NEW YORK, May 6 (Reuters) - Nasdaq Operations (NDAQ.O) said it will cancel all trades executed between 2:40 p.m. to 3 p.m. showing a rise or fall of more than 60 percent from the last trade in that security at 2:40 p.m or immediately prior. Nasdaq said the stocks affected and break points will be disseminated soon. >>
What sucks it that so many stops and trailing stops got triggered during this peroid and most will stand. A lot of people got the shaft. Imagine if you had a reasonable 15-20% trailing stop on AAPL to protect profits. You are now out of the stock and missed the move back up after the mayhem. Apple traded between 258 and 199 today. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
In 2001 during the Nasdaq meltdown I tried to trade these fast markets. On two separate occasions I bought stocks after quick 50% intraday drops. I then quickly sold after 20% bounces. The stocks kept going higher but I was happy making 20% in 10 min. The next morning I was notified that my original buy was busted, but my sell at the higher price would stand. So I was now short, and the stock was higher. My 20% gain became a 20% loss overnight. I did nothing wrong yet took the pole deep. On days like this, I just stay away, as I think do most traders, hence the reason for illiquid and volatile markets.
In 2000-2001 somehow it didn't seem like it moved quite this fast. Maybe it was because I was ten years younger. I only traded one stock during that time. INKT. It moved 20 dollars a day and that's all you need. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>In 2000-2001 somehow it didn't seem like it moved quite this fast. Maybe it was because I was ten years younger. I only traded one stock during that time. INKT. It moved 20 dollars a day and that's all you need. MJ >>
It wasnt the whole market moving, just individual stocks.
I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers.
At least now Congress will have something else to talk about and this will help passage of a financial reform bill. I wonder if the administration had something to do with this?
<< <i>I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers. >>
I'll take computerized trading over pen & paper trading any day.
And computers are only as good as the commands and information flowing into them...
Lots of shares got grabbed on the rebound. MOST of those trades will stick.
Hypothetical Example: ACN
You got stopped out at $25.
Shares go to <$1.
Shares speed back to $40, and I had a buy order in at $18.
Your sell and my buy stick.
................
TRADE CANCELLATION NOTICE
Notice has been received from each of the NASDAQ, NYSE ARCA, BATS, DIRECT EDGE, ISE and NATIONAL STOCK EXCHANGE of their intent to cancel all trades executed between 14:40:00 and 15:00:00 which were executed at a price greater or less than 60% away from the consolidated last print in that security at 14:40:00 or prior.
Each has also provided notification that this decision cannot be appealed. At this point we are awaiting information from these exchanges, as well as any other exchanges which may later provide notice of a similar decision, as to which stocks are affected and the break points at which the cancellations will take place.
Once this information has been determined, we will act to process any resultant position and cash changes to your account and will provide notification of this action via email and TWS bulletin.
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30
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
I'm afraid you are correct Storm.............Those who went to work with trailing stops or stops probably got stopped out of their tradings possibly giving up months of gains. I don't think it was J6P picking up the rubble and getting bargains of a lifetime at 3:00pm today...............It was the pro's............STINKS. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Today was wild... The explanation I saw was that someone mis-entered a $16B sale instead of $16M. I had to say, I have NEVER seen the market tank that fast and swiftly before. That was practically straight down... I knew something had to be up, but I was paralyzed to do anything. I guess that's a good thing. I didn't have any stops, and I'm mostly in mining stocks. They were bargains at one point, but they re-captured their losses and ended up with small losses or even small gains.
I'm slightly concerned that the bullishness in gold was caused by the quick decline in sotkcs, and that gold will drop back down to 1180-1200 if/when markets return to normal on Fri. But I'm more convinced that this was a key launch point of an aggressive move higher. The trend today does have more room to run. I'm looking at 1222 as a short-term target. This very well could be the equivalent to the first week of October where gold started to move and never really pulled back and provided good entry points.
Personally, as I shared, I did sell "extra" positions between 1190-1193. I have re-established these positions around 1203. Support is at 1183.5, 1198, and resistance is at 1222.6 and 1236.9.
As far as stocks, I think the dip was temporary, and I expect a rise to ~1150 on Fri.
Plat and Palladium are sure getting shallacked recently.
<< <i>I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers. >>
I'll take computerized trading over pen & paper trading any day.
And computers are only as good as the commands and information flowing into them... >>
And I'll take 2 humans and a piece of paper over a room full of computers anyday. These "flash" trade programs have no humans inputting data.
This selloff was predicted as I wrote about on April 26. I even posted a chart of RTH and said I saw an 8% drop. It did go up about 2.5% in the next 3 days, but also dropped just over 8% from my post at $105. There were many charts with similar patterns. Everyone looking for 1250 SPX, meant it wasnt gonna happen. Equity bullishness, even on this thread, was heavy.
I must note that the conventional wisdom spouted by the financial industry when buying & selling stocks is to use trailing stops, in order to "lock in your profits".
I wonder if any legitimate firms will now change their pat advice, since the paradigm has now changed.
Q: Are You Printing Money? Bernanke: Not Literally
Shares speed back to $40, and I had a buy order in at $18.
Your sell and my buy stick.
Storm, I am sure that will be the case. However, doesn't it make you wonder why they wouldn't simply bust all trades that occured under a price of, say $35? That seems like less of a screw job for the little guy, as far as I can determine.
Q: Are You Printing Money? Bernanke: Not Literally
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Silver just had a $1.00+ runup when I wasn't paying attention. CNBC just noted that the CRB Index just had its biggest one-day drop in 17 months. I guess silver is no longer a commodity.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Silver just had a $1.00+ runup when I wasn't paying attention. CNBC just noted that the CRB Index just had its biggest one-day drop in 17 months. I guess silver is no longer a commodity. >>
<< <i>I must note that the conventional wisdom spouted by the financial industry when buying & selling stocks is to use trailing stops, in order to "lock in your profits".
I wonder if any legitimate firms will now change their pat advice, since the paradigm has now changed. >>
Coming from the industry I can say I've never understood this either. And I can say I have never placed or recommended a trailing stop. Reason being, that when you place a stop, then you have already made up your mind to sell, so why wait to sell it 10 or 20% lower? Have I missed out on bigger runs, yes, but I've never sold at a price lower than I first wanted.
Too many times stocks gap down through stops anyway and you may in fact sell MUCH lower than you wanted. When you have decided to sell, then sell. Dont be a wishy washy investor.
Equity bullishness, even on this thread, was heavy.
Yes...but that bullishness for Dow 12,000+ didn't assume it was going to happen this May. I'm figuring on another reflation-trade move coming this summer. The correction occuring now was overdue. So far it's not out of control...but it certainly could get that way. It doesn't change my view of higher highs in the Dow/S&P.
I'm looking for another leg down in the majority of miners early next week. Plat and Palladium look to have another leg down due as well. Gold and silver bullion could certainly rise or hold about steady as that occurs. Money has flocked to the best seniors and intermediates and pretty much abandoned all but the most primo juniors and explorers. Golden Star had been a darling the past few months as it rose from the mid 2's to the mid 4's. Unfortunately a lousy quarterly report (3.9 MILL earned on $100 MILL in revenues) sent it packing today. After a 3 month run I can see stocks like this pulling back a bit further to the 200 dma.
Next week is a 3-10-30 bond week which will only assist the current flight to treasuries. It's already well set up with bond prices peaked to add to the Treasury's coffers. Shortly after the sale rates will probably rebound. Just another small headwind for PM's next week though the bond week at the end of the month will coincide with expiration...that will be a tougher one to weather. This Wed-Thursday should be a good time for a trend change. A final smack to the stock market to reprobe the recent lows could be in order. and miners would tend to go with it. Besides the miners the ags & oil companies and most of the commodity ETF's are getting into a bottoming zone.
COT commercial numbers were not surprising. Gold and the dollar got a little more short but nothing monumental. Open Interest in gold futures rose 13K to 551K.
Had some extra time this weekend and read through the Kinross quarterly report. I was surprised that it was easier to follow than many other miner reports. Their derivatives were right out there in the open for anyone to see. I've bought Kinross from time to time. They've taken more of a hit during the current volatility and the quarterly report seems to indicate some possible reasons why. Their production and profits were substantially up over 1st qtr of 2009, slightly more than the rise in the pog.
A few salient points:
-Their flagship Kupal mine (far east Russia) saw a 21% drop in sales due to 17% weaker ore grade, higher labor costs, etc. I seem to remember that they reported this fact earlier in the qtr. This is one of their two mines that have a hefty 20 gm/tonne ore grade. It doesn't take much ore to make money but Russia is not the safest political jurisdiction. The Russian Federation has a 25% ownership in Kupal. I don't know if that's good or bad. Maybe someday they'll want more? Kupol represents >30% of Kinross' total ounces and even a larger percentage of sales.
-The sale of 1/2 of their interest in the Cerro Casale mine (Chile) netted them several hundred million in free cash and a few dozen million in profit. Should that mine go to production they will owe Barrick a one time $20 MILL fee (it would have been $40 MILL otherwise).
-$819 BILL in "goodwill" claimed on their 8 operating mines. I didn't know that Canadian GAAP allows untapped/exploratory value to be reported in "goodwill." In selling off half of their ownership in the Cerro Casale mine they lowered their "GW" by over $360 MILL. Goodwill represents about 10% of the company's value.
-Carrying a current negative $309 MILL in total derivatives. Kinross does use gold/silver, Interest Rate swaps, currency and energy derivatives in running their business. Most of this -$309 MILL is in expected gold/silver derivative losses. Their 2010 contracts are currently worth about -$100 MILL and the 2011 ones about -$200 MILL. Most of this is from locking in gold forward contracts at an average price of $634/oz. It appears they are off-setting some of this by purchasing some buy contracts in the $1150 range for 2010 and 2011. Still, unless they roll over these (loss) contracts they will take some sizeable hits this year, and next year. The net earnings have been running around $76-$110 MILL/qtr. Note that these contracts came with their acquistion of the Bema and Kupol projects.
-Cost of gold per ounce was in the upper $400's which is better than what I've been seeing from some miners lately (ie numbers in the upper $500's to lower $600's). Cost of oil is up considerably over the past year and trying to juggle multiple currency and interest rates hedges in a volatile financial world is not easy.
-Kinross recently purchased a 9% stake in Red Back Mining shares worth around C$600 Mill. And have purchased an 82% stake in Underworld Resources (White Gold project, Yukon Territory) for >$100 MILL. Also in the process of finalizing a deal to purchase the Duoinoye project located within 100 km of Kupol (roughly $225 MILL deal). Kinross has about 30 exploratory projects going on around the world. Their assets are located in the US, Russian Federation, Chile, Brazil, Equador.
RR, what did you think of IAG and AUY's earnings? I was impressed with AUY, I think they are going to do well, and their costs/oz seem to be low. IAG had some good numbers as well.
For stocks in general, I expect a reboud to play out over the early part of next week, before probably another leg down. I think the overall picture is bullish, but the bullish move is going to take longer than expected. There's too much money sloshing around the markets to keep it down for long. I also think the fed is going to have to release some money to try to keep the dollar down. A strong dollar is NOT what the fed or Obama wants to see right now. The only question is when...
The bond week doesn't concern me anymore for gold. Gold has de-coupled from the dollar so I think it will be fairly immune to bond week. $1210 is the last area of real resistance for gold, and the charts have plenty of energy to power through this level soon. Gold has a new all time high weekly close, a new all time high average monthly price (April), and the charts look like a breakout to me. I think the last week or the week before is the equivalent to the the first week of October. Looks to me like we're in for a fairly good stretch of nothing-but-up for gold.
Nice move by silver. I kept looking at it and thinking to myself that I should get involved, but I never did. That ~$1 move was impressive. I've seen targets for $21.50 silver by mid-June, and I believe it.
Criminal and civil probes under way into Morgan silver trading By cpowell Created 2010-05-08 15:33
11:25a ET Saturday, May 8, 2010
Dear Friend of GATA and Gold (and Silver):
The New York Post tomorrow will report that the U.S. Justice Department has begun a criminal investigation of JPMorgan Chase & Co. in regard to trading in the precious metals markets and that the U.S. Commodity Futures Trading Commission has begun a civil investigation.
The forthcoming Post story was disclosed by its reporter, Michael Gray, at his Internet blog last night:
On April 11 Gray reported extensively on GATA's disclosure at the March 25 hearing of the U.S. Commodity Futures Trading Commission that a London silver trader had alerted the CFTC in advance to a silver market manipulation by Morgan Chase traders:
I dont see any outperformance by silver over gold in coming weeks. Silver needs to close over $19.50 to break the 2-yr downtrend. Currencies across the globe, with the exception of the dollar and Yen look vulnerable.
<< <i>I dont see any outperformance by silver over gold in coming weeks. Silver needs to close over $19.50 to break the 2-yr downtrend. Currencies across the globe, with the exception of the dollar and Yen look vulnerable. >>
I never said silver would outperform gold
And also, I also don't put much stock into derived charts.
<< <i>I dont see any outperformance by silver over gold in coming weeks. Silver needs to close over $19.50 to break the 2-yr downtrend. Currencies across the globe, with the exception of the dollar and Yen look vulnerable. >>
I never said silver would outperform gold
And also, I also don't put much stock into derived charts. >>
My post was not directed at you. Im merely providing an informed opinion. I was going to post a bunch of currency charts, but now I wonder why I bother to provide stock market analysis free of charge. I am now sensing a lot of gold bullishness-- especially among this board-- so I will repeat what I wrote a week ago. This gold rally will most likely result in more disillusioned investors over the coming months.
Its a funny thing not taking the popular stance. LOL
Edited to add. If you believe silver could be 21.50 by June then that means a 17% gain. So your saying that gold will outperform? Return maybe 20% in that time? So your looking for about $1450 gold in 5 weeks?
<< <i>My post was not directed at you. Im merely providing an informed opinion. I was going to post a bunch of currency charts, but now I wonder why I bother to provide stock market analysis free of charge. I am now sensing a lot of gold bullishness-- especially among this board-- so I will repeat what I wrote a week ago. This gold rally will most likely result in more disillusioned investors over the coming months.
Its a funny thing not taking the popular stance. LOL >>
Well I hope you continue to post your analysis, but I hope no one is basing any trades off of what you, myself, or anyone else says on here.
I think all of us on here are long term gold bulls, but we are certainly going to differ on our outlooks over the near and medium terms. It wouldn't be an interesting discussion if we all thought the same thing. I always like to see people disagree with my outlook because I may have missed something, and if I have I want to see it.
<< <i>Edited to add. If you believe silver could be 21.50 by June then that means a 17% gain. So your saying that gold will outperform? Return maybe 20% in that time? So your looking for about $1450 gold in 5 weeks? >>
I'm not making any predictions on where gold will be relative to silver. Playing or relying on inter-relationship of markets does not usually work out well. And when I say $21.50 silver, I would consider anything within plus or minus $.50 of that to be accurate, and would give gold a pretty wide range (1365 - 1430) to maintain the ratio.
I see your point of view cohodk, but I think we differ mostly in that I see that the market is at a pivot point. Lots of things are happening right now and will probably evolve and have evolved in the past week to change the direction of markets and cause some big moves. Here's my list: 1. The success or failure of capping the oil spill 2. EU/Euro turmoil, including Greece 3. Prosecution/more news on JP Morgan w/ regard to silver manipulation 4. Recent stock market turmoil 5. Gold's de-coupling from the USD
Then there's a few more indicators: 1. Silver's huge move on Monday. What drove it? Will it continue? 2. Gold's breakout - breaking of previous monthy average and weekly closing high and knocking on all-time high 3. Breakout of dollar
PC, the AUY quarterly report was a little less than expected. Most took that news as bearish. I've not been able to review the IAG report yet. IAG's (and EGO's) price has lead the intermediates for some time and I don't like the price on either of them right now. I think the bond week will be enough to push gold stocks down a bit further or at least keep them at bay....bullion is a different animal. Gold looks like it should outperform stocks, plat/pall, silver, commodities, and miners over the next month to few months.
My view of the gold/silver ratio chart is somewhat similar to Cohodk's. We have liquidity generally moving away from the markets since September. The GSR chart is zig-zaggy but still generally upwards. It's movement has been erratic enough to keep from seeing any particular wave pattern. I would lean towards it currently being in the c leg of an abc correction that began in September following a falling one year ABC wave pattern. If that is the case then it should correct up to the 75+ level. Considering that the 1st leg was 12 months down, and this current pullback is starting it's 9th month, there is only so much time left in this leg.
Of course it's entirely possible that the GSR downward movement from Feb-April (5 legs) was the start of yet another lengthy downtrend. The pullback that has occurred the past several weeks could just be a final & nasty correction before resuming a downward course that began in Feb.
In either of these cases the move since September looks corrective and eventually GSR should recommence a downward trend into the low 50's...assuming it hasn't already. The action of the stochastic barely turning up from an oversold condition seems at odds with the RSI all the way up at 70. But this happened a few times prior to 2008 and resulted in sideways action following the spikish behavior. If the movement does fall off a bit from here and go sideways, would that then form a bearish H&S pattern from Sept-May?.....projecting down into the low 50's? My point being can a spike be considered as a "shoulder?"
I hear ya, PC, I just see you as being extremely bullish. Thats ok, but it seems to have an infectious effect on the rest of the board. I think you do a great job in reading the charts. Just keep in mind that behind those charts are buy and sell decisions that are based on human emotion and mass psychology. Understanding human behavior is usually much more profitable than understanding balance sheets.
This Greece fiasco has been festering since October. We are now 6 months into it, so I believe much of the urgency to purchase PMs has been exhausted. In other words, the Greek Tragedy, is old news. Intermarket relationships are KEY. Not just among gold and silver, but among interest rates, tax rates, currencies, entitlement programs, ect. To disregard them could be damaging to ones wallet. My weekly momo indicators on both gold and silver are still negative. Gold has not yet broken its intraday high and has not yet, IMO, broken out. Even a close over 1220 would not convince me as there are a series of resistance points nearby. In the abscense of more bad news from Europe, the flight to safety trade in gold could unwind. The Summer is seasonally unfavorable. Im not a gold bull or bear, nor am I am equity bull or bear. I approach every asset class with cautious optimism. Every stock or asset has hit a new high, before it started back down.
Last week I wrote of the Dow's failure to put together back to back down days. When it finally happened, it did so with a vengence. The longer gold goes without an down year, the bigger the coming correction. It would be much healthier for the long term for gold to ease back a bit now rather than to rally to $1500, then get crushed 50%. What good does it do to promote gold as a wealth saving mechanism, only to see it collapse 50%? Confidence could be lost, must as it is in equities. That wont be good, and I would prefer to not see that happen.
I wouldnt read much into the jump in silver on Friday. It did drop 90 something cents one day last week also.
Meanwhile, the DOW futures point to a 200pt + opening. Markets were quite oversold going into the weekend. Again, im not impressed--happy though as I rode a 30% long position over the weekend. My daily momos have just started to roll over and oversold means weakness. Be prepared for more volatility. The Baltic Index was one of a few that managed a positive week last.
Geez Dave. I actually agreed with just about all of that! We should both be scared, very scared. Late to the dance Euro and Stock market shorts could be in a world of hurt tomorrow at the bell. Gold could struggle as well.................All the best, MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Cohodk, those intermarket relationships fail when you rely on the the most heavily, so use them at your own risk... Of course, this is why it's always good debate among traders, since everyone sees charts differently and uses different indicators and has different experiences. What are the resistance points you see for gold north of 1210? I see only 1220 and the ATH of ~1228.
I see why you think the way you do - and I think you understand my reasoning as well. If we are in the last phase of a multi-year hyperbolic move, then there is good reason to be very bullish - the most profitable part of the pattern is upon us! But at the end of the pattern, some time next spring, we will get that big slide that you are looking for. I will be unloading all of my gold then, just like it would have been smart to unload your real estate in late 2005.
The timing models called for a low either Fri or Mon - I think I mentioned this before and I Think we just saw the low hit just below 1185. Just when you don't think the timing models are going to be accurate, they find a way to come through. This move down will keep the gold charts charged up for the next thrust through 1220 and beyond.
The dollar index has taken a huge hit, and gold has taken a decent hit as well but silver is hanging in there fairly well. Plat and palladium having a good run too. This is the stock market rebound I was expecting, I am going to take this opportunity to light or exit positions Mon or Tues as I think this rebound is temporary and there could be more downside to come.
RR, I know AUY's report was less than expected, but I thought the content and the numbers were very healthy and very promising.
Gold had a great night and now only really has one big resistance level (and it's not as significant as $1210 was) to get through befoere entering "free space." Less than $8 from a new intra-day all time high. Gold does have energy to push a little higher and actually touch or slightly beat the highs. I still think that might happen today.
Silver's having a great morning as well, back over $19 for a 60-70 cent gain which is impressive. $21.50 by mid-June is looking quite possible at this rate.
All of this despite the USD index's climb to the mid 84's and despite bond week.
I think stocks are in for a decent day today and tomorrow, and then who knows... I'm not going to speculate there. I can see it going both ways.
Miners outperformed gold and silver today with lots of charts starting to break out. It's always nice to look at Kitco's top five performers and owning a piece of each of them.
Trading PM stocks either takes the patience of a saint (long term) or the reflexes of Neo in the Matrix (short time frame). No in between or you get skinned alive IMO. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Big spikes on many miners today with senior and intermediate producers leading the way in the 6-10% range. Unfortunately I was still only 35% committed in the miners waiting for an additional entry point having missed smackdown Thursday altogether. My AUY and BVN were sold last week. And wouldn't yoi know AUY, BVN, and Kinross, the same 3 with lackluster earnings reports that resulted in some price bashing this past month......all rocketed up today in major catch-up mode. Sheesh! The laggards became the leaders. Actually BVN had been moving up for several days....and know I know why. Today they officially reported additional gold finds on their shared Chucapaca project with Gold Fields.....an estimated 5.6 MILL gold equiv ounce resource. BVN is a 49% shareholder but leaves the mining expenses to GFI. Chucapaca (Peru) is one of the world's largest gold mines.
Well at least I didn't sell off any gold or silver bullion or generic gold on the cheap in the recent whipsaws. Still fully loaded. Usually once I let go of bullion/generics I tend not to buy it back...the timing is never quite right again.
GSR has essentially retested it's bottom 4 month trend line after collapsing the last several days. It looks to me to be an interim H&S top with the neckline being exactly at the bottom of today's levels - 62.2.....it then rebounded back to 64 at the close. The H&S neckline also happens to be the same line as the bottom 4 month trend line. The right shoulder is not exactly rounded or well formed like the left one but it still looks acceptable enough having dropped from 69 to 62 over several days. If that 62 level is penetrated it would be pointing the way towards the low to mid 50's....and new 30 yr highs for silver.
KGC has been my laggard as well....It has not been easy to hold.............MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Today was a very good day for all of my investment accounts. I over-loaded my futures account with gold contracts this morning and it paid off. I did sell the extra contracts at 1228 but I picked some of them back again on tonight's litte pull-back at 1228 since this move looks great. I think gold will continue to rise through the middle of next week, although it's possible gold may need to rest for a day Wednesday. However, if this move develops like last fall's breakout move over ~1027, we'll be at $1300 before we know it without any good pullback entry points. A few days ago when we were discussing $1350 gold and $21.50 silver by mid-June it felt like a daunting task, but I don't think so anymore. Gold is on the move, and I suggest everyone load up. Silver looks great also...
Wow, gold displaying incredible strength tonight. Stopped just shy of 1245, which could be a fairly big resistance point according to some. Once it clears 1245 it's time to add to positions further...
Great day today with more new highs. Gold's consolidation is nearly complete, and it was able to gain a few points in the process. Gold's got more upside ahead, I'm seeing short term targets around $1278 by some time next week.
SLW released earnings tonight. Not sure what they were expected to be but they had nothing but uber-positive things to report with net earnings tripling over the same quarter last year and an average silver sales price just over $17 and a cost in the $4 neighborhood.
For Thurs, support lies at $1227.9, ~1238, and resistance at $1249.7, $1260.2
I've noticed that with 1st QTR earnings reports (of those on leading indexes or funds) that lackluster ones have outnumbered the winners by 2-1 or even 3-1. That means the gold miners aren't hitting the marks, at least not yet. I believe Barrick and Newmont had 100% stellar reports (did not read those) but not aware of any others. Yesterday Aurizon reported below expectations and today it was Gammon Gold whose production dropped 20+% vs 1st QTR 2009. They were lucky to eek out a +1c eps after a $4 MILL drop in G&A gave them a boost. Goldenstar also just put out an lackluster report. The common threads continue to be unexpected costs, drop in ore grade, rising oil prices, derivatives, currency hedges, strikes, electricity shortages, delays in permiting, rising G&A expenses, etc, etc. You'd think with gold having risen 25% yoy that most of these guys could do a lot better vs. 1st QTR 2009.
These reports haven't stopped these guys dead in their tracks but have certainly slowed their progress. Selecting GDX or GDXJ is probably a better/safer choice than trying to pick miners who will end up with good earnings reports. You will at least see gains this way. It's getting hard to find miners that can keep costs in the $400-$480 range per geo. The days of $300's seem to be gone at least until base metals pick up a lot more.
The other day I added a July layer of short puts. I sold the GLD Jul 100 puts. This adds to my May 92 puts, Jun 97 puts. As GLD has moved up, the other puts are close to delta zero, which means no exposure. I may add to the July position or layer on August if GLD follows its seasonal pattern of a weak June. I don't like chasing the up market, but I was at close to zero trading exposure.
As has been my case all year in GLD, it is another low risk, low reward trade. With a 95% probability of profit in this latest case. As I've written elsewhere, for the most part, my "gun slinging" days of youth are over. I never had the trading nimbleness that some others demonstrate. I rarely had much success day trading or with quick in-and-out trading. So I am content with slow nickels vs. quick dollars. A large part of trading success depends on finding a trading style that fits a person's personality and temperament.
Today's drop in gold is a slight concern, but only if $1218-1220 give way. This is actually a healthy retracement that will really help gold make some really healthy progress in the next few weeks and more importantly, sustain those gains. It also looks to me like the stock market has more correcting to do.
Staying above $1213 was job #1 for gold and it did that by briefly touching $1217 today before rebounding to back over $1230. As like a week ago Thursday most miners took a heavy dip as stops were run during the dollar's rise to 86 (and gold's drop to $1217). But many of these miners sprung back most of the way. The charts still look bearish for them and I suspect they will flounder here a bit more unless gold heads back over $1250. GDXJ made a new all time high and GDX came within 3-5% of it's all time highs.
I'm leaning towards additional weakness in gold only because it came up so quick from $1200. Sinclair predicted that when gold hit $1250 it would pull back for a bit. Coming out of bond week I sort of expected a strong Thursday and Friday that would push into next week. My concern now is that some localized weakness could be prolonged into the next bond week and end of month gold futures options expiration. That would be a much better time for the commercials to attack gold. Of course it might get to $1275 by the time they get than chance. Sinclair's next angel is at $1296...then comes $1369. When the dollar finally finishes this run from December, gold should shift gears.
COT went somewhat as expected. Commerical ratio stayed about the same at 2.67 while open interest soared another +32K to 583K on futures only. Their net short position increased by 11K to 283K. Both OI and net short are getting within spitting distance of the late November highs. The commercials reduced 3000 shorts on the US dollar and dropped open interest. Seems they foresaw this current run continuing. USDollar to 92-93 in 2010 now almost seems realistic.
The picture is getting a little clearer but still not cast in stone yet. There are 6 month and 2 month head and shoulders forming on the chart. GSR has been working right at the neckline of the 6 month H&S for the past 4 days. This is also right up against the 200 dma which seems to be constraining it. It needs to get up above the 200 and 50 dma's to keep the corrective uptrend alive....or else the 50's beckon. Interesting that the neckline pts on each side of the head are the same distance from their shoulder peaks. More interesting is that the May 4th peak was both a 61% FIB in both time and price (39 days down, 24 days up) of the previous 5 wave down trend. That fits pretty well with EW wave 2 corrections...hinting at more down action.
It's also strange how the action of the last 1-1/2 months is forming an unstable, expanding flat based triangle....whatever that means in TA. Guess I'll have to go back to E&M and re-read that section. If that well formed base at 62 is sharply penetrated look out below! Some negative divergences being hinted at by the associated indicators. Still, if one also looks at VIX, FXE/FXY, NZD/XJY and other liquidity measures, they are all saying that the trend is still somewhat towards reducing liquidity (ie a rising GSR).
The picture is getting a little clearer but still not cast in stone yet. There are 6 month and 2 month head and shoulders forming on the chart. GSR has been working right at the neckline of the 6 month H&S for the past 4 days. This is also right up against the 200 dma which seems to be constraining it. It needs to get up above the 200 and 50 dma's to keep the corrective uptrend alive....or else the 50's beckon. Interesting that the neckline pts on each side of the head are the same distance from their shoulder peaks. More interesting is that the May 4th peak was both a 61% FIB in both time and price (39 days down, 24 days up) of the previous 5 wave down trend. That fits pretty well with EW wave 2 corrections...hinting at more down action.
It's also strange how the action of the last 1-1/2 months is forming an unstable, expanding flat based triangle....whatever that means in TA. Guess I'll have to go back to E&M and re-read that section. If that well formed base at 62 is sharply penetrated look out below! Some negative divergences being hinted at by the associated indicators. Still, if one also looks at VIX, FXE/FXY, NZD/XJY and other liquidity measures, they are all saying that the trend is still somewhat towards reducing liquidity (ie a rising GSR).
roadrunner >>
...for us newbies ...english please
Singapore & Hong Kong March/April Hong kong/Long Beach JUNE Table #838 MACAU emgworldwide@gmail.com Cell: 512.808.3197 EMERGING MARKET GROUP PCGS, NGC, CCE & NCS, CGC, PSA, Auth. Dealer
Doesn't the second week of May look like an in spirit of bear flag... with a short term move down to mid-high 62's?
I don't know what an "in-spirit" bear flag is but I would agree that the flag formation of this past weak looks to corroborate further down movement. Friday's "spinning top" (indicision) candle would also support a change in direction. Short term GSR bottoms occur about every 3.4 to 4 months on the chart. The last significant one was in mid-January. One has either already occured in May or is to occur very soon. This would contradict the earlier analysis.
I tried to match up GSR with other liquidity/volatility ratios to see if the charts showed the same general shape. To my surprise none of them really do. Maybe I'm looking at the wrong ones. GSR seems to have it's own "liquidity" heartbeat though it does rhyme with the others.
In English:
Short term signs "seem" to suggest GSR may try to bust through the 62 gold/silver ratio price line and challenge 60. GSR is a measure of money flows (liquidity) into the various markets. When the price of silver is rising faster than gold.....money is flowing into markets. When the price of silver is dropping faster than gold (or rising more slow), money is flowing away from speculative markets into cash/treasury/bond/gold bullion markets. The longer term trend still shows GSR ratio slowing rounding up out of a bottom....which means less money flowing into stocks. The other liquidity/volatility ratios seem to support that same general shape. Unfortunately, there's never a proven right answer until the game has been played out.
As we've seen in the past year and even past few months gold (and now even silver) can rise as the GSR ratio is rising. That was not often the case in previous years when a rising GSR nearly always meant falling gold and silver prices, with silver tanking fastest. I'd have to go back and check the trends but I don't think silver rising in price against a rising GSR has happened before 2010. At least I can't recall anything of note in the 2007-2009 period. Had anyone asked me back then what silver does when GSR rises, I would have said "drops." (ie a simple yes or no answer). The Euro is probably the cause for the recent trend change.
Bottom line: if gold and silver can rise against the headwinds of a rising GSR (money flowing out of stocks and commodities in general) as well as a rising USDollar and Treasuries, imagine what would they do when liquidity flows and the dollar reverse?
Bottom line: if gold and silver can rise against the headwinds of a rising GSR (money flowing out of stocks and commodities in general) as well as a rising USDollar and Treasuries, imagine what would they do when liquidity flows and the dollar reverse?
Gold re-tested $1250 for the second time on Friday just before dropping $30, so $1250 is the resistance level to watch. I expect the 3rd attempt to be successful, possibly on Tues or Wed.
Even though gold has decoupled from the dollar, from what I can tell it still exerted some pressure to cause that $30 drop. It's extremely bullish that gold recovered so quickly and so well from that test. It's also very positive that gold has now had a 38.2% Fib retracement for its move from ~1185. The USD is now in the mid 86's and I expect it will hit a wall at 88 (at least for a while) which should help gold.
RR, you say that gold has moved up fast - and it has - but I don't think it's moved up too fast. Certainly not the rocketship we saw last fall. This time it's been good $20 moves or so followed by retracements and consolidations. The charts - particularly the longer term charts - still have lots of room left.
I had expected last week's move to continue into Tues next week, but now we can see that we've been in a consolidation the past few days that will last at least through Monday, possibly Tues.
There are reports all over Europe of HUGE gold and silver demand. IMO, that's clearly what's driving gold and silver prices here and causing prices to go up in the face of the rising USD. PCGS price guide prices for pre-1933 gold rose pretty good this last week - from what I can tell $100+ on most of what I own which is MS62/63 Libs & Saints. BTW, at least according to local bullion dealers, much of the pre-1933 gold they sell comes from European sources, and they say it's drying up.
There are reports all over Europe of HUGE gold and silver demand. IMO, that's clearly what's driving gold and silver prices here and causing prices to go up in the face of the rising USD. PCGS price guide prices for pre-1933 gold rose pretty good this last week - from what I can tell $100+ on most of what I own which is MS62/63 Libs & Saints. BTW, at least according to local bullion dealers, much of the pre-1933 gold they sell comes from European sources, and they say it's drying up.
But one has to temper the massive flight from the Euro as being overdown. When it reverses we could see gold demand actually weaken, even if light of a declining dollar. At least something to consider.
Everytime I hear of European classic US gold sources drying up, it's not longer before another "big deal" hits the market and tanks the generics. I'm not convinced these sources will ever truly dry up.
Though the generic US gold market is probably >$ 1 BILLION in value, our major gold dealers probably can't efficiently handle a $10 MILL hoard showing up (<1% supply). And from what I see they usually don't try and piece-meal in the supply to keep prices more even. They just dump - and everyone seems to know about it as well. Even worse is that so many dealers are stretched out on cash via regular bullion/scrap deals and waiting for payment that liquidity is continually squeezed. It doesn't have the speed of the futures market. So all it takes is a very tiny supply of generics being dumped all at once and prices crater.....volatility rules as well.
Comments
<< <i>This will be a VERY short list:
NEW YORK, May 6 (Reuters) - Nasdaq Operations (NDAQ.O) said it will cancel all trades executed between 2:40 p.m. to 3 p.m. showing a rise or fall of more than 60 percent from the last trade in that security at 2:40 p.m or immediately prior. Nasdaq said the stocks affected and break points will be disseminated soon. >>
What sucks it that so many stops and trailing stops got triggered during this peroid and most will stand. A lot of people got the shaft. Imagine if you had a reasonable 15-20% trailing stop on AAPL to protect profits. You are now out of the stock and missed the move back up after the mayhem. Apple traded between 258 and 199 today. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Knowledge is the enemy of fear
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>In 2000-2001 somehow it didn't seem like it moved quite this fast. Maybe it was because I was ten years younger
It wasnt the whole market moving, just individual stocks.
I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers.
At least now Congress will have something else to talk about and this will help passage of a financial reform bill. I wonder if the administration had something to do with this?
Knowledge is the enemy of fear
Knowledge is the enemy of fear
<< <i>I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers. >>
I'll take computerized trading over pen & paper trading any day.
And computers are only as good as the commands and information flowing into them...
Looks like lots of folks are screwed.
Some bells just cannot be unrung.
Lots of shares got grabbed on the rebound. MOST of those
trades will stick.
Hypothetical Example: ACN
You got stopped out at $25.
Shares go to <$1.
Shares speed back to $40, and I had a buy order in at $18.
Your sell and my buy stick.
................
TRADE CANCELLATION NOTICE
Notice has been received from each of the NASDAQ, NYSE ARCA, BATS, DIRECT EDGE, ISE and NATIONAL STOCK EXCHANGE of their intent to cancel all trades executed between 14:40:00 and 15:00:00 which were executed at a price greater or less than 60% away from the consolidated last print in that security at 14:40:00 or prior.
Each has also provided notification that this decision cannot be appealed. At this point we are awaiting information from these exchanges, as well as any other exchanges which may later provide notice of a similar decision, as to which stocks are affected and the break points at which the cancellations will take place.
Once this information has been determined, we will act to process any resultant position and cash changes to your account and will provide notification of this action via email and TWS bulletin.
As such changes may adversely affect account equity and/or margin compliance, account holders are advised to monitor their accounts and manage their risk accordingly. Additional information will be posted as received to the System Status page.
30
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I'm slightly concerned that the bullishness in gold was caused by the quick decline in sotkcs, and that gold will drop back down to 1180-1200 if/when markets return to normal on Fri. But I'm more convinced that this was a key launch point of an aggressive move higher. The trend today does have more room to run. I'm looking at 1222 as a short-term target. This very well could be the equivalent to the first week of October where gold started to move and never really pulled back and provided good entry points.
Personally, as I shared, I did sell "extra" positions between 1190-1193. I have re-established these positions around 1203. Support is at 1183.5, 1198, and resistance is at 1222.6 and 1236.9.
As far as stocks, I think the dip was temporary, and I expect a rise to ~1150 on Fri.
Plat and Palladium are sure getting shallacked recently.
<< <i>
<< <i>I am not a fan of computerized trading. Computers are only as good as the programmers, and if the programmers were good traders, they wouldnt be programmers. >>
I'll take computerized trading over pen & paper trading any day.
And computers are only as good as the commands and information flowing into them... >>
And I'll take 2 humans and a piece of paper over a room full of computers anyday. These "flash" trade programs have no humans inputting data.
This selloff was predicted as I wrote about on April 26. I even posted a chart of RTH and said I saw an 8% drop. It did go up about 2.5% in the next 3 days, but also dropped just over 8% from my post at $105. There were many charts with similar patterns. Everyone looking for 1250 SPX, meant it wasnt gonna happen. Equity bullishness, even on this thread, was heavy.
The big question is "what now"?
Knowledge is the enemy of fear
I wonder if any legitimate firms will now change their pat advice, since the paradigm has now changed.
I knew it would happen.
Your sell and my buy stick.
Storm, I am sure that will be the case. However, doesn't it make you wonder why they wouldn't simply bust all trades that occured under a price of, say $35? That seems like less of a screw job for the little guy, as far as I can determine.
I knew it would happen.
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<< <i>Holy silver! What happened? >>
Yes, very nice day........MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>Holy silver! What happened? >>
Yes, very nice day........MJ >>
Of course, because I plan to buy next week after some gold selling this week.
I knew it would happen.
<< <i>Silver just had a $1.00+ runup when I wasn't paying attention. CNBC just noted that the CRB Index just had its biggest one-day drop in 17 months. I guess silver is no longer a commodity. >>
CTFC Warning issued about limits may have affected Silver
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<< <i>I must note that the conventional wisdom spouted by the financial industry when buying & selling stocks is to use trailing stops, in order to "lock in your profits".
I wonder if any legitimate firms will now change their pat advice, since the paradigm has now changed. >>
Coming from the industry I can say I've never understood this either. And I can say I have never placed or recommended a trailing stop. Reason being, that when you place a stop, then you have already made up your mind to sell, so why wait to sell it 10 or 20% lower? Have I missed out on bigger runs, yes, but I've never sold at a price lower than I first wanted.
Too many times stocks gap down through stops anyway and you may in fact sell MUCH lower than you wanted. When you have decided to sell, then sell. Dont be a wishy washy investor.
Knowledge is the enemy of fear
Yes...but that bullishness for Dow 12,000+ didn't assume it was going to happen this May. I'm figuring on another reflation-trade move coming this summer. The correction occuring now was overdue. So far it's not out of control...but it certainly could get that way. It doesn't change my view of higher highs in the Dow/S&P.
I'm looking for another leg down in the majority of miners early next week. Plat and Palladium look to have another leg down due as well. Gold and silver bullion could certainly rise or hold about steady as that occurs. Money has flocked to the best seniors and intermediates and pretty much abandoned all but the most primo juniors and explorers. Golden Star had been a darling the past few months as it rose from the mid 2's to the mid 4's. Unfortunately a lousy quarterly report (3.9 MILL earned on $100 MILL in revenues) sent it packing today. After a 3 month run I can see stocks like this pulling back a bit further to the 200 dma.
Next week is a 3-10-30 bond week which will only assist the current flight to treasuries. It's already well set up with bond prices peaked to add to the Treasury's coffers. Shortly after the sale rates will probably rebound. Just another small headwind for PM's next week though the bond week at the end of the month will coincide with expiration...that will be a tougher one to weather. This Wed-Thursday should be a good time for a trend change. A final smack to the stock market to reprobe the recent lows could be in order. and miners would tend to go with it. Besides the miners the ags & oil companies and most of the commodity ETF's are getting into a bottoming zone.
COT commercial numbers were not surprising. Gold and the dollar got a little more short but nothing monumental. Open Interest in gold futures rose 13K to 551K.
roadrunner
A few salient points:
-Their flagship Kupal mine (far east Russia) saw a 21% drop in sales due to 17% weaker ore grade, higher labor costs, etc. I seem to remember that they reported this fact earlier in the qtr. This is one of their two mines that have a hefty 20 gm/tonne ore grade. It doesn't take much ore to make money but Russia is not the safest political jurisdiction. The Russian Federation has a 25% ownership in Kupal. I don't know if that's good or bad. Maybe someday they'll want more? Kupol represents >30% of Kinross' total ounces and even a larger percentage of sales.
-The sale of 1/2 of their interest in the Cerro Casale mine (Chile) netted them several hundred million in free cash and a few dozen million in profit. Should that mine go to production they will owe Barrick a one time $20 MILL fee (it would have been $40 MILL otherwise).
-$819 BILL in "goodwill" claimed on their 8 operating mines. I didn't know that Canadian GAAP allows untapped/exploratory value to be reported in "goodwill." In selling off half of their ownership in the Cerro Casale mine they lowered their "GW" by over $360 MILL. Goodwill represents about 10% of the company's value.
-Carrying a current negative $309 MILL in total derivatives. Kinross does use gold/silver, Interest Rate swaps, currency and energy derivatives in running their business. Most of this -$309 MILL is in expected gold/silver derivative losses. Their 2010 contracts are currently worth about -$100 MILL and the 2011 ones about -$200 MILL. Most of this is from locking in gold forward contracts at an average price of $634/oz. It appears they are off-setting some of this by purchasing some buy contracts in the $1150 range for 2010 and 2011. Still, unless they roll over these (loss) contracts they will take some sizeable hits this year, and next year. The net earnings have been running around $76-$110 MILL/qtr. Note that these contracts came with their acquistion of the Bema and Kupol projects.
-Cost of gold per ounce was in the upper $400's which is better than what I've been seeing from some miners lately (ie numbers in the upper $500's to lower $600's). Cost of oil is up considerably over the past year and trying to juggle multiple currency and interest rates hedges in a volatile financial world is not easy.
-Kinross recently purchased a 9% stake in Red Back Mining shares worth around C$600 Mill. And have purchased an 82% stake in Underworld Resources (White Gold project, Yukon Territory) for >$100 MILL. Also in the process of finalizing a deal to purchase the Duoinoye project located within 100 km of Kupol (roughly $225 MILL deal). Kinross has about 30 exploratory projects going on around the world. Their assets are located in the US, Russian Federation, Chile, Brazil, Equador.
roadrunner
For stocks in general, I expect a reboud to play out over the early part of next week, before probably another leg down. I think the overall picture is bullish, but the bullish move is going to take longer than expected. There's too much money sloshing around the markets to keep it down for long. I also think the fed is going to have to release some money to try to keep the dollar down. A strong dollar is NOT what the fed or Obama wants to see right now. The only question is when...
The bond week doesn't concern me anymore for gold. Gold has de-coupled from the dollar so I think it will be fairly immune to bond week. $1210 is the last area of real resistance for gold, and the charts have plenty of energy to power through this level soon. Gold has a new all time high weekly close, a new all time high average monthly price (April), and the charts look like a breakout to me. I think the last week or the week before is the equivalent to the the first week of October. Looks to me like we're in for a fairly good stretch of nothing-but-up for gold.
Nice move by silver. I kept looking at it and thinking to myself that I should get involved, but I never did. That ~$1 move was impressive. I've seen targets for $21.50 silver by mid-June, and I believe it.
Edited to add chart:
Criminal and civil probes under way into Morgan silver trading
By cpowell
Created 2010-05-08 15:33
11:25a ET Saturday, May 8, 2010
Dear Friend of GATA and Gold (and Silver):
The New York Post tomorrow will report that the U.S. Justice Department has begun a criminal investigation of JPMorgan Chase & Co. in regard to trading in the precious metals markets and that the U.S. Commodity Futures Trading Commission has begun a civil investigation.
The forthcoming Post story was disclosed by its reporter, Michael Gray, at his Internet blog last night:
Linky_do
On April 11 Gray reported extensively on GATA's disclosure at the March 25 hearing of the U.S. Commodity Futures Trading Commission that a London silver trader had alerted the CFTC in advance to a silver market manipulation by Morgan Chase traders:
http://www.gata.org/node/8529
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Knowledge is the enemy of fear
<< <i>I dont see any outperformance by silver over gold in coming weeks. Silver needs to close over $19.50 to break the 2-yr downtrend. Currencies across the globe, with the exception of the dollar and Yen look vulnerable. >>
I never said silver would outperform gold
And also, I also don't put much stock into derived charts.
<< <i>
<< <i>I dont see any outperformance by silver over gold in coming weeks. Silver needs to close over $19.50 to break the 2-yr downtrend. Currencies across the globe, with the exception of the dollar and Yen look vulnerable. >>
I never said silver would outperform gold
And also, I also don't put much stock into derived charts. >>
My post was not directed at you. Im merely providing an informed opinion. I was going to post a bunch of currency charts, but now I wonder why I bother to provide stock market analysis free of charge. I am now sensing a lot of gold bullishness-- especially among this board
Its a funny thing not taking the popular stance. LOL
Edited to add. If you believe silver could be 21.50 by June then that means a 17% gain. So your saying that gold will outperform? Return maybe 20% in that time? So your looking for about $1450 gold in 5 weeks?
Knowledge is the enemy of fear
<< <i>My post was not directed at you. Im merely providing an informed opinion. I was going to post a bunch of currency charts, but now I wonder why I bother to provide stock market analysis free of charge. I am now sensing a lot of gold bullishness-- especially among this board
Its a funny thing not taking the popular stance. LOL >>
Well I hope you continue to post your analysis, but I hope no one is basing any trades off of what you, myself, or anyone else says on here.
I think all of us on here are long term gold bulls, but we are certainly going to differ on our outlooks over the near and medium terms. It wouldn't be an interesting discussion if we all thought the same thing. I always like to see people disagree with my outlook because I may have missed something, and if I have I want to see it.
<< <i>Edited to add. If you believe silver could be 21.50 by June then that means a 17% gain. So your saying that gold will outperform? Return maybe 20% in that time? So your looking for about $1450 gold in 5 weeks? >>
I'm not making any predictions on where gold will be relative to silver. Playing or relying on inter-relationship of markets does not usually work out well. And when I say $21.50 silver, I would consider anything within plus or minus $.50 of that to be accurate, and would give gold a pretty wide range (1365 - 1430) to maintain the ratio.
I see your point of view cohodk, but I think we differ mostly in that I see that the market is at a pivot point. Lots of things are happening right now and will probably evolve and have evolved in the past week to change the direction of markets and cause some big moves. Here's my list:
1. The success or failure of capping the oil spill
2. EU/Euro turmoil, including Greece
3. Prosecution/more news on JP Morgan w/ regard to silver manipulation
4. Recent stock market turmoil
5. Gold's de-coupling from the USD
Then there's a few more indicators:
1. Silver's huge move on Monday. What drove it? Will it continue?
2. Gold's breakout - breaking of previous monthy average and weekly closing high and knocking on all-time high
3. Breakout of dollar
My view of the gold/silver ratio chart is somewhat similar to Cohodk's. We have liquidity generally moving away from the markets since September. The GSR chart is zig-zaggy but still generally upwards. It's movement has been erratic enough to keep from seeing any particular wave pattern. I would lean towards it currently being in the c leg of an abc correction that began in September following a falling one year ABC wave pattern. If that is the case then it should correct up to the 75+ level. Considering that the 1st leg was 12 months down, and this current pullback is starting it's 9th month, there is only so much time left in this leg.
Of course it's entirely possible that the GSR downward movement from Feb-April (5 legs) was the start of yet another lengthy downtrend. The pullback that has occurred the past several weeks could just be a final & nasty correction before resuming a downward course that began in Feb.
In either of these cases the move since September looks corrective and eventually GSR should recommence a downward trend into the low 50's...assuming it hasn't already. The action of the stochastic barely turning up from an oversold condition seems at odds with the RSI all the way up at 70. But this happened a few times prior to 2008 and resulted in sideways action following the spikish behavior. If the movement does fall off a bit from here and go sideways, would that then form a bearish H&S pattern from Sept-May?.....projecting down into the low 50's? My point being can a spike be considered as a "shoulder?"
roadrunner
This Greece fiasco has been festering since October. We are now 6 months into it, so I believe much of the urgency to purchase PMs has been exhausted. In other words, the Greek Tragedy, is old news. Intermarket relationships are KEY. Not just among gold and silver, but among interest rates, tax rates, currencies, entitlement programs, ect. To disregard them could be damaging to ones wallet. My weekly momo indicators on both gold and silver are still negative. Gold has not yet broken its intraday high and has not yet, IMO, broken out. Even a close over 1220 would not convince me as there are a series of resistance points nearby. In the abscense of more bad news from Europe, the flight to safety trade in gold could unwind. The Summer is seasonally unfavorable. Im not a gold bull or bear, nor am I am equity bull or bear. I approach every asset class with cautious optimism. Every stock or asset has hit a new high, before it started back down.
Last week I wrote of the Dow's failure to put together back to back down days. When it finally happened, it did so with a vengence. The longer gold goes without an down year, the bigger the coming correction. It would be much healthier for the long term for gold to ease back a bit now rather than to rally to $1500, then get crushed 50%. What good does it do to promote gold as a wealth saving mechanism, only to see it collapse 50%? Confidence could be lost, must as it is in equities. That wont be good, and I would prefer to not see that happen.
I wouldnt read much into the jump in silver on Friday. It did drop 90 something cents one day last week also.
Meanwhile, the DOW futures point to a 200pt + opening. Markets were quite oversold going into the weekend. Again, im not impressed--happy though as I rode a 30% long position over the weekend
Knowledge is the enemy of fear
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I see why you think the way you do - and I think you understand my reasoning as well. If we are in the last phase of a multi-year hyperbolic move, then there is good reason to be very bullish - the most profitable part of the pattern is upon us! But at the end of the pattern, some time next spring, we will get that big slide that you are looking for. I will be unloading all of my gold then, just like it would have been smart to unload your real estate in late 2005.
The timing models called for a low either Fri or Mon - I think I mentioned this before and I Think we just saw the low hit just below 1185. Just when you don't think the timing models are going to be accurate, they find a way to come through. This move down will keep the gold charts charged up for the next thrust through 1220 and beyond.
The dollar index has taken a huge hit, and gold has taken a decent hit as well but silver is hanging in there fairly well. Plat and palladium having a good run too. This is the stock market rebound I was expecting, I am going to take this opportunity to light or exit positions Mon or Tues as I think this rebound is temporary and there could be more downside to come.
Gold had a great night and now only really has one big resistance level (and it's not as significant as $1210 was) to get through befoere entering "free space." Less than $8 from a new intra-day all time high. Gold does have energy to push a little higher and actually touch or slightly beat the highs. I still think that might happen today.
Silver's having a great morning as well, back over $19 for a 60-70 cent gain which is impressive. $21.50 by mid-June is looking quite possible at this rate.
All of this despite the USD index's climb to the mid 84's and despite bond week.
I think stocks are in for a decent day today and tomorrow, and then who knows... I'm not going to speculate there. I can see it going both ways.
Trading PM stocks either takes the patience of a saint (long term) or the reflexes of Neo in the Matrix (short time frame). No in between or you get skinned alive IMO. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Well at least I didn't sell off any gold or silver bullion or generic gold on the cheap in the recent whipsaws. Still fully loaded. Usually once I let go of bullion/generics I tend not to buy it back...the timing is never quite right again.
GSR has essentially retested it's bottom 4 month trend line after collapsing the last several days. It looks to me to be an interim H&S top with the neckline being exactly at the bottom of today's levels - 62.2.....it then rebounded back to 64 at the close. The H&S neckline also happens to be the same line as the bottom 4 month trend line. The right shoulder is not exactly rounded or well formed like the left one but it still looks acceptable enough having dropped from 69 to 62 over several days. If that 62 level is penetrated it would be pointing the way towards the low to mid 50's....and new 30 yr highs for silver.
roadrunner
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Gold's consolidation is nearly complete, and it was able to gain a few points in the process. Gold's got more upside ahead, I'm seeing short term targets around $1278 by some time next week.
SLW released earnings tonight. Not sure what they were expected to be but they had nothing but uber-positive things to report with net earnings tripling over the same quarter last year and an average silver sales price just over $17 and a cost in the $4 neighborhood.
For Thurs, support lies at $1227.9, ~1238, and resistance at $1249.7, $1260.2
These reports haven't stopped these guys dead in their tracks but have certainly slowed their progress. Selecting GDX or GDXJ is probably a better/safer choice than trying to pick miners who will end up with good earnings reports. You will at least see gains this way. It's getting hard to find miners that can keep costs in the $400-$480 range per geo. The days of $300's seem to be gone at least until base metals pick up a lot more.
roadrunner
As has been my case all year in GLD, it is another low risk, low reward trade. With a 95% probability of profit in this latest case. As I've written elsewhere, for the most part, my "gun slinging" days of youth are over. I never had the trading nimbleness that some others demonstrate. I rarely had much success day trading or with quick in-and-out trading. So I am content with slow nickels vs. quick dollars. A large part of trading success depends on finding a trading style that fits a person's personality and temperament.
I'm leaning towards additional weakness in gold only because it came up so quick from $1200. Sinclair predicted that when gold hit $1250 it would pull back for a bit. Coming out of bond week I sort of expected a strong Thursday and Friday that would push into next week. My concern now is that some localized weakness could be prolonged into the next bond week and end of month gold futures options expiration. That would be a much better time for the commercials to attack gold. Of course it might get to $1275 by the time they get than chance. Sinclair's next angel is at $1296...then comes $1369. When the dollar finally finishes this run from December, gold should shift gears.
COT went somewhat as expected. Commerical ratio stayed about the same at 2.67 while open interest soared another +32K to 583K on futures only. Their net short position increased by 11K to 283K. Both OI and net short are getting within spitting distance of the late November highs. The commercials reduced 3000 shorts on the US dollar and dropped open interest. Seems they foresaw this current run continuing. USDollar to 92-93 in 2010 now almost seems realistic.
roadrunner
The picture is getting a little clearer but still not cast in stone yet. There are 6 month and 2 month head and shoulders forming on the chart. GSR has been working right at the neckline of the 6 month H&S for the past 4 days. This is also right up against the 200 dma which seems to be constraining it. It needs to get up above the 200 and 50 dma's to keep the corrective uptrend alive....or else the 50's beckon. Interesting that the neckline pts on each side of the head are the same distance from their shoulder peaks. More interesting is that the May 4th peak was both a 61% FIB in both time and price (39 days down, 24 days up) of the previous 5 wave down trend. That fits pretty well with EW wave 2 corrections...hinting at more down action.
It's also strange how the action of the last 1-1/2 months is forming an unstable, expanding flat based triangle....whatever that means in TA. Guess I'll have to go back to E&M and re-read that section. If that well formed base at 62 is sharply penetrated look out below! Some negative divergences being hinted at by the associated indicators. Still, if one also looks at VIX, FXE/FXY, NZD/XJY and other liquidity measures, they are all saying that the trend is still somewhat towards reducing liquidity (ie a rising GSR).
roadrunner
<< <i>6 month Gold to Silver ratio chart
The picture is getting a little clearer but still not cast in stone yet. There are 6 month and 2 month head and shoulders forming on the chart. GSR has been working right at the neckline of the 6 month H&S for the past 4 days. This is also right up against the 200 dma which seems to be constraining it. It needs to get up above the 200 and 50 dma's to keep the corrective uptrend alive....or else the 50's beckon. Interesting that the neckline pts on each side of the head are the same distance from their shoulder peaks. More interesting is that the May 4th peak was both a 61% FIB in both time and price (39 days down, 24 days up) of the previous 5 wave down trend. That fits pretty well with EW wave 2 corrections...hinting at more down action.
It's also strange how the action of the last 1-1/2 months is forming an unstable, expanding flat based triangle....whatever that means in TA. Guess I'll have to go back to E&M and re-read that section. If that well formed base at 62 is sharply penetrated look out below! Some negative divergences being hinted at by the associated indicators. Still, if one also looks at VIX, FXE/FXY, NZD/XJY and other liquidity measures, they are all saying that the trend is still somewhat towards reducing liquidity (ie a rising GSR).
roadrunner >>
...for us newbies ...english please
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I don't know what an "in-spirit" bear flag is but I would agree that the flag formation of this past weak looks to corroborate further down movement. Friday's "spinning top" (indicision) candle would also support a change in direction. Short term GSR bottoms occur about every 3.4 to 4 months on the chart. The last significant one was in mid-January. One has either already occured in May or is to occur very soon. This would contradict the earlier analysis.
I tried to match up GSR with other liquidity/volatility ratios to see if the charts showed the same general shape. To my surprise none of them really do. Maybe I'm looking at the wrong ones. GSR seems to have it's own "liquidity" heartbeat though it does rhyme with the others.
In English:
Short term signs "seem" to suggest GSR may try to bust through the 62 gold/silver ratio price line and challenge 60. GSR is a measure of money flows (liquidity) into the various markets. When the price of silver is rising faster than gold.....money is flowing into markets. When the price of silver is dropping faster than gold (or rising more slow), money is flowing away from speculative markets into cash/treasury/bond/gold bullion markets. The longer term trend still shows GSR ratio slowing rounding up out of a bottom....which means less money flowing into stocks. The other liquidity/volatility ratios seem to support that same general shape. Unfortunately, there's never a proven right answer until the game has been played out.
As we've seen in the past year and even past few months gold (and now even silver) can rise as the GSR ratio is rising. That was not often the case in previous years when a rising GSR nearly always meant falling gold and silver prices, with silver tanking fastest. I'd have to go back and check the trends but I don't think silver rising in price against a rising GSR has happened before 2010. At least I can't recall anything of note in the 2007-2009 period. Had anyone asked me back then what silver does when GSR rises, I would have said "drops." (ie a simple yes or no answer). The Euro is probably the cause for the recent trend change.
Bottom line: if gold and silver can rise against the headwinds of a rising GSR (money flowing out of stocks and commodities in general) as well as a rising USDollar and Treasuries, imagine what would they do when liquidity flows and the dollar reverse?
roadrunner
Nicely stated. It's what many are waiting for!!!
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Even though gold has decoupled from the dollar, from what I can tell it still exerted some pressure to cause that $30 drop. It's extremely bullish that gold recovered so quickly and so well from that test. It's also very positive that gold has now had a 38.2% Fib retracement for its move from ~1185. The USD is now in the mid 86's and I expect it will hit a wall at 88 (at least for a while) which should help gold.
RR, you say that gold has moved up fast - and it has - but I don't think it's moved up too fast. Certainly not the rocketship we saw last fall. This time it's been good $20 moves or so followed by retracements and consolidations. The charts - particularly the longer term charts - still have lots of room left.
I had expected last week's move to continue into Tues next week, but now we can see that we've been in a consolidation the past few days that will last at least through Monday, possibly Tues.
There are reports all over Europe of HUGE gold and silver demand. IMO, that's clearly what's driving gold and silver prices here and causing prices to go up in the face of the rising USD. PCGS price guide prices for pre-1933 gold rose pretty good this last week - from what I can tell $100+ on most of what I own which is MS62/63 Libs & Saints. BTW, at least according to local bullion dealers, much of the pre-1933 gold they sell comes from European sources, and they say it's drying up.
But one has to temper the massive flight from the Euro as being overdown. When it reverses we could see gold demand actually weaken, even if light of a declining dollar. At least something to consider.
Everytime I hear of European classic US gold sources drying up, it's not longer before another "big deal" hits the market and tanks the generics. I'm not convinced these sources will ever truly dry up.
Though the generic US gold market is probably >$ 1 BILLION in value, our major gold dealers probably can't efficiently handle a $10 MILL hoard showing up (<1% supply). And from what I see they usually don't try and piece-meal in the supply to keep prices more even. They just dump - and everyone seems to know about it as well. Even worse is that so many dealers are stretched out on cash via regular bullion/scrap deals and waiting for payment that liquidity is continually squeezed. It doesn't have the speed of the futures market. So all it takes is a very tiny supply of generics being dumped all at once and prices crater.....volatility rules as well.
roadrunner