point to buy the best at the best price (EGO, AUY, GG, AEM, BVN, KGC, IAG, GSS) for hopefully a move later in year. Let's give the dollar a few days, maybe even a few weeks to show some strength. Then it's back to the old grind.
This pull back looks healthy and natural and the long term trend remains up. There's gobs of bids underneath the current leve, imho. I'm thinking that 960s is a good point to start reaccummulating gold and 15.50-15.60 a good spot in silver.
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If gold were a person, he wouldn't be a very good friend. I was feeling quite comfortable after the run-up to 1020 this morning. Gold likes to fake people out and test their emotions.
Today was nerve-racking for me. Most of my futures position was built in the high $990's, so I'm OK, but I did end up adding a bit in the low $1010's. In the past I probably would have sold on a day like today, but I held on. With Murphy's law in play, gold is surely to go lower, or at least go lower just long enough to get me to panic and sell, just before turning around again.
However, when I look at my overall perspective, I see two possibilities: A) Today was just a normal consolidation that has fully energized the pattern. Today's move was NOT part of a trend. $990 needs to continue to hold up and we are likely to head higher. This goes in concert with 1045 S&P holding up. 1045 is the Fib 38.2% retracement for the last move up. Additionally, The USD needs to top out just over 77, where it is now.
Gold will continue lower to test the point of the last breakout or a moving average point, as low as $960.
Either way, gold remains in a bullish pattern until we see a slice through $960. Option A remains in effect until a decisve slice below $990.
The last time we had a G20 meeting the same thing happened to gold....it got whacked. None of those guys wanted to see gold hanging above $1000 never mind $1010-$1020. And in the current case we have futures and options expiring with many banksters looking to profit on the shorts they added over the past week or two. And also completed 3 days of bond auctions and a 2 day FED meeting. A good engineered squeeze on the dollar seemed to fit. Gold held up pretty well still hanging in the $990's. A month ago, we were dreaming about getting back above $950.
On an hourly basis a pullback could be possible. Even using 6 day oscillators rather than the standard 12-14 things still point down. TBT is still trending slightly down and UUP ($USD) is pointed up. The gold stocks look the closest to bottoming, gold is lagging slightly. Let's let the G20 meeting end first and gold futures expiration end today. The relieving of those pressures could allow a nice bump later today or first thing next week. The brokers are also padding their books for end of contract year to lock in their bonuses. Selling some nice gains in gold stocks probably didn't help the pog. $984 has been touched which backtests the 18 month triple top line. A fall below $980 or so takes gold down to the April uptrend line ($965-$970).
I'm looking at the daily charts over the past month and the trends seem to be generally pointing down for now: macd, rsi, slow stoch, boll. bands, volume, still showing no signs of turning, etc. GDX and Gold/Silver Ratio are showing Aroon15 day crosses today usually indicating a downtrend well in progress with more to go. Some of the stocks that left the party early on the 8th are now riding the bottom of the above indicators.
So I'm going to give this all a little more time to settle for CCI, W%R, SS, Aroon10-15 and other indicators to hit their normal bottoms. Once a swift move is in progress these indicators don't often stop short of all the way down. At least that's what I've been seeing on gold for the past 9 months. Gold stocks are getting close. Whenever I try to time counter-trend moves on a day to day basis I usually take a butt kick. It's safer for me to try to and figure out a weekly or monthly trend, though still not easy. I usually have a decent feel as to when it's safe enough to jump back in, but I've been too eager to jump out after the first sign of a pullback. The boyz know how to spin up those emotions to try and get you out.
In looking back through Sept. I can see the trends a little more clearly now in 20-20 hindsight. I've spent a fair amount of time watching trends on downturns on when to get back in, but really haven't been as rigorous this time watching these on the way up...probably because I've been shook out early the past 2 times. Need to pay attention in both directions whether one is in or out. I mentioned a short time back that volume has been dropping pretty much all month....not a good sign. It peaked around the 4th for most gold related stocks. The 10 day BBands peaked around the 8th to 10th coinciding with the first hit to ABX, NEM, GG as well as some juniors. Even the gold to silver ratio 10 day bands peaked out on the 10th. The StochRsi was in agreement showing peaks around the the 8th for those stocks. TBT (bearish 20yr TBond) has normally been a decent tracker of gold this year but didn't do very well the past month as gold became a haven with treasuries for the first time in a while. But TBT did make the rise in early Sept with gold and then turned on the 10th in tacit agreement. The volume oscillator PVO peaked around the 6th to 8th for most everything gold confirming the general shape of volume for the month.
The 20 day bands peaked on the 17th to 18th coinciding with the first high in gold. At the same time the CCI went negative continuing it's general downtrend. When the StochRsi in the dollar and GSR started heading strongly up agains the drops in the gold stocks around the 17th-18th it should have been clear that this was probably not going to be a quick 1 or 2 day counter-move. That shift should have been the alarm bell. At the time I wasn't even watching it. And no doubt it's easier to say such a thing in hindsight. But putting it down will help me focus on them next time.
Well I think $990 is going to hold up for the day meaning the pattern is still bullish in all time frames; however, gold is vulnerable. Todays' move still does not appear to be part of any trend - we're still in consolidation. With 3 down days in a row, we're probably due for a small bounce. I might use such opportunity to reduce my position.
The logical side of me sees RR's posts and the reality that the dollar chart looks ready for a bounce (up to the upper line on the channel) or at least a consolidation. In any case, it's oversold. 77.0-77.2 is holding firm resistance, just like 1040-1045 is holding for the S&P and $990 for gold. But my instincts tell me that something's not right in the markets, and I'm mostly referring to the last few weeks. Inter-market relationships are strong right now, but they can and do fail and de-couple.
On one hand, gold has held up well this week given everything gold-negative that was going on. Some charts have shown though that gold is not keeping up (matching) the weakness in the USD. I suppose this could be the result of manipulation, but I do have to be concerned about why gold is up "where it should be." Of course, this could mean pent-up bullishness.
For a psuedo crystal ball I went back and dredged up the GSR charts among others to try and get a better big picture of where we are. I've been paying too much attention to the trees lately and not the forest. And I think the weekly GSR chart in line format (rather than candlestick or bars) sort of fits the bill. Going back to the bull run into March 2008 the GSR has traced out a fairly correct pattern of Elliot Waves. For the 18 months involved, it's probably makes more sense than the gold or silver charts by themselves. We have the 5 initial deleveraging waves screaming up from Aug-Nov 2008 and then a basic zig-zag ABC corrective pattern (5-3-?) with the C still heading towards completion. The 2 and 4 legs alternate in complexity on the A leg. I would expect the C leg to conform to another 5 waves down like the A leg, with the 4 leg being more complex than the 2, just as in the A leg.
What the above says to me is that we're in the #4 leg of the C leg and will wander up and down a bit heading towards 63-64. From there a final 5th leg moves GSR to 55-57. This will help take GSR closer to its norm, allow the dollar some upside for a few weeks, and then a final move up for gold. The C leg appears to be moving about 2X as fast as the A leg did. Therefore I'd expect the #4 leg to last about half as long as the #4 in the A leg, or approx a month or less....Oct 13/14. Then leg 5 completes about 4-6 weeks later into later November. This is not much different from YY Gold's general trend chart.
COT report for 9/22/09
No surprise here. Gold futures open interest unchanged at 467K, some longs removed and a small amount of shorts added....ratio increased slightly to 4.58. Silver the same story. The dollar was relatively unchanged with the long/short ratio moving up slightly to 2.72.
<< <i>Well I think $990 is going to hold up for the day meaning the pattern is still bullish in all time frames; however, gold is vulnerable. Todays' move still does not appear to be part of any trend - we're still in consolidation. With 3 down days in a row, we're probably due for a small bounce. I might use such opportunity to reduce my position.
The logical side of me sees RR's posts and the reality that the dollar chart looks ready for a bounce (up to the upper line on the channel) or at least a consolidation. In any case, it's oversold. 77.0-77.2 is holding firm resistance, just like 1040-1045 is holding for the S&P and $990 for gold. But my instincts tell me that something's not right in the markets, and I'm mostly referring to the last few weeks. Inter-market relationships are strong right now, but they can and do fail and de-couple.
On one hand, gold has held up well this week given everything gold-negative that was going on. Some charts have shown though that gold is not keeping up (matching) the weakness in the USD. I suppose this could be the result of manipulation, but I do have to be concerned about why gold is up "where it should be." Of course, this could mean pent-up bullishness.
I need a better crystal ball. >>
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Saw nothing in the gold charts today that would indicate anything but some more downside in order to test the $970's or $960's. Appears gold is now consolidating in the $990's prior to another leg down. Trading volumes continued to decrease and are essentially at the same levels prior to the Sept. move. GSR is in it's 4th corrective leg and should seek the 63-64 level from here. Nothing changed in the dollar as it still has upward momentum. For now, just watching.....and waiting. Had an interesting 3-5% spike in the miners today where they bolted up at the opening and then got pulled all the way back for essentially no gain.
Comments
Gold had quite a run and needed to consolidate. Now that consolidation is done and gold is ready for another move (up or down). I expect it to be upward, and I expect it to start tonight or tomorrow. It may just be a move to bring us to the 1025-1030 range. I don't expect 1010 to crack. I don't expect the move from there over 1040 to be immediate, although any news event or announcement could spark it.
I am battling with whether or not to take some profits at 1035 or so. It seems to me that would be the prudent thing, but it also seems to me that gold is going to breakout, and once that happens gold could "melt" upward rather quickly. Fear and greed... RR's information concerns me, causing me to think I should take profits, but then something else tells me that none of that will matter and/or some of those events will spark the breakout somehow.
For Beavan's scenario to unfold, it would be like the guppies running the world for a day. It could happen, but the odds seem tiny to me. Certainly gold could fold on Friday for other reasons, but to pin it on options market makers on GLD seems far fetched. September 24 is when options on gold futures expire. If there are any games, that day or the day before would be the more likely day. For equity options, most of the fireworks seem to occur on Wednesday before expiration, and we got them, with the spike in gold. Options related moves, tend to fade quickly, and are more like hiccups than events worth trying to trade.
Like I wrote elsewhere, a pullback to the 50 day moving average is common after a breakout. That would shake out a lot of folks, and would be a decent entry point for longs that aren't already in. Like I wrote on my blog, while September is the best month for gold, October tends to be flat to down. For gold stocks, on average, October is one of the worst. As always, seasonal tendencies are one of the weaker indicators. Also keep in mind that virtually every pro gold trader knows these calendar tendencies, so a few may jump the calendar, and take profits or head to the sidelines before October.
For now, gold and silver still look to be trending down over the past 24 hours. The dollar bottomed at around 76.0 and had several touches around 76.1 before proceeding into a cosolidating triangle. It has now broken out of that triangle and put in a new daily high. It may try to make a run to 77+ or 78 which could turn gold for the very short term. Treasuries also have that look that they want to turn up again. Hence gold further down would be my bet for the next 24 hrs even considering that both the gold and silver stochastics are locked in >80. Even most of the better miners are now locked in >80.
roadrunner
As far as the seaonality, it's easy to look at the strong historical record and believe that it's going to repeat again. But there are alwas exceptions, so I have a hard time putting to much stock into seasonality. I've personally been burnt too many times relying on historical tendencies and seasonality or similar factors only to have it "be different this time."
Anyway, support is at 1008.7, resistance at 1017.3, 1023.8, and 1032.4 for Friday.
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<< <i>I'll just throw this out there... One of the things I've heard is that if you're going to read charts you gotta kinda ignore the news and other information. The charts are supposed to do what the charts are supposed to do.
As far as the seaonality, it's easy to look at the strong historical record and believe that it's going to repeat again. But there are alwas exceptions, so I have a hard time putting to much stock into seasonality. I've personally been burnt too many times relying on historical tendencies and seasonality or similar factors only to have it "be different this time."
Anyway, support is at 1008.7, resistance at 1017.3, 1023.8, and 1032.4 for Friday. >>
Yes, articles like the WB article are noise and are a distraction for a trader, adding nothing of value. Everyone and his brother knows it is option expiration Friday, it is not news. If by some luck, gold tanks today, WB will claim hero status, when the reasoning behind his article is fundamentally flawed. Where is the history of other big gold moves on options expiration to make the case? How can a few GLD options and a few options on tiny cap gold stocks have sway over the much larger gold futures market? If option market makers really had that kind of muscle, they would target much easier, much more lucrative targets like Apple or RIMM, where the option volumes are much higher and there is not a huge futures market to flick them away like fleas.
I'm the one who emphasizes the charts. I do look at seasonality, but it is way down the list, though way ahead of noise articles like the WB one. The calendar tendencies are more of a concern for those in gold stocks than those playing GLD or futures. How gold reacts to new news can give indications. That gold may close up for the week when a top analyst basically yells "fire" in the theater (the top rated UBS gold analyst publicly telling folks to sell) is a positive.
Sentiment is useful for calling turns. If virtually all the gold newsletter timers come on board late in the move, that would be a danger signal. One forum newbie posted his first gold buy, and that is a minor negative. If there get to be lots of those kinds of posts, that is when the forum becomes most useful. I often find that newbies have an uncanny ability to call tops and bottoms when making their first buys or selling everything. Right now the small fish on BST seem to be mostly selling and that is a minor positive.
I caution those that place too much weight on the COT (commitment of traders). Back in September 2006, I was long GLD, selling for a small profit just before a COT report came out and gold tumbled. The tumble only lasted a few days before GLD resumed a huge six month up move, that ended up at a 50% gain from the breakout. We are only up 7% from the current breakout. The commercials had to cover at much higher prices (as ProofCollection has been writing about).
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I follow gold stocks rather than the futures/options so my opinions tend to be slanted in that direction when I say "gold." And miners are in a 5 leg down series that probably will complete today though more could follow after a bounce back. A few of the weaker gold stocks started turning days ago as a warning shot. The big sweep downs at the open or during the day on some of the gold stocks the past several days indicated problems/weakness might come (ie GSS, AUY, TRE, etc.). Gold may only move down 1-1.5% but it can wreak havoc on the miners. I'm still concerned that gold touched $1008 yesterday and then to $1005 today. I don't suspect gold is going anywhere until the miners end this funk.
The COT short comm. numbers in Sept 2006 were not near a record % high of total open interest. On the JS website today is a chart of COT short interest showing a similar % position back in August 2005 before the big run to $730 occured. In essence the COT lowered their short interest % all the way from the $400's to the $700's. But as Hoye has demonstrated this week via historical charts, every time the COT short interest rsi(>70) has hit extremes like this in the past 13 years (about 6 instances) there was a pullback first within days/weeks. We've been at that point since last week sometime. We just don't know if it's days or weeks for the switch to get thrown. The Sept seasonality could already be over on Sept 18th as half of September certainly qualifies for a Sept seasonal rally but I would concede it still looks like gold wants to finish up closer to $1033+ before the month ends. Next week is really the end to seasonality for gold with everything coming to a head by Thursday/Friday (G20, bond sales, expiration, USA seasonality, etc.)
Edit: I miscounted the waves down in GLD because it can sometimes be confusing. There is usually less scatter in the GDX and SLV charts when it comes to counting. And the SLV charts shows a much more clear 4 waves as of 1:00 PM est today. So I expect another down wave later today. And with silver hanging just barely over $17 and gold around $1007 it would seem to suggest that. The big question is if that's it for the correction or is there more to come?
roadrunner
COT report for 9/18/09:
As expected the commercials sold lots of longs in gold and silver and piled on shorts. The gold short to long ratio climbed from an already massive 4.12 to 4.50. But that was on Tuesday. Open interest only climbed +16K contracts this week vs. +57K last week. Quite a slowdown. But the banksters were doing what they do best, profit on longs and continue packing on the shorts to try and turn the tide. As mentioned in the post above, they owned a similar massive % short position in August 2005 but were unable to do anything but sell down shorts all the way into the April/May 2006 high. Maybe this is setting up for a repeat.
The dollar continued with last week's reversal to the long side by increasing the commercial's long to short ratio from 1.62 to 2.53, a healthy jump. Open interest dropped by 3,750 contracts due to selling more shorts than longs. It would seem that the banksters are looking for a rising dollar real soon.
roadrunner
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For YG, the mini contract, last week closed at 1006.4 and this week closed at 1010.3, but it's also showing a last transaction of 1008.9, which I think is the difference of closing the price at 1:00 (when SM closes) vs 2:00 (when futures market closes).
Today's move was not the start of a trend. A trend is ready to start Sun or Mon though, and of course, can go either direction.
My instincts tell me gold is going to decline further, although I have yet to sell anything. I am still playing with "house money." I'll be anxious to see what happens Sun night. A decline under 1008 will probably mean a re-test to 990 or so. Maybe something interesting will happen in the world.
I also wanted to re-visit the moving averages. 5 day: 1004.6, 30day: 1011.3. 50day: 961 200day: 923.
In the end, a day like yesterday and today are perfect for whipping up negative sentiment which I think is good for gold. I do think that the dollar might need to reverse and bounce upward a bit here soon though. We had 10 straight red candles for DX (dollar futures) and today was green.
The one thing I keep reminding myself with is the fact that when gold finally breaks out over 1040, gold will likely (but not necessarily) be de-coupled from any trade relationships with the stock market, the dollar, oil, or anything else.
All in all, not a bad week for gold but next week is critical.
The stock market is also holding in there - it's holding 1060 quite well, and this level is significant because it is the 38.2% retracement of the big decline. Looking at the weekly ECRI index, it continued to climb yet again. I think stocks are going to continue to climb.
roadrunner
<< <i>I was looking at the world stock market closes of $1006.5 and $16.98. >>
Right, my question has always been, when you have multiple "things" that track the same thing (gold) but vary by a little, which one is proper to analyze and go by? For instance, if you're a trader of GLD, are the GLD charts adequate or should you use futures because the data covers more time? You might have gaps when looking at GLD, but not so much with something that trades essentially 24h/day.
The pog trades several more hours after the early afternoon Comex close. So shouldn't one consider another several hours of trading activity on the NY Globex that runs until 5:15 PM? I guess one can make a point that many of the big guns are done by 1:30 PM but gold has made some major moves up and down outside of Comex hours.
SLV revisited - Seeking Alpha
While we all agree that SLV has been a good trading vehicle...just don't be the last one holding it when the music stops and the world finds out it is more derivatives than physical. The author brings up some points we've discussed before. Such as it has always bothered me as to why the very powers that have been tring to keep PM prices down and the dollar strong for so long would have ever dreamt up ETF's to support long positions by investors. It never did make sense...unless those ounces have just been a diversion away from honest bullion and into derivative paper. I do find it interesting that after world silver stocks fell from 2.2 BILL ounces in 1990 to 0.2 BILL onuces in 2005, that they have since tripled to 600 MILL ounces....partly because your SLV ounces are now part of world inventories.
roadrunner
Support for gold (GC) is at 1004.1 and resistance is at 1011.8. As the next trend is ready to start, I'll be looking for the next definitive move above or below these levels. One other indicator for me is going to be the S&P500. It's currently between support and resistance of 1055 and 1061, with 1060 being an all-important 38.2% fib number. If the S&P gives up its support, I think gold will too. So far it's hanging in there, but I can tell I'm not going to get much sleep tonight.
I know it seems that you (RR) are a fan of looking at the GSR, but I'm not sure it's a valid approach to look at a chart that is comprised of two other charts in the short term. I'm not saying it isn't, but you are talking about two commodities versus each other and I would just think it's more meaningful to look at each separately - especially for the short term. I can see definite value in looking at the GSR for a long term play.
On the other hand, you can'd discount a move in the dollar. It has quite a negative streak going that you'd think almost has to bounce a little. Looks to me like there is strong resistance at about 76.80 (DX futures), so a solid breach (upward) here would be a negative for gold as well.
roadrunner
<< <i>With a lot of potential anti-gold events culminating this week it's a good time for a dollar bump (even if just to 77.5 to 78) and PM drop. The GSR is like the VIX of the PM's. It shows if money is flowing in or out of the market. Right now GSR is moving very close to the 60.0 number from a low of 58.2 late last week. If it swings 2 points (60.2) there's a better than even chance it will swing more. While I can't explain the relationship between G and S in the GSR it seems to work even for short term moves on the order hours. Taking 15-20 min GSR snap shots as the trading day progresses can help tip a trade in one's favor as the GSR sways back and forth. Silver is typically the driving metal since when money is free-flowing it moves strongly in silver's favor. Gold can hang in there for a while, but as silver drops further it almost always pulls gold down with it.
roadrunner >>
Looks like Roadrunner's scenario is unfolding, strength in the dollar attributed to the upcoming G20 meeting and Fed comments, gold falling in part due to extreme readings on the COT with commercials continuing to short heavily.
As for trading, I had a short GDX put expire Friday for a profit thankfully. I also took profits on a GLD vertical call spread much earlier in the move. I am taking on water on my remaining GLD vertical call spread initiated at GLD 99.0. The best it got to was a tiny profit after commissions, now it is down about 33%. With the benefit of hindsight, the spike last Wednesday would have been a good time to exit. My other position of short GLD puts are at a 50% profit on the dollar value (more like 5% on amount invested when factoring in the margin requirement). The vertical spread has "limited" downside of 100% (can't lose more than the spread cost) or about another point, so I think I'll just leave it. The short put is at the 94 strike, so it has a bit of room before it becomes threatened (with all downside if GLD drops to zero).
/Oops, edited to correct misuse of the term "notional value." The notional value would be the entire amount or the full $98 per share of GLD. What I meant to write is 50% on the dollar value of the option.
The GSR did bounce back up to over 60.2 before the NY open but it was only for a few hours and then scurried back to the mid-59's. Looking at the GSR trend it still looks down which is bullish. But the daily gold/gdx chart seems to be saying there is more downside to work out before heading back up. It could be as little as Tuesday. More to figure out here with bond auctions starting tomorrow, the FED meeting mid-week, and then G-20 on Friday along with gold futures expiration. Concur with PC that gold and the dollar look to be able to go either way right now with H&S's on the charts. Gold and silver only barely rebounded back to their Friday closes indicating probably another leg down. I'd still be leaning that way considering the COT levels and the multiple events transpiring this week tip the scale to the bearish side imo. I'm ready to buy more on weakness and hope things don't pop right now and leave me at MoneyLA's train station with ticket in hand but no seat (as far as my paper trading account goes).
roadrunner
Resistance levels are 1010.6 and 1015.9 with support at 1003.1, 997.8 and 990.3.
I think we'll definitely see 1010 tonight, but mostly I just expect meandering and languishing.
Stewart Thomson's current weekly gold chart showing many similarities in the oscillators vs. Sept. 2007. Gold was overbought then and stayed that way until March 2008. A number of analysts have recently posted similar comparisons. It's not a guarantee of a forthcoming breakout and new ATH.
David Nichols fractal analysis update
It's been a while since I've seen anything worthwhile from DN. His fractal energy chart shows gold with a huge amount of potential to relieve. It is very similar to fall of 2007 and support's ST's analysis above. PC, you'll also take heart in his chart of the leading economic indicators (ECRI) being the most bullish they have ever been since they have been recorded. DN sees this as economic recovery looming for the next 12-18 months, an environment he believes is needed to send gold to $2000. This is somewhat different than JS's thoughts that the dollar's devaluation over the next 1-2 years will propell gold to those heights (ie a currency event, not necessarily deflation or inflation). But both views get gold higher by 2012.
roadrunner
<< <i>Stewart Thomson's current weekly gold chart showing many similarities in the oscillators vs. Sept. 2007. Gold was overbought then and stayed that way until March 2008. A number of analysts have recently posted similar comparisons. It's not a guarantee of a forthcoming breakout and new ATH. >>
Yes, what I've learned and observed is that stochastics and MACD are generally only useful indicators for trading sideways or range-bound patterns. While a trend is actively moving, the indicators stay in overbought or oversold territory, and can stay there for a long time. So those indicators do not weigh much on my decisions.
The dollar is now back below 76.80 and gold is flirting with 1009, and silver back over $17. If gold breaks 1010.6, the next stop is 1016. I think we could be spending Tuesday between 1003-1010 or 1010-1016. I think I might sell a small portion of my position with the hopes of re-loading lower, for a small gain. I don't feel that gold is ready for the next move, although I will reiterate that I think we're in for a world event or a big announcement that will spark an upward cascade.
One ore more of the following are due soon, and any one of these can send gold soaring:
-Raising federal debt limit
-Passing of health care bill
-Chinese announcement regarding trade war and/or health bill spending
-FHA and/or FDIC formally announcing running out of funds/reserves
-Announcement regarding expansion of AfPak effort
Edited to add:
It will be interesting to see how the bond auctions go. I'm not expecting anything particularly bad, namely because you never know if the reports are honest or if the fed is just monetizing behind the scenes. But, I'm very interested to see if China shows up, giving the developments in the "trade war" and their interest in IMF bonds. This combined with a record amount for 2, 5, and 7 year bonds ($112B).
I am conflicted. The ECRI shows recovery is coming, whether genuine or not, and I do see other anecdotal signs. PLus, logic tells me that inventories are now tight and that any kind of spending increase will cause increased economic activity resulting in more employment. However, I do know that the proverbial "other shoe" is about to drop: commercial real estate. That coupled with other articles I've read about how the money supply has actually been shutoff since Jan or so, and that it takes about 8-9 months for this to take effect. 8-9 months puts us right about now. This teoretically would mean a corresponding economic crash. I wish I could get my crystal ball fixed.
Bonds should do well because the Fed/Treasury is buying back a significant portion of them. One account I've read estimates 50% of all bond auctions this year have been purchased by the house.
GSR back to 59.0 which is very bullish on how quickly it came back. The dollar has now reached another new low for 2009 negating the idea for now of an extended rally. Gold is set up pretty well to challenge the all time high today or tomorrow....if it wants to go.
The $USD dipped into 75 territory today just begging for gold to make a run at $1033.
Warning Will Robinson.....the Aden Sisters posted today. Usually that means a top just occured or will occur very soon.
roadrunner
I think we've seen that last of sub-$1000 gold. Worst case, a test to $1010 may happen, and if it does, it's a good chance to load up. A drop under $1000 now would be a huge red flag.
The USD is hovering at 76.20 tonight. A breach of 76.0 could send gold up nicely. 2-year bonds sold well today, but I think those are an easy sell compared to the longer term notes. Regardless, the fed seems to have no problem finding buyers or making it look like they have buyers. Bernake's expressed support for an alternative global reserve currency were surprising and it seems bearish for the dollar.
Interesting article. Everyone but the commercial traders are long.
Gold Market: Almost 100% Of Money Managers Are Long
Discussion of gold $1500 this year:
Gold $1,500 This Year
Video on the USD Carry Trade
Something to be concerned with: GS sees inflation setting new lows, which is bad for gold. You've got to respect GS's opinion, they rarely get anything wrong:
Goldman: Deflationary Forces Will Send Treasuries to 3%
economy is not recovering, the US Dollar is in deep trouble, and we may have a really rotten President who can't lead us out of the mess.
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<< <i>Could be a realization sinking in that the economy is not recovering, the US Dollar is in deep trouble, and we may have a really rotten President who can't lead us out of the mess. >>
Was there ever any doubt?
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I loaded up to a full position on the first dip to $14.30 last night, but I should have waited for the quick dip under 1010 this morning. Oh well, you'll never pick the bottoms or tops exactly.
We're looking at resistance at 1023 and then beyond that at 1030.8 with support at 1014.3. The S&P is now at resistance at 1075, if it breaks that, we might hit or break through 1023 with gold.
U.N. climate meeting was propaganda:
The good news is that the coming economic collapse will send gold and silver to the moon and put an end to the nonsense of government health care,
endless entitlements, and climate change buffoonery. But bad news is we may have to destroy our country to get there.
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In looking at the 15 min charts of GLD, GDX, and SLV over the past 5 days I'm not convinced there still isn't more downside in either gold, the miners, or both. We've either just completed the 3rd or 5th leg down of an ABC correction from the peak 5 days ago. GSR headed back and SM looked terrible in the last hour today. Oil down and the dollar trending up. With options expiration starting to take hold doesn't look particularly bullish for PM's to me. The Aden Sisters have the ball right now. But on a bullish note, a rather nice cup and handle formation grew from September 17th to date. Tea anyone?
Degraaf on gold
Degraaf shows an interesting graph of Gold vs long bond that is sitting at a break out point. It's very similar to the graph of Gold. Another graph of the Central Fund of Canada vs. GLD is shown. Interesting that since November 2008 CEF has outpaced GLD by quite a bit. One of them conducts semi-annual physical audits of the entire fund and has 30 yrs of sound management.....the other? He suggest that people are slowly getting the idea that GLD is at least partially papered over.
TLP: What if you wanted to invest in a tulip trust that managed hundreds of gardens around the country with the finest and prettiest of tulips. The only problem was no one ever conducted physical reviews of the sites but they all got good reviews by major banks and leading auditors. With your share of stock you got a picture of the tulip(s) you had invested in. Everything is rosy and these thing trade like hot cakes on line. Hit the enter key and you own some tulips. The price of TLP has more than doubled since its inception. What a great way to get J6P involved in tulip ownership w/o all the hassles of growing them. Best of both worlds. One day someone accidently walks into one of the gardens during the guards' coffee break. He discovers there are no tulips....just the photos of tulips that were probably computer created. What would happen to the share price of TLP?
roadrunner
I actually see a loose penant forming with lower highs and higher lows on the hourly chart. Well, until this hour and the culmination of a $25 drop. It remains to be seen where this hour closes out at, but I'm guessing it will close out above 1005, in which case the penant will still be there. The penant
1045 is a key support level for the S&P500, and we're hoving about there now. Regardless I don't see gold going below 995 today, and I expect the S&P to bounce off of this level.
Gold is charged up and ready for a move. I don't think this $25 drop qualifies as a trend. I'm still waiting for a drop below $990 or a breakout over $1033.
A number of market timers had 9/22 to 9/24 in their sights back in August including the YuYangers. All spot on. YY shows a downtrend into the first week in August but no doubt volatility up and down along the way. Looks to me from the daily chart (3 months) there is still more downside to play out in the days ahead.
A gdx negative momentum cross just occured yesterday and reconfirmed today. The same chart shows this as the 3rd leg down in the big picture...with usually another leg down to follow before it finally bottoms. Doesn't mean we can't rebound back over $1000 one more time. The knife is falling. Is it ready to be caught?
roadrunner
So far typical attempt to test the wedge breakout. Today touched the 20dma. Nothing out of the ordinary. Also does not portend to a major upward movement as the all-time highs have not yet been breached. Consolidation continues.
Knowledge is the enemy of fear
My take is that gold and the S&P will go the same direction. 1045 is a big level for the S&P500, and I don't think S&P is ready to breach this level. If it does then we could see gold hit $960 or so, but my instinct tells me that $998 gold and 1045 S&P are going to hold.
I knew it would happen.
Someone up thread mentioned touching the 20 day moving average, which is where one pundit said the COT readings projected. I have mentioned that a pull back to the 50 dma is normal behavior after a breakout and would be a decent entry point. I also mentioned today (September 24) as a day to watch for wide swings because options on futures are expiring. I didn't expect this.
Knowledge is the enemy of fear
rr, I've read your comments about the Aden Sisters in the past - and I must agree with you. Their timing is exquisite.
I knew it would happen.
Nice chart Cohodk on gold's current standing. A number of options for the pullback include the triangle apex, the breakout point, the top of the triangle back tested, and some Fib number of this last wave up. Best I can see right now was that this was the 3rd wave down and a quick one at that. Gold just loves to do 5 wave corrections after a major up move. So I suspect we have 2 more legs to complete. I don't see anything above the $980's as the end point since that would correspond to a 50 or 62% retrace of the final leg wave up.
A number of the miners got whacked good today. They tended to be the ones that didn't take most of their lumps during the past 2 weeks and continued right up until the 17th to 22nd. Equalization in progress. High-flyer EGO was about the hardest hit so far. Now looking for a good entry point to buy the best at the best price (EGO, AUY, GG, AEM, BVN, KGC, IAG, GSS) for hopefully a move later in year. Let's give the dollar a few days, maybe even a few weeks to show some strength. Then it's back to the old grind.
roadrunner
Today was nerve-racking for me. Most of my futures position was built in the high $990's, so I'm OK, but I did end up adding a bit in the low $1010's. In the past I probably would have sold on a day like today, but I held on. With Murphy's law in play, gold is surely to go lower, or at least go lower just long enough to get me to panic and sell, just before turning around again.
However, when I look at my overall perspective, I see two possibilities:
A) Today was just a normal consolidation that has fully energized the pattern. Today's move was NOT part of a trend. $990 needs to continue to hold up and we are likely to head higher. This goes in concert with 1045 S&P holding up. 1045 is the Fib 38.2% retracement for the last move up. Additionally, The USD needs to top out just over 77, where it is now.
Either way, gold remains in a bullish pattern until we see a slice through $960. Option A remains in effect until a decisve slice below $990.
roadrunner
What does everyone else think?
I'm looking at the daily charts over the past month and the trends seem to be generally pointing down for now: macd, rsi, slow stoch, boll. bands, volume, still showing no signs of turning, etc. GDX and Gold/Silver Ratio are showing Aroon15 day crosses today usually indicating a downtrend well in progress with more to go. Some of the stocks that left the party early on the 8th are now riding the bottom of the above indicators.
So I'm going to give this all a little more time to settle for CCI, W%R, SS, Aroon10-15 and other indicators to hit their normal bottoms. Once a swift move is in progress these indicators don't often stop short of all the way down. At least that's what I've been seeing on gold for the past 9 months. Gold stocks are getting close. Whenever I try to time counter-trend moves on a day to day basis I usually take a butt kick. It's safer for me to try to and figure out a weekly or monthly trend, though still not easy. I usually have a decent feel as to when it's safe enough to jump back in, but I've been too eager to jump out after the first sign of a pullback. The boyz know how to spin up those emotions to try and get you out.
In looking back through Sept. I can see the trends a little more clearly now in 20-20 hindsight. I've spent a fair amount of time watching trends on downturns on when to get back in, but really haven't been as rigorous this time watching these on the way up...probably because I've been shook out early the past 2 times. Need to pay attention in both directions whether one is in or out. I mentioned a short time back that volume has been dropping pretty much all month....not a good sign. It peaked around the 4th for most gold related stocks. The 10 day BBands peaked around the 8th to 10th coinciding with the first hit to ABX, NEM, GG as well as some juniors. Even the gold to silver ratio 10 day bands peaked out on the 10th. The StochRsi was in agreement showing peaks around the the 8th for those stocks. TBT (bearish 20yr TBond) has normally been a decent tracker of gold this year but didn't do very well the past month as gold became a haven with treasuries for the first time in a while. But TBT did make the rise in early Sept with gold and then turned on the 10th in tacit agreement. The volume oscillator PVO peaked around the 6th to 8th for most everything gold confirming the general shape of volume for the month.
The 20 day bands peaked on the 17th to 18th coinciding with the first high in gold. At the same time the CCI went negative continuing it's general downtrend. When the StochRsi in the dollar and GSR started heading strongly up agains the drops in the gold stocks around the 17th-18th it should have been clear that this was probably not going to be a quick 1 or 2 day counter-move. That shift should have been the alarm bell. At the time I wasn't even watching it. And no doubt it's easier to say such a thing in hindsight. But putting it down will help me focus on them next time.
roadrunner
The logical side of me sees RR's posts and the reality that the dollar chart looks ready for a bounce (up to the upper line on the channel) or at least a consolidation. In any case, it's oversold. 77.0-77.2 is holding firm resistance, just like 1040-1045 is holding for the S&P and $990 for gold. But my instincts tell me that something's not right in the markets, and I'm mostly referring to the last few weeks. Inter-market relationships are strong right now, but they can and do fail and de-couple.
On one hand, gold has held up well this week given everything gold-negative that was going on. Some charts have shown though that gold is not keeping up (matching) the weakness in the USD. I suppose this could be the result of manipulation, but I do have to be concerned about why gold is up "where it should be." Of course, this could mean pent-up bullishness.
I need a better crystal ball.
For a psuedo crystal ball I went back and dredged up the GSR charts among others to try and get a better big picture of where we are. I've been paying too much attention to the trees lately and not the forest. And I think the weekly GSR chart in line format (rather than candlestick or bars) sort of fits the bill. Going back to the bull run into March 2008 the GSR has traced out a fairly correct pattern of Elliot Waves. For the 18 months involved, it's probably makes more sense than the gold or silver charts by themselves. We have the 5 initial deleveraging waves screaming up from Aug-Nov 2008 and then a basic zig-zag ABC corrective pattern (5-3-?) with the C still heading towards completion. The 2 and 4 legs alternate in complexity on the A leg. I would expect the C leg to conform to another 5 waves down like the A leg, with the 4 leg being more complex than the 2, just as in the A leg.
What the above says to me is that we're in the #4 leg of the C leg and will wander up and down a bit heading towards 63-64. From there a final 5th leg moves GSR to 55-57. This will help take GSR closer to its norm, allow the dollar some upside for a few weeks, and then a final move up for gold. The C leg appears to be moving about 2X as fast as the A leg did. Therefore I'd expect the #4 leg to last about half as long as the #4 in the A leg, or approx a month or less....Oct 13/14. Then leg 5 completes about 4-6 weeks later into later November. This is not much different from YY Gold's general trend chart.
COT report for 9/22/09
No surprise here. Gold futures open interest unchanged at 467K, some longs removed and a small amount of shorts added....ratio increased slightly to 4.58. Silver the same story. The dollar was relatively unchanged with the long/short ratio moving up slightly to 2.72.
roadrunner
<< <i>Well I think $990 is going to hold up for the day meaning the pattern is still bullish in all time frames; however, gold is vulnerable. Todays' move still does not appear to be part of any trend - we're still in consolidation. With 3 down days in a row, we're probably due for a small bounce. I might use such opportunity to reduce my position.
The logical side of me sees RR's posts and the reality that the dollar chart looks ready for a bounce (up to the upper line on the channel) or at least a consolidation. In any case, it's oversold. 77.0-77.2 is holding firm resistance, just like 1040-1045 is holding for the S&P and $990 for gold. But my instincts tell me that something's not right in the markets, and I'm mostly referring to the last few weeks. Inter-market relationships are strong right now, but they can and do fail and de-couple.
On one hand, gold has held up well this week given everything gold-negative that was going on. Some charts have shown though that gold is not keeping up (matching) the weakness in the USD. I suppose this could be the result of manipulation, but I do have to be concerned about why gold is up "where it should be." Of course, this could mean pent-up bullishness.
I need a better crystal ball. >>
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roadrunner