The gold miners tried to surprise early today but then most of them quickly came back down to earth as gold ran out of steam. Kinross and Goldcorp lead those making new weekly lows. BVN continues to show strength and buck the trend. Bullion gold still hanging strong in the trading range as it continues to coil up. The 10 day trading bands on gold are now the tightest they have been in months...but the 20's are still rolling over. Another leg up seems very likely. Miners in general could reverse at any time but they still appear to have downward momentum. Not so sure the exact count on the waves down so far. Could be in the 3rd or 4th. GSR continues to triangulate within a tighter trading range waiting for a break out with both the 10/20 bands nearly flat lined. Today GSR displayed a big red candle for the first time in over a month possibly giving a warning that this 4th leg sideways is nearly done...and the 5th leg down is upon us.
Gold initially rallyed hard at the start of October along with bonds and the dollar falling, and the Aussie, Cando, and Euro rising. The currencies appear to have flattened out or rolled over slightly. Those factors should be bearish for gold but note that interest rates have been rising again for several days re-establishing the trend that began at the start of October. That might have helped keep gold in the game this past week. Bonds along with the Yen giving up safe haven status sort of left gold all alone.
COT report:
Not much in the way of changes. Gold futures O/I increased by 5K to 509,000. Most of the increase could be attributed to spreading. The bankers weren't doing much as they added 154 longs and 1721 shorts. S/L ratio is a few hundredths higher at 4.45. The small specs must have been smarting as they unloaded 5800 shorts. Silver followed much the same pattern. The dollar moved slightly higher on the long side to a commercial long to short ratio of 2.82.
The pattern is almost fully consolidated and will probably be done by mid-day Monday. I fully expect the next leg upward to begin Monday or Tuesday, Wednesday at the latest.
I was lucky on Friday and played the $10-15 drop almost perfectly with a small portion of my position, but I'm now back in fully and ready for the next move upward.
I don't know if I mentioned this, but Ackerman had picked ~1134 (IIRC) for the high point for the next move. I think he's going to be pretty accurate with this one.
I just wish the mint would have released their 2009 proof buffs already, I'd really rather not pay another $100 for them.
I forgot to comment last time about my positions. When I say I'm in 100%, that doesn't mean my entire portfolio, or my entire account. I'm referencing my personal maximum exposure limit. When playing futures you have to have a cash buffer to absorb any dips or adverse movements. In this case, I have decided to maintain a cash buffer such as to withstand a drop under 1040. If I drop my position to 70%, that really just means my cash buffer is even larger.
Edited to add: I think the stock market's recent weakness could continue next week, but I think it will follow gold upward if everything works out. Of course, everything could go the opposite way which would mean the breakout in gold is not for real, but I just don't see that happening. Of course, gold and the SM could de-couple here. Oil's probably a good play and ready to head higher as well.
The ECRI WLI stopped going up for the first time in a long time, but still sits at a really high reading. With all of the cash out there, and really low interest rates, I don't see how the stock market will turn around any time soon, except for small corrections.
Gold up just a tad this morning overnight with one quick run to 1060 or so. The miners are very strong today. This is probably hinting at a bullish move later today or tomorrow.
Support at 1053.3, 1055.7, and resistance at 1059, 1061.3, and 1067.
<< <i>Gold up just a tad this morning overnight with one quick run to 1060 or so. The miners are very strong today. This is probably hinting at a bullish move later today or tomorrow.
Support at 1053.3, 1055.7, and resistance at 1059, 1061.3, and 1067. >>
Let's hope it's tomorrow .... I want to order some gold eagles from APMEX, but waiting to see if Gold drops any further ... (saved myself already $1 per $5 AGE over yesterdays quote.)
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
The dollar's exponential boost this morning from 75.3 to 76.0 was the primary motivator to dump gold. Bonds and notes started selling today as well as part of the last official bond sales for this year. It also seemed that bullion gold was eventually going to follow the miners which had been meandering downward for nearly 2 weeks. The dollar's jump wasn't all that huge but the speed of it was unusual.
That inverse dollar chart (UDN) looks eerily similar to the GS chart posted months ago which was also driving into the same type of wedge formation. Goldman still hasn't caved in but it has corrected somewhat over the past 2 weeks along with the rest of the banking index ($BKX). UDN could conceivably head back to the red line (200 dma). It forms a decent 5 wave pattern that could be complete. And that would mean that the Dow/S&P are done as well. That would mean dollar strength for the rest of the year. I just don't see that. I'd be surprised if dollar strength could last for more than this week.
I'm not convinced that stocks aren't still going to continue up yet again for the remainder of the year after this current weakness blows away. And hence the dollar would then continue down after a respite. $USD is bouncing off some key support at around 76.0 right now. Will see how it holds out. The Euro bounced off multiple support points of the past month or so at around 148.3. The Cando (resource based currency) has been in a slow dive (until today) along with the gold stocks for about 2 weeks and seems to be getting close to reaching oversold conditions. Along with that long term bond yields continue to rise. Wrap all that together and the dollar still has plenty of work to do. If the dollar can make it to >76.3 and break above it's 7-8 month down channel convincingly that will give it a lot more credibility. I'm figuring on the dollar fizzling out this week (typically by Thurs or Friday of bond week) and then gold continuing back up.
The downward momentum in the miners left over from Friday continued shortly after the strong opening head fake. Yeah, they sure look like they were moving up quickly. But staying on trend, stochastics and RSI/Macd continued to accelerate down. The 20 day bands continued to hump over and the 10 days bands continued trending in their same direction, so nothing really changed. A Gap in GLD at 100 (approx $1018 gold) and the Sept high in that same area gives additional support to the gold price. GSR's unusual and large red candle on Friday was followed by a large and unusual black candle today. It can't seem to make up it's mind. But it basically went with the VIX today unlike Friday.
Today's dollar "boost" timing was certainly convenient with bond sales beginning and options/futures expiring over the next 2 days. $7 BILL in TIPS were sold today at 0.769%. Yeah, sign me up for some of those! Over the next 3 days $123 BILL in bonds will be auctioned off (ie bought by the FED/Treasury).
Dollar pessimism reached extremes. Now they call this just a "technical" move. As a technician, I am LMAO!!! >>
Good... I saved several $$$ waiting until late this afternoon to make my fractional Gold eagle purchase via APMEX....lets hope it stays below $1050, until after Thursday.... (Proof Buffs go on sale on Thursday @ $1310 if the average gold price remains below $1050 for the last 7 days)
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
Good analysis. I have somewhat different perspective---what else is new, right, but I'll add a little without giving away too much.
Just a few things that I am watching.
1. There are hundreds and hundreds of these rising wedge patterns. 2. The dollar's jump wasn't all that huge but the speed of it was unusual. Be very mindful of the last part of your sentence as I think it means a lot. 3. Interest rates have been backing up for the better part of the month as I mention a few weeks ago. The 10yr has popped up almost 50 basis points or 0.5%. 4. The TIPS auction was "riduculously" strong, even by my bullish commentary. That scares me. 5. GDX and XAU have pulled back to their 50dma and while prices hit new highs, momo failed to confirm. 6. Dollar pessimism may be greater now than in Mar 08. And while the dollar is down, it is not at the Mar 08 lows, while the situation has apparently worsened. Another non confirmation? 7. Barring disaster this year will mark the 9th(?) year with a higher close. 7. I am hoping to be able to get a chart together and posted in the Econ thread.
Thanks for those points of interest Cohodk. I certainly don't rule out a long-lasting multi-month dollar move that could kick gold in the teeth. That's the storm scenario what would ultimately be the C leg in the gold ABC correction. We would therefore be at the start of the C leg looking at retracing to $650-$850 gold over the next 2-12 months. I'm just having a hard time dealing with that scenario. But I do see the $USD now well above the embedded stochastic of several days ago. If this scenario occured all the gold gurus should start looking for new jobs. Sinclair in particular is still counting down to the first week in November when he is certain the dollar commences it's next move into the depths. I can understand a gold retest back to the $1000 area ($990-$1020) but anything additional would be a huge surprise.
It would seem odd for the PTB to decide to let long term TBonds weaken while allowing the dollar to strengthen. Rates going up certainly won't help the economy nor will a stronger dollar. One would think it's the exact opposite of what the Fed/Treasury would be pushing....unless the banks stand to make Billions/Trillions from that trade and are calling the shots.
-I can guess that there are close to 2000 rising wedges on the Russell 2000 -Gold has sort of followed the dollar rather than interest rates for most of the summer. Is it possible that the zig-zag in rising rates since October 2nd is just a short term correction in the longer trend? -Dollar pessism, or gold optimism was at a fever pitch back in March 2008 as gold ascended past $1000 for the first time. This past month sitting around $1000-$1065 seemed almost boring with everyone waiting for a pullback. Most gold bugs seem rather subdued now figuring down is more likely than up. Whatever the official bank plan is here for the dollar and gold, it will probably not be as expected. -I fully expect a 9th year in a row for gold closing higher. And a 10th year as well. It only needs to stay above $890 to accomplish that. A re-test of the nowbroken neckline at around $1000-$1020 should have been in the cards from the day it was broken. I don't see why everyone should get bearish because that needs to occur.
1) As cohodk has pointed out before, a stock market decline will send folks scurrying into the "safety" of the dollar. It happened the same way last time.
Gold will get hit just like everything else if the stock market tanks, as people scramble for liquidity and safety. After that, it takes a little time for those dollars to reconcile where their next home will be. And just like last time, some of those dollars will find their way into gold instead of stocks.
What a perfect way to keep interest rates low - scare the crap out of the stock market so that Treasuries look "good" at the lowest rate possible.
2) This can happen repeatedly, all while gold works its way up and up. There must be enough retirement fund managers who are still limited by the terms of their prospectuses to buying only stocks, or a preponderance of stocks, with no way of hedging against a stock decline. That's ugly. The only way for a fund participant to escape is to liquidate their retirement account.
THAT is what the Treasury Dept is milking - the trapped money. After all, they are already on notice from China.
Q: Are You Printing Money? Bernanke: Not Literally
I've been travelling all day so I wasn't able to watch things closely or comment here. I've read all of the commentary today and I just don't think this is a sign of a false breakout or reversal, although I had to ignore the Cohodk's chart.
Obviously, I wasn't expecting the weakness today; however, I don't think this is any kind of failure or bearish news... yet. In fact it can be quite bullish. So far, this is just a test back down to a significant level, ~1037 and/or the previous ATH at ~1034. This is a great way to launch the next-leg-up... with as much fear and doubt as possible. Similarly, the USD is back up to a major level at ~76. If I've measured and done everything right, this is a Fib 38.2% retracement for the move up for gold from ~990 to 1072. It's always good to get these Fib corrections out of the way. Now the next move can begin.
We can't rule out a de-coupling of gold from the stock market and even the USD, but that's another factor to consider. I would agree that a correction in the stock market would be appropriate at this point as the recent rally has been massive. Today's move also marked an important Fib 38.2% retracement for SP500.
All this taken into account for Tuesday/Wednesday for me at least say bounce. IMO, gold will at least bounce back to it's last support level ~1055 and then fall, or continue upward on the next move up. My money is still on another move up. This is a GREAT place to add to long positions, although most are probably too scare to do so (and that's just how gold likes it).
As far as buying fraction AGEs at APMEX, I bought mine last Friday thinking gold wouldn't go down any further than where it was (1055 ish). No worries though, checking tonight it seems I'm only out about $10.
Support levels are at 1023.3 and 1031.1, and resistance is at 1046, 1053.7, and 1068.5.
Thomson re-emphasizes his personal trading tactics. Note that he is no longer trading potentially problematic GLD and has shifted to the Canadian ETF GTU. In reading his material one would think they are in a war zone.
Miners intially got thrown deep into the basement today but many came back not that far from the open price. Generally, the bulk of the miners have completed 5 legs down (ie Newmont). A few of them were behaving much more like gold itself and have now completed 3 legs down (ie BVN). Interesting too that BVN behaved exactly like GLD on the way up over the past few months. In either case a corrective leg back up seems in order for the present. Kinross got mugged the past week and dropped down nearly to its 200 dma today based on some lowered production guidance, already giving up about 50% of its gains from April. GSR now back into the target area of 62.5-64 where I mentioned previously it's 4th leg might take it. The dollar is also having trouble for now staying above 76.3. Some of the money for the bond sales was whipped up this time by a timely whacking of stocks and commodities. It has worked before, but not during the last 2 auctions. The sheeple need to believe in the deflation trade for at least this week.
Next question....where do the miners stop on this correction? Are they correcting the entire leg from last November or part of a smaller leg from April, July, or Sept? ....***edited***........after giving this more thought and analysis I'm hanging my hat on gold being in it's third major leg up commencing in Nov. 2008. Counting from November 2008 gold has completed 2 smaller legs and is now in the 3rd wave up. To be more precise it is now in the 4th minor wave (correcting) of the 5 wave series, of the 3rd wave up. A 5th minor wave following the current pull back to $1018-$1031 could take it to $1090+. From that point we get a pull back towards $1000. Because the 2nd gold leg from March-Sept 2009 was a lengthy and complex 5 wave triangle, I would expect wave 4 to be much simpler and shorter than the 6 month long wave 2. One concern though is that for the bullish wave 3 of major leg 3 just being completed, it certainly didn't measure up to what would have been expected. In the back of my mind I still keep the $750 option open.
I sell some GLD via buying back my short GLD Nov 91 puts, for a break even profit. I am still long GLD via being short some GLD Nov 92 puts. The remaining position shows a 7% chance of loss if held until November option expiration.
Gold timer sentiment was once a support for bulls, now is a drag, because too many gold timer newsletters have jumped on the rally.
It seems that many gold influences are now at key junction points where a flip one way or the other makes the difference between breaking the bearish trend or continuing to cascade. Once the bond sale is done Thursday at 1:00 we can see more clearly if this dollar strength was just more smoke or has real legs. Bonds have strengthened for the last 2 days which is probably directly related to the auctions. Let's see what Thursday afternoon and Friday bring for bonds and the dollar. It didn't help that gold options expired this week and that traders were polishing up their end of month books to show some stock & commodity profits. The bankers don't have the physical gold to deliver so it was imperative to get gold well under $1050 again. Coin gold bars, cash, derivatives, and GLD shares are no help when a buyer is demanding 400 oz. good delivery bars.
US dollar fighting at key pivot point of 76.7.....still below though. The RSI is peeking above 50 for the first time in weeks/months but momentum is also starting to hit the oversold area. The Euro likewise has an RSI just <50 and is sitting right on top of 147.00, a key support point from weeks ago. It's bounced off 146.9-147.0 a few times today. A move much lower and it can drop hard considering the next support is quite a bit lower.
GSR has pulled back to the 64.0 area which touches the bottom of leg 1 from August 13th. Right now this can still be a vigorous zig-zag wave 4 pullback. But it also could be the start of an entire bullish leg. GSR appears to be slowing down here with momentum nearly topped out. For most of this year momentum didn't hang on very long after hitting this peak. GSR continuing on to 65 would tend to support Cohodk's change in market mode. I think GSR takes a breather here.
Gold has behaved rather well over the past few days. Even with an expected and still tiny 4% correction it sort of feels like the world has caved in on the metals. Everyone expected a retest much earlier but the lingering at $1042-$1065 kept one thinking otherwise. Silver is off nearly 10%. What really has tanked is the miners with GDX on average down 15% vs. the S&P at only 4%. Some of the better miners are now down 20-30%. Leverage cuts both ways. But with the naked short sellers piling on it's not hard to stampede these shares. Clearly there is some sand bagging going on here so that the "right" hands end up with the mining shares once again. Either that, or this is the start of another deleveraging event with leveraged assets leading the way. The Yen and bonds have become the only safe haven this week. I don't feel a deleveraging event like last fall is here, though Denninger, Hoye, Faber and others might be feeling otherwise. It's a hazy line between simply correcting back on non-dollar assets vs. a rush to liquidity event. From Cohodk's post of a few days ago it seems he favors something inbetween...a steadier and longer move to liquidity and non-risk. Come Friday, things hopefully will be clearer.
Gold's critical support is at $1024 which correlated to the first leg up from the $982 resistance point. A strong move below that and it plants the seeds that possibly the entire move from $982 was only corrective in nature, not bullish. Thereby looms the start of the C wave in the on-going ABC 19 month correction. For now, $1026 holds.
Sometimes that spidey sense is the best thing going. No worries though. No one here will compromise your alter-ego.
Chart condundrum: why is it that GDX seems to show 5 complete waves from Nov-Oct yet the gold chart only shows 3 waves? The difference being that the miners improved upon their Feb highs in May while gold did not. Possibly the stock market link provided that additional impetus to the miners. Does that mean the stock link to the miners is stronger than bullion gold?
I've been quite busy the last few days, which is probably good, as it has kept my fingers off of the sell button. When I saw cohodk's chart I knew I should probably reduce my position, but naturally I did not. I must admit I was a bit over-leveraged, but I was able to determine yesterday that a bottom was near and I did end up sending in some temporary cash to satisfy margin calls. With last night's rebound though, I'm in the clear... for now. Sometimes you have to be reminded why it's best not to be greedy. My strategy all along was really to just ride out any dips like that, although if I can see them coming I'd rather sell and buy lower.
One report I read called for a gold bottom Oct 28-Nov 2, but like Wolf, I believe yesterday was it. 1027 was an important level on the last move up, and it held as support. Looking at the USD chart, ~76.7 was a key resistance level and it appears to have held up. 76.7 was approximately the top end of the downward channel for the USD, so it was natural for to test the upward boundary again. Now I expect it to meander back to the lower side, which will probably bring us to around 74.
I don't expect the rebound to start real soon or real fast, it will probably take some time, and I won't be really confident until we get back through 1046.
Support is at 1022.6 and 1032.6, with resistance at 1038.7 and 1048.6.
<< <i>I know nothing, but my spidey sense is calling a bottom. Here, now. >>
The Wolf-ey spidey sense got it. Good call. Often times I do cover my short puts at or near a bottom (like I did yesterday)--that will tend to occur often for trader's that cut losses like I tend to do.
Today I sold the IAM Gold shares I picked up toward's the close yesterday when things just got dirt cheap. Maybe I should have hung on a bit longer as this is but one day. But following 3 perfect legs up today and a 9% gain, I had to push the sell button. It had been up by 11% but by the time I got back from the dentist and B.J.'s at 1:00 I got 9%. At least I felt better waking up this morning and seeing gold moving up in the mid-$1030's. I think there will be one more leg down following this pullback though it may not reach as deep as we saw yesterday. I'm not yet fully convinced that we're out of the woods and above $1026 for good. There will be at least a retest before breaking out above $1050. If the GDP report was the main driver of today's breakout it was more smoke and mirrors due to the pumping of auto and home sales as well as other incentives. That wasn't real growth. Here's to spidey sense! The last official bond week is now over and gold is still hanging tough.
Yesterday I started building my own junior ETF and selected 4 of the names that are on the GDXJ list. I added them late yesterday as well while they were on sale and 20-30% off their highs. But these I want to continue to build upon moreso than trade. I plan to end up with about 10-12 or so and will shift them around as fundamentals and technicals warrant. When GDXJ formally comes out I might use that instead. But just like with GDX, there are a half dozen to a dozen players that I like a lot more than some of the others. 37% of the stocks on GDXJ will make up 59% of the value. The bottom 14 names by size (37%) will only make up 16% of the index. There are some names there I still know nothing about with 2 of them from the Hong Kong exchange. The 4 silver miners will give it a 20/80% Ag/Au weighting.
The YuYangers once again hit the call perfectly calling for a bottom on the 28th. They had this entire week as their buy zone before the next leg up. They had this chart posted months ago. In looking back their momentum calls all this year have been pretty darn good. From there they see a rise into mid-next week, a pull back, and then a rise into mid-to late November. Second half of December into January is pull back time.
Edited: watch the GSR for one more leg down from current levels from Thursday evening. Another leg down (5th) from it's 64 high and we should get more up action over the next few days following a brief move back up Friday. If it goes the other way, it is indicating more bearishness to come.
Was very pleased but wasn't expecting the big move up today. It is the beginning of a short-term move that I think will carry to the ATH of 1072. Not sure it will get any higher on this next run over the next 2-3 trading days. RR, I think you'll wish you didn't sell, but nothing wrong with capturing profits. Wish I had done some of that lately.
The same report that called for a dollar top Oct 28 is also calling for a dollar bottom Nov 9, which is consistent with timing models that show the next 10 days are going to be great for gold. Not necessarily all up days, but up overall.
I think Friday will take us up to 1060.
Support is at 1034.2, 1041.3, and resistance is at 1054.4 and 1061.5
Nothing like a big GDP number to rally stocks and push the dollar lower. More decent econ news today and the dollar is resuming its upward trend. I expect a few days--5 to 10-- of dollar stability, then a push higher, which could be on the massive side. 77 leads to 81, perhaps in a heartbeat.
Wow what a wash out day for the stock market. Looks like gold got some flight to safety buying intra-day, as gold rallied off the lows for the day. If the stock market decline continues, there is a chance that stock related margin calls may force some traders to sell off some of their paper gold. During the rally, an up day for stocks often meant an up day for gold. That didn't happen Friday, but one day doesn't mean the linkage is gone and done with.
For the month of October: paper GLD closed up about 4% to 102.53 GDX (gold miners) down about 6% to 42.37
<< <i>Nothing like a big GDP number to rally stocks and push the dollar lower. More decent econ news today and the dollar is resuming its upward trend. I expect a few days--5 to 10-- of dollar stability, then a push higher, which could be on the massive side. 77 leads to 81, perhaps in a heartbeat. >>
I hope you're correct as I have nearly 50% of my holdings in the doble short financial, double short S&P and double short nasdaq etf's. If the dollar moves like you expect then the S&P will have a huge sell off.
RR, I think you'll wish you didn't sell, but nothing wrong with capturing profits. Wish I had done some of that lately.
The only thing I wished is that I did it exactly again today like I did yesterday. Had a good plan but not so good execution. I did buy those IAG shares back but about an hour before they got hit hard for the 2nd time. While I got back in quite a bit cheaper it always seems that it's never cheap enough. I decided to buy some Agnico-Eagle as well and the same scenario occured where they got hit hard a 2nd time driving it back to low 51's (32% off the Oct. peak). I settled for 27%. AEM has a huge price gap from 59-61. But if Cohodk's scenario plays out in the dollar, I'll soon be wishing I had not bought any stocks the past couple days. Fwiw GDX briefly spiked below the trend line from November. It's already retraced 55% of this last up move from the June-July pullback. The HUI/Gold momentum indicators are as deeply oversold as anytime in the past 12 months. The RSI is the lowest of any time in the past 12 months. Bullish percentage on the GDM index ($BPGDM) momentum is at a point only reached a few times this year. That's not to say that a further drop in the SM can't pull miners down a lot further. Gold off 2.5% from peak, SPY off 4.5%, but miners off 15% on average. Makes sense to me. AEM wins the prize though by cascading past -30% today. Only a few juniors even did that. I looked back for any clues as to why it did this and coincidentally there was the tiniest gap back on July 14th from 51.8 - 52.2 that never got filled. It swept down today to take that out. Wow! GLD has a gap from $1016-$1023 as well as at $957. While GLD does not trade continuously it normally fills the gaps. The most recent gap still gives some concern for a deeper retest.
COT report ending Tuesday:
The commercials cashed in 11,000 shorts and purchased 3000 longs. Open interest fell back to 497K from 509K. Short to long ratio fell from 4.45 to 4.17. Silver followed the same general trend with more longs being added and shorts being sold. The dollar went more to the short side. Long to short ratio fell from 2.82 to 2.34. Open interest remained the same by selling 3X as many longs for each short purchased. I'd be expecting the long side of this to keep on increasing if a strong upwards move is in the works. Back in June as the dollar began to strengthen the ratio increased to 3.6 fairly quickly and eventually peaked at 4.8. In mid-February before the dollar started to tank the short to long ratio went to 6-8. With the current 2.34 long/short things still look temperate.
GSR bumped back up to the 64.0 resistance point again just like the dollar bumping heads again with 76.4-76.7. If GSR lets loose at >65 then Cohodk's scenario looks likely.
The shorts are unwinding some positions? Isn't that a not-so-good sign? Or is that a good sign? I do get a little confused with the convoluted reasoning, sometimes.
So far roadrunner and cohodk - you've both kept me from my next "buy". I resisted the Proof Gold Buffs. Now it looks like I'll have to keep accumulating more cash until Dec. 3rd, which is a big day for Proof 1 oz. Plats and fractional unc AGEs. Then again, silver beckons.
Talk straight with me - are the metals going to sell off and not recover for 8 months, like cohodk says? I can see something like that happening, but I just don't think that it will.
It's more a question of parabolic timing for me. I don't want to miss the lift off.
Q: Are You Printing Money? Bernanke: Not Literally
Since gold/silver dropping heavily Monday and Tuesday put many short contracts back in the money they were sold off. It's expected and usually is followed by more of the same if gold support weakens.
I wish I had the straight scoop about what's coming in the next few weeks or months. The race to devalue currencies flows from the US to overseas and back again. The foreign exporters will push back hard to devalue their currencies even faster following a bout of dollar depreciation over the past 8 months. The dollar can easily rise if large foreign exporters decide to buy the dollar (and print more of their currency) to improve their export positions. While the long term trend is down for all currencies and up for gold, the short term swings in the currencies can also swing PM's.
The candle glance charts of currencies, bonds, liquidity, etc. show a turn occuring in the past 2-6 weeks. The gold to silver ratio may have showed it first back in September. The neg divergences in RSI in stocks goes back to early August. The dollar looks to have completed 5 waves down since March. The GSR/$VIX may have recently done the same as well. The completion of 9-12 month down trends in those 2 would suggest "healthy" pullbacks to follow. But this doesn't quite seem to jive with the idea of gold making a seasonal strong run in late November through spring 2010 not to mention Sinclair's beliefs that the dollar swims into rougher waters starting a week from today (G20 meeting, etc.). In the end though, fighting the charts as noted above, may get you on the wrong side of the swing. I have no concerns that physical gold will hold up well regardless of what is thrown at it. But silver, mining shares, commodities, plat, pall, etc. will probably not fare as well.
Looks like I got it wrong for Friday, but if it were that easy I'd be a lot richer.
The 1040 level is exerting a lot of influence. Last week it sucked gold back up form 1030 and on Friday sucked gold down from the high 1040's until the very end.
My concern is growing now, especially due to the weakness in stocks. SP500 broke some important support levels, so I think there could be more weakness in stocks to come. While gold was coupled to stocks, it doesn't have to be. I'm trying to be aware of the relationship but not to put too much stock in it.
Although the volume numbers aren't that large, the COT report is compelling although I hate to use this as any kind of guide either as it showed heavy shorts during the recent move upward. Large and small speculators shed long positions more than short, while commercial traders added long and lost short positions for both gold and silver. Silver was the opposite. For the USD, large and small speculators went more long while commercial went more short.
I need to spend some more time looking at the charts and doing some reading this weekend, but I think I'll take any move into the 1060's to reduce my position by at least half. I still think it's possible for gold to have the next couple of weeks be good, but I defeinitely want to reduce my exposure as things are not so clear anymore.
Things might return more to normal with the bond auction over, perhaps the dollar can now continue its slide in its downward range.
I wanted to add, this editorial by the author of the Hat Trick Letter had some interesting commentary, but the important thing was the charts that I was going to post here, but won't since they are in this link.
The USD chart is up against its descending trend line and within striking distance of the 50dma. I'll be watching for a breakout at this level. Most of the return to this level all came this week during the bond auctions. Will the strength continue next week with the bond auctions over?
The silver chart shows ~16.10 holding firm, and I think it will hold this level given the support this level appears to have, in addition to the rising rising trend line at about $16.0, and just a brief breach of the 50dma at 16.48.
In that link Jim Willie states that there is no credible evidence of support for the US dollar and that is scorned around the world. That scorn exists because we are devaluing faster than they are....hence winning from the govt's and banker's perspective. The large exporting nations of the world would love for their currencies to be so scorned. The support for the dollar can easily come from the larger exporting nations who would rather see the dollar strengthened than risk having their exports drop off the cliff. I'll state it again. My biggest concern is that the dollar chart indicates it has completed 5 waves down from March. GSR may have done it as week charting back to November. The charts that Willie presents of the dollar and silver are at least short to medium term bearish for metals. The current silver chart has formed a pattern similar to June's sharp correction, only we're just half way if that path continues.
The devaluing is interesting, the question is when they all fall down. Sinclair says almost immediately, if I read him right, and Jim Willie doesn't say when, but thinks it's going to happen. In any event, he likes silver.
My read on Sinclair is that he sees further decline in the dollar starting the end of this year. That decline could even be just the appearance of weakness (ie rhetoric, posturing, etc.). The dollar could actually rebound for a while though it won't change the longer term picture. JS initially put out an exact date back in January but has since softened that to mean "soon" enough. I don't believe he sees the dollar disappearing but rather becomes a part of a wider based currency or becoming back by something of tangible value.
Tuesday and Wednesday the FOMC meets. Rumors out there about a shaky week in the equities coming up. Certainly a lot of bearish sentiment out there following last week's dumping.
The YuYang guys called it right on with the gold bottom Wednesday and a recovery today. I was sweating out my gold stocks this past weekend. In any event they moved up sharply this morning and I cashed a bunch of them out. IAG went again but only for 6% this time. It went along with the AEM went as well as gold exceeded $1060 and the Dow was well over 9800 again. I think these gold stocks might be better buys later this week or even later this month. For now it looks like gold has followed 3 legs up from the $1026 retest point. Those up legs do look impulsive and 80% of the $1071-$1026 drop was recovered. So it's sure not looking like a corrective move. A pull back to $1045-$1052 to complete leg 4 and it's off to Sinclair's next milestone of $1089 imo. I favor the $1052 retrace point as the 62% FIB was used up on leg 2 down ($1049-$1035). That's a 38% FIB.
CIT's bankruptcy filing didn't crash the markets but there's always tomorrow. Economic stats coming out this morning provided the boost once again to the reflation play (ISM report, home sales, etc.).
GSR fighting like mad around the 64.0 level just as the dollar was fighting just above 76.0. Neither broke any new ground. Just as I've been writing this the Dow gave back most all it's gains today with gold back to $1055. GSR tended higher nontheless on silver's general weakness. A 5th wave down in the GSR and $USD is still not out of the question. Deepcaster did an analysis on GSR today. Among all the manipulation and games out there they feel GSR is one of the few reliable tools out there.
End of day update: missed the opportunity to buy back some of those miners at around 2PM even cheaper than I bought them at last week. Could have tried for a 3rd attempt on the IAG trade as it fell back 9% after the morning peak. Seems to be making a series of higher highs and lows. But sitting in a better cash position right now waiting to see how long this wave 4 down in gold takes. Could be over by the time market opens Tuesday or could even slide into Wednesday.
With last night and todays' move, I am convinced that the gold bull train is ready to go. Tonight gold is already back up to 1065. Timing cycles are pointing toward this week into the next week being bullish. I think that also matches with some of the recent charts. The USD is ready to continue downward in it's downward channel, and gold can continue upwards. Stocks broke out (downward) out of its uward channel, but another decent day of gains and it will be solidly back in the channel again as well. Next week around Tuesday will be key as it will tell us if the overall trend will reverse or continue upward. Some are calling for a downward trend for gold going into December. Curiously, silver is struggling a little, but I think it will recover with stocks, at least through next week, and probably not exceeding 17.5-18.0.
I can see that gold could still struggle at 1070 for a while, but I think we'll ultimately see movement over this barrier to new all time highs. We could have some brief daily dips into the 1050's, but I don't think those will last long. I'm not super-bullish on how high the new all time highs will be... probably no more than 1080 to 1100.
I think I'm going to lighten my positions as gold nears 1070 and goes toward 1080, and I'll be looking to play a range between 1060 and 1070 or so if there is any pullback off of 1070. I definitely want to lock in some profits.
Support for Mon night/Tues is at 1047.2, 1055.9, with resistance at 1068.4, 1077.1, and 1098.3.
If we get that 5th leg down in the GSR (as well as the dollar) I would expect hitting GSR=58 again just like on the 3rd leg. Even with gold where it is now ($1065) that correlates to silver at $18.36. So if gold makes a new high ($1080), a 58 ratio puts silver at 18.62. So I'd guess I'd be a bit more bullish on silver than upper $17's if a final dollar down leg begins.
Comments
Gold initially rallyed hard at the start of October along with bonds and the dollar falling, and the Aussie, Cando, and Euro rising. The currencies appear to have flattened out or rolled over slightly. Those factors should be bearish for gold but note that interest rates have been rising again for several days re-establishing the trend that began at the start of October. That might have helped keep gold in the game this past week. Bonds along with the Yen giving up safe haven status sort of left gold all alone.
COT report:
Not much in the way of changes. Gold futures O/I increased by 5K to 509,000. Most of the increase could be attributed to spreading. The bankers weren't doing much as they added 154 longs and 1721 shorts. S/L ratio is a few hundredths higher at 4.45. The small specs must have been smarting as they unloaded 5800 shorts. Silver followed much the same pattern. The dollar moved slightly higher on the long side to a commercial long to short ratio of 2.82.
roadrunner
I was lucky on Friday and played the $10-15 drop almost perfectly with a small portion of my position, but I'm now back in fully and ready for the next move upward.
I don't know if I mentioned this, but Ackerman had picked ~1134 (IIRC) for the high point for the next move. I think he's going to be pretty accurate with this one.
I just wish the mint would have released their 2009 proof buffs already, I'd really rather not pay another $100 for them.
I forgot to comment last time about my positions. When I say I'm in 100%, that doesn't mean my entire portfolio, or my entire account. I'm referencing my personal maximum exposure limit. When playing futures you have to have a cash buffer to absorb any dips or adverse movements. In this case, I have decided to maintain a cash buffer such as to withstand a drop under 1040. If I drop my position to 70%, that really just means my cash buffer is even larger.
Edited to add:
I think the stock market's recent weakness could continue next week, but I think it will follow gold upward if everything works out. Of course, everything could go the opposite way which would mean the breakout in gold is not for real, but I just don't see that happening. Of course, gold and the SM could de-couple here. Oil's probably a good play and ready to head higher as well.
The ECRI WLI stopped going up for the first time in a long time, but still sits at a really high reading. With all of the cash out there, and really low interest rates, I don't see how the stock market will turn around any time soon, except for small corrections.
Yeah...
Support at 1053.3, 1055.7, and resistance at 1059, 1061.3, and 1067.
<< <i>Gold up just a tad this morning overnight with one quick run to 1060 or so. The miners are very strong today. This is probably hinting at a bullish move later today or tomorrow.
Support at 1053.3, 1055.7, and resistance at 1059, 1061.3, and 1067. >>
Let's hope it's tomorrow .... I want to order some gold eagles from APMEX, but waiting to see if Gold drops any further ... (saved myself already $1 per $5 AGE over yesterdays quote.)
Dollar pessimism reached extremes. Now they call this just a "technical" move. As a technician, I am LMAO!!!
Knowledge is the enemy of fear
Knowledge is the enemy of fear
is there something else i missed?
That inverse dollar chart (UDN) looks eerily similar to the GS chart posted months ago which was also driving into the same type of wedge formation. Goldman still hasn't caved in but it has corrected somewhat over the past 2 weeks along with the rest of the banking index ($BKX). UDN could conceivably head back to the red line (200 dma). It forms a decent 5 wave pattern that could be complete. And that would mean that the Dow/S&P are done as well. That would mean dollar strength for the rest of the year. I just don't see that. I'd be surprised if dollar strength could last for more than this week.
I'm not convinced that stocks aren't still going to continue up yet again for the remainder of the year after this current weakness blows away. And hence the dollar would then continue down after a respite. $USD is bouncing off some key support at around 76.0 right now. Will see how it holds out. The Euro bounced off multiple support points of the past month or so at around 148.3. The Cando (resource based currency) has been in a slow dive (until today) along with the gold stocks for about 2 weeks and seems to be getting close to reaching oversold conditions. Along with that long term bond yields continue to rise. Wrap all that together and the dollar still has plenty of work to do. If the dollar can make it to >76.3 and break above it's 7-8 month down channel convincingly that will give it a lot more credibility. I'm figuring on the dollar fizzling out this week (typically by Thurs or Friday of bond week) and then gold continuing back up.
The downward momentum in the miners left over from Friday continued shortly after the strong opening head fake. Yeah, they sure look like they were moving up quickly. But staying on trend, stochastics and RSI/Macd continued to accelerate down. The 20 day bands continued to hump over and the 10 days bands continued trending in their same direction, so nothing really changed. A Gap in GLD at 100 (approx $1018 gold) and the Sept high in that same area gives additional support to the gold price. GSR's unusual and large red candle on Friday was followed by a large and unusual black candle today. It can't seem to make up it's mind. But it basically went with the VIX today unlike Friday.
Today's dollar "boost" timing was certainly convenient with bond sales beginning and options/futures expiring over the next 2 days. $7 BILL in TIPS were sold today at 0.769%. Yeah, sign me up for some of those! Over the next 3 days $123 BILL in bonds will be auctioned off (ie bought by the FED/Treasury).
Today's misc charts - gold, bonds, currencies, ratios
roadrunner
<< <i>It aint gonna be today or tomorrow.
Dollar pessimism reached extremes. Now they call this just a "technical" move. As a technician, I am LMAO!!! >>
Good... I saved several $$$ waiting until late this afternoon to make my fractional Gold eagle purchase via APMEX....lets hope it stays below $1050, until after Thursday.... (Proof Buffs go on sale on Thursday @ $1310 if the average gold price remains below $1050 for the last 7 days)
Good analysis. I have somewhat different perspective---what else is new, right
Just a few things that I am watching.
1. There are hundreds and hundreds of these rising wedge patterns.
2. The dollar's jump wasn't all that huge but the speed of it was unusual. Be very mindful of the last part of your sentence as I think it means a lot.
3. Interest rates have been backing up for the better part of the month as I mention a few weeks ago. The 10yr has popped up almost 50 basis points or 0.5%.
4. The TIPS auction was "riduculously" strong, even by my bullish commentary. That scares me.
5. GDX and XAU have pulled back to their 50dma and while prices hit new highs, momo failed to confirm.
6. Dollar pessimism may be greater now than in Mar 08. And while the dollar is down, it is not at the Mar 08 lows, while the situation has apparently worsened. Another non confirmation?
7. Barring disaster this year will mark the 9th(?) year with a higher close.
7. I am hoping to be able to get a chart together and posted in the Econ thread.
Knowledge is the enemy of fear
It would seem odd for the PTB to decide to let long term TBonds weaken while allowing the dollar to strengthen. Rates going up certainly won't help the economy nor will a stronger dollar. One would think it's the exact opposite of what the Fed/Treasury would be pushing....unless the banks stand to make Billions/Trillions from that trade and are calling the shots.
-I can guess that there are close to 2000 rising wedges on the Russell 2000
-Gold has sort of followed the dollar rather than interest rates for most of the summer. Is it possible that the zig-zag in rising rates since October 2nd is just a short term correction in the longer trend?
-Dollar pessism, or gold optimism was at a fever pitch back in March 2008 as gold ascended past $1000 for the first time. This past month sitting around $1000-$1065 seemed almost boring with everyone waiting for a pullback. Most gold bugs seem rather subdued now figuring down is more likely than up. Whatever the official bank plan is here for the dollar and gold, it will probably not be as expected.
-I fully expect a 9th year in a row for gold closing higher. And a 10th year as well. It only needs to stay above $890 to accomplish that. A re-test of the nowbroken neckline at around $1000-$1020 should have been in the cards from the day it was broken. I don't see why everyone should get bearish because that needs to occur.
roadrunner
Gold will get hit just like everything else if the stock market tanks, as people scramble for liquidity and safety. After that, it takes a little time for those dollars to reconcile where their next home will be. And just like last time, some of those dollars will find their way into gold instead of stocks.
What a perfect way to keep interest rates low - scare the crap out of the stock market so that Treasuries look "good" at the lowest rate possible.
2) This can happen repeatedly, all while gold works its way up and up. There must be enough retirement fund managers who are still limited by the terms of their prospectuses to buying only stocks, or a preponderance of stocks, with no way of hedging against a stock decline. That's ugly. The only way for a fund participant to escape is to liquidate their retirement account.
THAT is what the Treasury Dept is milking - the trapped money. After all, they are already on notice from China.
I knew it would happen.
Obviously, I wasn't expecting the weakness today; however, I don't think this is any kind of failure or bearish news... yet. In fact it can be quite bullish. So far, this is just a test back down to a significant level, ~1037 and/or the previous ATH at ~1034. This is a great way to launch the next-leg-up... with as much fear and doubt as possible. Similarly, the USD is back up to a major level at ~76. If I've measured and done everything right, this is a Fib 38.2% retracement for the move up for gold from ~990 to 1072. It's always good to get these Fib corrections out of the way. Now the next move can begin.
We can't rule out a de-coupling of gold from the stock market and even the USD, but that's another factor to consider. I would agree that a correction in the stock market would be appropriate at this point as the recent rally has been massive. Today's move also marked an important Fib 38.2% retracement for SP500.
All this taken into account for Tuesday/Wednesday for me at least say bounce. IMO, gold will at least bounce back to it's last support level ~1055 and then fall, or continue upward on the next move up. My money is still on another move up. This is a GREAT place to add to long positions, although most are probably too scare to do so (and that's just how gold likes it).
As far as buying fraction AGEs at APMEX, I bought mine last Friday thinking gold wouldn't go down any further than where it was (1055 ish). No worries though, checking tonight it seems I'm only out about $10.
Support levels are at 1023.3 and 1031.1, and resistance is at 1046, 1053.7, and 1068.5.
Thomson's tactics
Miners intially got thrown deep into the basement today but many came back not that far from the open price. Generally, the bulk of the miners have completed 5 legs down (ie Newmont). A few of them were behaving much more like gold itself and have now completed 3 legs down (ie BVN). Interesting too that BVN behaved exactly like GLD on the way up over the past few months. In either case a corrective leg back up seems in order for the present. Kinross got mugged the past week and dropped down nearly to its 200 dma today based on some lowered production guidance, already giving up about 50% of its gains from April. GSR now back into the target area of 62.5-64 where I mentioned previously it's 4th leg might take it. The dollar is also having trouble for now staying above 76.3. Some of the money for the bond sales was whipped up this time by a timely whacking of stocks and commodities. It has worked before, but not during the last 2 auctions. The sheeple need to believe in the deflation trade for at least this week.
Next question....where do the miners stop on this correction? Are they correcting the entire leg from last November or part of a smaller leg from April, July, or Sept? ....***edited***........after giving this more thought and analysis I'm hanging my hat on gold being in it's third major leg up commencing in Nov. 2008. Counting from November 2008 gold has completed 2 smaller legs and is now in the 3rd wave up. To be more precise it is now in the 4th minor wave (correcting) of the 5 wave series, of the 3rd wave up. A 5th minor wave following the current pull back to $1018-$1031 could take it to $1090+. From that point we get a pull back towards $1000. Because the 2nd gold leg from March-Sept 2009 was a lengthy and complex 5 wave triangle, I would expect wave 4 to be much simpler and shorter than the 6 month long wave 2. One concern though is that for the bullish wave 3 of major leg 3 just being completed, it certainly didn't measure up to what would have been expected. In the back of my mind I still keep the $750 option open.
Gold miner charts & GLD
roadrunner
Gold timer sentiment was once a support for bulls, now is a drag, because too many gold timer newsletters have jumped on the rally.
US dollar fighting at key pivot point of 76.7.....still below though. The RSI is peeking above 50 for the first time in weeks/months but momentum is also starting to hit the oversold area. The Euro likewise has an RSI just <50 and is sitting right on top of 147.00, a key support point from weeks ago. It's bounced off 146.9-147.0 a few times today. A move much lower and it can drop hard considering the next support is quite a bit lower.
GSR has pulled back to the 64.0 area which touches the bottom of leg 1 from August 13th. Right now this can still be a vigorous zig-zag wave 4 pullback. But it also could be the start of an entire bullish leg. GSR appears to be slowing down here with momentum nearly topped out. For most of this year momentum didn't hang on very long after hitting this peak. GSR continuing on to 65 would tend to support Cohodk's change in market mode. I think GSR takes a breather here.
Gold has behaved rather well over the past few days. Even with an expected and still tiny 4% correction it sort of feels like the world has caved in on the metals. Everyone expected a retest much earlier but the lingering at $1042-$1065 kept one thinking otherwise. Silver is off nearly 10%. What really has tanked is the miners with GDX on average down 15% vs. the S&P at only 4%. Some of the better miners are now down 20-30%. Leverage cuts both ways. But with the naked short sellers piling on it's not hard to stampede these shares. Clearly there is some sand bagging going on here so that the "right" hands end up with the mining shares once again. Either that, or this is the start of another deleveraging event with leveraged assets leading the way. The Yen and bonds have become the only safe haven this week. I don't feel a deleveraging event like last fall is here, though Denninger, Hoye, Faber and others might be feeling otherwise. It's a hazy line between simply correcting back on non-dollar assets vs. a rush to liquidity event. From Cohodk's post of a few days ago it seems he favors something inbetween...a steadier and longer move to liquidity and non-risk. Come Friday, things hopefully will be clearer.
Gold's critical support is at $1024 which correlated to the first leg up from the $982 resistance point. A strong move below that and it plants the seeds that possibly the entire move from $982 was only corrective in nature, not bullish. Thereby looms the start of the C wave in the on-going ABC 19 month correction. For now, $1026 holds.
roadrunner
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Chart condundrum: why is it that GDX seems to show 5 complete waves from Nov-Oct yet the gold chart only shows 3 waves? The difference being that the miners improved upon their Feb highs in May while gold did not. Possibly the stock market link provided that additional impetus to the miners. Does that mean the stock link to the miners is stronger than bullion gold?
roadrunner
One report I read called for a gold bottom Oct 28-Nov 2, but like Wolf, I believe yesterday was it. 1027 was an important level on the last move up, and it held as support. Looking at the USD chart, ~76.7 was a key resistance level and it appears to have held up. 76.7 was approximately the top end of the downward channel for the USD, so it was natural for to test the upward boundary again. Now I expect it to meander back to the lower side, which will probably bring us to around 74.
I don't expect the rebound to start real soon or real fast, it will probably take some time, and I won't be really confident until we get back through 1046.
Support is at 1022.6 and 1032.6, with resistance at 1038.7 and 1048.6.
<< <i>I know nothing, but my spidey sense is calling a bottom. Here, now. >>
The Wolf-ey spidey sense got it. Good call. Often times I do cover my short puts at or near a bottom (like I did yesterday)--that will tend to occur often for trader's that cut losses like I tend to do.
Yesterday I started building my own junior ETF and selected 4 of the names that are on the GDXJ list. I added them late yesterday as well while they were on sale and 20-30% off their highs. But these I want to continue to build upon moreso than trade. I plan to end up with about 10-12 or so and will shift them around as fundamentals and technicals warrant. When GDXJ formally comes out I might use that instead. But just like with GDX, there are a half dozen to a dozen players that I like a lot more than some of the others. 37% of the stocks on GDXJ will make up 59% of the value. The bottom 14 names by size (37%) will only make up 16% of the index. There are some names there I still know nothing about with 2 of them from the Hong Kong exchange. The 4 silver miners will give it a 20/80% Ag/Au weighting.
The YuYangers once again hit the call perfectly calling for a bottom on the 28th. They had this entire week as their buy zone before the next leg up. They had this chart posted months ago. In looking back their momentum calls all this year have been pretty darn good. From there they see a rise into mid-next week, a pull back, and then a rise into mid-to late November. Second half of December into January is pull back time.
Edited: watch the GSR for one more leg down from current levels from Thursday evening. Another leg down (5th) from it's 64 high and we should get more up action over the next few days following a brief move back up Friday. If it goes the other way, it is indicating more bearishness to come.
roadrunner
The same report that called for a dollar top Oct 28 is also calling for a dollar bottom Nov 9, which is consistent with timing models that show the next 10 days are going to be great for gold. Not necessarily all up days, but up overall.
I think Friday will take us up to 1060.
Support is at 1034.2, 1041.3, and resistance is at 1054.4 and 1061.5
Knowledge is the enemy of fear
For the month of October:
paper GLD closed up about 4% to 102.53
GDX (gold miners) down about 6% to 42.37
<< <i>Nothing like a big GDP number to rally stocks and push the dollar lower. More decent econ news today and the dollar is resuming its upward trend. I expect a few days--5 to 10-- of dollar stability, then a push higher, which could be on the massive side. 77 leads to 81, perhaps in a heartbeat. >>
I hope you're correct as I have nearly 50% of my holdings in the doble short financial, double short S&P and double short nasdaq etf's.
If the dollar moves like you expect then the S&P will have a huge sell off.
The only thing I wished is that I did it exactly again today like I did yesterday. Had a good plan but not so good execution. I did buy those IAG shares back but about an hour before they got hit hard for the 2nd time. While I got back in quite a bit cheaper it always seems that it's never cheap enough. I decided to buy some Agnico-Eagle as well and the same scenario occured where they got hit hard a 2nd time driving it back to low 51's (32% off the Oct. peak). I settled for 27%. AEM has a huge price gap from 59-61. But if Cohodk's scenario plays out in the dollar, I'll soon be wishing I had not bought any stocks the past couple days. Fwiw GDX briefly spiked below the trend line from November. It's already retraced 55% of this last up move from the June-July pullback. The HUI/Gold momentum indicators are as deeply oversold as anytime in the past 12 months. The RSI is the lowest of any time in the past 12 months. Bullish percentage on the GDM index ($BPGDM) momentum is at a point only reached a few times this year. That's not to say that a further drop in the SM can't pull miners down a lot further. Gold off 2.5% from peak, SPY off 4.5%, but miners off 15% on average. Makes sense to me. AEM wins the prize though by cascading past -30% today. Only a few juniors even did that. I looked back for any clues as to why it did this and coincidentally there was the tiniest gap back on July 14th from 51.8 - 52.2 that never got filled. It swept down today to take that out. Wow! GLD has a gap from $1016-$1023 as well as at $957. While GLD does not trade continuously it normally fills the gaps. The most recent gap still gives some concern for a deeper retest.
COT report ending Tuesday:
The commercials cashed in 11,000 shorts and purchased 3000 longs. Open interest fell back to 497K from 509K. Short to long ratio fell from 4.45 to 4.17. Silver followed the same general trend with more longs being added and shorts being sold. The dollar went more to the short side. Long to short ratio fell from 2.82 to 2.34. Open interest remained the same by selling 3X as many longs for each short purchased. I'd be expecting the long side of this to keep on increasing if a strong upwards move is in the works. Back in June as the dollar began to strengthen the ratio increased to 3.6 fairly quickly and eventually peaked at 4.8. In mid-February before the dollar started to tank the short to long ratio went to 6-8. With the current 2.34 long/short things still look temperate.
GSR bumped back up to the 64.0 resistance point again just like the dollar bumping heads again with 76.4-76.7. If GSR lets loose at >65 then Cohodk's scenario looks likely.
roadrunner
So far roadrunner and cohodk - you've both kept me from my next "buy". I resisted the Proof Gold Buffs. Now it looks like I'll have to keep accumulating more cash until Dec. 3rd, which is a big day for Proof 1 oz. Plats and fractional unc AGEs. Then again, silver beckons.
Talk straight with me - are the metals going to sell off and not recover for 8 months, like cohodk says? I can see something like that happening, but I just don't think that it will.
It's more a question of parabolic timing for me. I don't want to miss the lift off.
I knew it would happen.
I wish I had the straight scoop about what's coming in the next few weeks or months. The race to devalue currencies flows from the US to overseas and back again. The foreign exporters will push back hard to devalue their currencies even faster following a bout of dollar depreciation over the past 8 months. The dollar can easily rise if large foreign exporters decide to buy the dollar (and print more of their currency) to improve their export positions. While the long term trend is down for all currencies and up for gold, the short term swings in the currencies can also swing PM's.
The candle glance charts of currencies, bonds, liquidity, etc. show a turn occuring in the past 2-6 weeks. The gold to silver ratio may have showed it first back in September. The neg divergences in RSI in stocks goes back to early August. The dollar looks to have completed 5 waves down since March. The GSR/$VIX may have recently done the same as well. The completion of 9-12 month down trends in those 2 would suggest "healthy" pullbacks to follow. But this doesn't quite seem to jive with the idea of gold making a seasonal strong run in late November through spring 2010 not to mention Sinclair's beliefs that the dollar swims into rougher waters starting a week from today (G20 meeting, etc.). In the end though, fighting the charts as noted above, may get you on the wrong side of the swing. I have no concerns that physical gold will hold up well regardless of what is thrown at it. But silver, mining shares, commodities, plat, pall, etc. will probably not fare as well.
Candleglance charts 6 months
Candleglance charts 1 year
roadrunner
The 1040 level is exerting a lot of influence. Last week it sucked gold back up form 1030 and on Friday sucked gold down from the high 1040's until the very end.
My concern is growing now, especially due to the weakness in stocks. SP500 broke some important support levels, so I think there could be more weakness in stocks to come. While gold was coupled to stocks, it doesn't have to be. I'm trying to be aware of the relationship but not to put too much stock in it.
Although the volume numbers aren't that large, the COT report is compelling although I hate to use this as any kind of guide either as it showed heavy shorts during the recent move upward. Large and small speculators shed long positions more than short, while commercial traders added long and lost short positions for both gold and silver. Silver was the opposite. For the USD, large and small speculators went more long while commercial went more short.
I need to spend some more time looking at the charts and doing some reading this weekend, but I think I'll take any move into the 1060's to reduce my position by at least half. I still think it's possible for gold to have the next couple of weeks be good, but I defeinitely want to reduce my exposure as things are not so clear anymore.
Things might return more to normal with the bond auction over, perhaps the dollar can now continue its slide in its downward range.
The USD chart is up against its descending trend line and within striking distance of the 50dma. I'll be watching for a breakout at this level. Most of the return to this level all came this week during the bond auctions. Will the strength continue next week with the bond auctions over?
The silver chart shows ~16.10 holding firm, and I think it will hold this level given the support this level appears to have, in addition to the rising rising trend line at about $16.0, and just a brief breach of the 50dma at 16.48.
roadrunner
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Tuesday and Wednesday the FOMC meets. Rumors out there about a shaky week in the equities coming up. Certainly a lot of bearish sentiment out there following last week's dumping.
roadrunner
CIT's bankruptcy filing didn't crash the markets but there's always tomorrow. Economic stats coming out this morning provided the boost once again to the reflation play (ISM report, home sales, etc.).
GSR fighting like mad around the 64.0 level just as the dollar was fighting just above 76.0. Neither broke any new ground. Just as I've been writing this the Dow gave back most all it's gains today with gold back to $1055. GSR tended higher nontheless on silver's general weakness. A 5th wave down in the GSR and $USD is still not out of the question. Deepcaster did an analysis on GSR today. Among all the manipulation and games out there they feel GSR is one of the few reliable tools out there.
End of day update: missed the opportunity to buy back some of those miners at around 2PM even cheaper than I bought them at last week. Could have tried for a 3rd attempt on the IAG trade as it fell back 9% after the morning peak. Seems to be making a series of higher highs and lows. But sitting in a better cash position right now waiting to see how long this wave 4 down in gold takes. Could be over by the time market opens Tuesday or could even slide into Wednesday.
roadrunner
I can see that gold could still struggle at 1070 for a while, but I think we'll ultimately see movement over this barrier to new all time highs. We could have some brief daily dips into the 1050's, but I don't think those will last long. I'm not super-bullish on how high the new all time highs will be... probably no more than 1080 to 1100.
I think I'm going to lighten my positions as gold nears 1070 and goes toward 1080, and I'll be looking to play a range between 1060 and 1070 or so if there is any pullback off of 1070. I definitely want to lock in some profits.
Support for Mon night/Tues is at 1047.2, 1055.9, with resistance at 1068.4, 1077.1, and 1098.3.
roadrunner