***AUGUST 2010 Gold and Silver Stocks/Options/Futures trading thread***

ProofCollection

July was brutal for me. I did not expect the pullback to be so severe. I planned to ride it out but I got stopped out and took some losses. Net results was down 62% this month.

In last month's thread, I pointed out that in 9 of the past 10 years, gold has established a low in June or July such that gold closed out the year higher than that low. I believe this year is going to be no different.

This week's correction had caused me to reconsider the parabolic move we are in, but gold came through to close out the week above a critical level to preserve the pattern. In the weekly chart below, gold put in a nice dragonfly doji and appears to be establishing a nice bottom at this level. It would be surprising to see more downside in the immediate near future.

On the long term picture, the resumption of the parabolic move has been delayed much longer than I had expected, but it isn't unprecedented. Significant pullbacks have been a part of all parabolic moves I have analyzed, and this one is no different. In fact, we can probably reasonably expect some very long ranging candles over the next 8 months as volatility increases greatly in the later stages of such a move.

For next week, gold probably probably needs to consolidate for a day or two after the big moves the last two days, but I expect the upside momentum to remain to take us back up to and possibly over $1200 for next week. There's a good possibility that we'll touch 1160 or 1170 briefly again during the consolidation, and this would be a good opportunity to add to positions... if I'm right.

ProofCollection

I'll comment on stocks as well. Stock in general look ready to continue to rock for quite a while. This chart shows that the SP500's move to 1006ish was nothing more than a 38.2% retracement of the move since the early 2009 lows. I'm not saying I agree with it, or that this move is "legit," but it's hard to see downside in this chart, IMO.

Wolf359

Does this move touch 1300 or better when it happens ?

ProofCollection

<< <i>Does this move touch 1300 or better when it happens ? >>



I believe 1300 is in the picture, but I would grow extremely cautious at that level and consider taking profits.

roadrunner

The broader indexes like the DOW, CAC, FTSE, HSI and others look to tracing out bullish H&S formations. I took some miner positions mid last week in AUY, KGC, GDXJ, JAG, MFN, KGN. Closed out the MFN and KGN on late Friday as they looked more likely to pull back. Also played with some beaten down explorers such as TLR. But jumped out of that one after it spiked up 17% this week. It was the action early last week in TLR and other juniors/intermediates over the past 2 weeks that seemed to indicate the tide was turning even though some of the darling seniors (ABX, GG, NEM) were still heading down. The momentum in the miners may have been lousy, but it's in the right direction at the moment....barring a Cardinal Climax shakeout (see below).

If Clive's article on the peaking of the Cardinal Climax/Grand Cross by the end of this weak doesn't pan out, it's time for the Astro Boys to put their Ouija boards away for good. If this extremely rare 1 in a 1000 yr pattern doesn't produce calamity in the markets then nothing ever should.

Clive goes Astro-nomical

COT report didn't really offer up anything useful. Open interest unchanged. The banks sold off a bunch of longs last week when gold peaked over $1200. Though I was expecting the short to long ratio to drop further from 2.03 it actually climbed to 2.15 because of the 15K longs sold off. This week they probably bought back those longs and sold a ton of shorts to lower the ratio right back to 2.0. I've been paying attention to gold's GOFO rate on the LMBA site as it typically bottoms when gold does. But all last week the rate steadily dropped with an impressive .05 drop on Friday to .285. So nothing conclusive yet other than the a final large drop is a good point to commence a reversal from. Gold hit Sinclair's $1156 Angel right on the button and bounced. How high remains to be seen. I did like gold's action Friday on the initial pre-open spike to $1174 followed by a smackdown to $1168 to convince the sheeple that it was going back towards $1140. The immediate bounce right to $1183 was nice to see. I finally learned from previous head fakes near bottoms to hang in there and stick with my analysis and gut. And while I contemplated bailing right at that $1168-$1170 range I decided to hang in there as uncomfortable as I felt seeing potential profits slowly dissipate. But gold pretty much followed the scenario of a combined bond week/options expiration by bottoming on Wed or Thursday (Thursday this time) and moving up by Thursday. Considering that the trend for much of June and July had already been down, it was the likely bet that a bond-options expiration punch w/recovery was coming. A number of the analysts I read (bloggers too) expect another gold/miner's leg down by August 20th. I'm not convinced. But I'll allow for either possibility and take it a few days at a time. The big gap in GDX down at 44 was not filled. Then again we still have a tiny unfilled GLD gap still around 117.7 and a GDXJ gap at 28-29. First step is to touch the 50 dma's and then see where things stand. At least the Libor3 month has been slowly falling for weeks which means a crash is less likely. And the Gold/Silver ratio to me looks to have a little more downtrending to do.

This headline from Kitco News on Friday probably hints at gold's direction this week: "Gold Prices Likely Weaker Next Week as Fears For Global Economy Recede"
In other words, just the opposite of what Kitco posts.

roadrunner

cohodk

Sorry to hear of the tough month PC. I have a set of trading rules that I've alluded to in the past. Rule #1 is NEVER take big losses. Its devastating. I dont know what your returns were for the first few months of the year but you did state 103%, 15%, 38%, (62%) for April, May, June, July respectively. On the whole those look like phenomonal results. Just to choose an easy number to use, assuming you started with $10,000 in April you would have had over $32,000 by end of June!!! But losses are death. After a 62% drop, the account value would now be about $12,400. Still a fantastic 24% return, but nothing close to a month ago. You now need a 200% return just to get back to where you were in June. If you were running a hedge fund you'ld be working for free for quite sometime as you reach your high-water mark.

There are 2 mistakes that I noticed you made. First was having too much conviction. You are 100% convinced gold is going higher. Nothing would or could change your mindset. Thats dangerous. You are 100% sure that gold is going parabolic in the next months/year. With thinking like this, I am 100% sure you will suffer another devastating month. The second mistake is that you ignored the technicals. You follow them everyday yet didnt see gold was losing internal momentum ever since pushing to a marginal high in May---just look at RSI. There are other momo indicators that failed to confirm the June highs. Gold also made 4 attempts to push through $1250 and could not sustain the rally. I mentioned all of this in late June/early July.

Some think I am a gold bear. This is not true and several frequent posters in these threads know that. But I do look at all possible scenerios before I enter a trade. In fact, I usually look to see how much I can lose before I look at how much I can make. I want to know how badly I could get hurt. From my perspective, gold is a rather boring trade. Nothing wrong with boring, but it has been said that time is money. From a trading viewpoint, there are much better vehicles to play. While most see a move from $1160 to $1180 as being $20, I see it as 20c or less than a 2% move. There are countless trading vehicles that move much more than that in a day and dont require knowledge of balance sheets, income statements, brokerage firm comments, ect. So while I may sound disenchanted with gold, please realize the perspective from which I speak. Maintaining a neutral bias is extremely difficult.

Im not trying to bust your balls, but rather provide constructive criticism. I love your passion for trading and truely want to see you be successful.

Investors also have a tendency to "swing for the fences" after taking a big loss as they try to get all their money back with a "big, quick hit". Most will have a batting average similar to a pro-baseball player--25-30%. That means 70-75% strike out and are gone from trading.


My current take on gold is that it has come in to test the 200dma and steep trendlines have been broken. Typical and normal. Nothing to worry about yet. My momos are still negative and without any near-term catalyst--which I dont see--gold is dead money, except for the nimblest of traders. Moving averages are beginning to flatten out.

Wolf359

It's really inappropriate to comment on other trading patterns, skills, or mistakes you perceive they made. You can do it in private with friends, but in public? Come on...

You post is really far too personal, rude, judgmental and uncalled for cohodk.

zrlevin

<< <i>It's really inappropriate to comment on other trading patterns, skills, or mistakes you perceive they made. You can do it in private with friends, but in public? Come on...

You post is really far too personal, rude, judgmental and uncalled for cohodk. >>



I found the post as very informative, and not rude at all. I am not heavily involved in trading, however, and do not know the ethics.

JMHO

TWQG

<< <i>It's really inappropriate to comment on other trading patterns, skills, or mistakes you perceive they made. You can do it in private with friends, but in public? Come on...

You post is really far too personal, rude, judgmental and uncalled for cohodk. >>



I don’t see anything wrong with it. The level of criticism is consistent with the detailed trading strategy that ProofCollection provides.

calleocho

I thought it was an sincere and positive post ..didnt see it as rubbing salt on an open wound or anything like that.

Wolf359

I stand by what I said. Maybe you guys better follow the posts more closely next time.

OPA

<< <i>

<< <i>It's really inappropriate to comment on other trading patterns, skills, or mistakes you perceive they made. You can do it in private with friends, but in public? Come on...

You post is really far too personal, rude, judgmental and uncalled for cohodk. >>



I found the post as very informative, and not rude at all. I am not heavily involved in trading, however, and do not know the ethics.

JMHO >>





Very informative...after all, ProofCollection has been giving us his gains & losses on a public forum.

ProofCollection

First of all, thank you for the comments - I don't mind the feedback at all.



<< <i>...You now need a 200% return just to get back to where you were in June. If you were running a hedge fund you'ld be working for free for quite sometime as you reach your high-water mark. >>



Yes, it will be hard to get back where it was, but I don't count the chickens before they hatch. So it would have been nice to have kept those gains, but I'm not trying to make a living off of the account either, so I can live it it.



<< <i>There are 2 mistakes that I noticed you made. First was having too much conviction. You are 100% convinced gold is going higher. Nothing would or could change your mindset. Thats dangerous. You are 100% sure that gold is going parabolic in the next months/year. With thinking like this, I am 100% sure you will suffer another devastating month. >>



This is where you're wrong. I am only convinced it is going higher and we are finishing the parabolic move because the charts say so. Yes, my mind can be changed if the charts change. I was ready to switch gears last week, but at the last minute gold finished the week above a critical level, thus preserving the pattern. Part of the fear that the pattern was in jeopardy is what caused my losses. I had some stops just below 1160 that got triggered a few days ago. I didn't (and still haven't) re-established the positions which would have regained quite a bit of value with the weekly close ~$25 above what I sold at and would have made the loss less severe.

At the same time, I could say the same thing about your conviction. You have stated and are convinced that gold is stuck in a range, and not going higher. This has caused you to make erroneous calls here on the message boards as well. It happens. Those are our long term views based on what we see, and they influence our calls.



<< <i>The second mistake is that you ignored the technicals. You follow them everyday yet didnt see gold was losing internal momentum ever since pushing to a marginal high in May---just look at RSI. There are other momo indicators that failed to confirm the June highs. Gold also made 4 attempts to push through $1250 and could not sustain the rally. I mentioned all of this in late June/early July. >>



I look at different technicals and patterns. I don't trade out of a position evertime I think a pullback is coming, as I just try to ride some of them out. I try to go for longer term plays and try to avoid getting whipsawed and manipulated by each sudden move (in both directions). I didn't anticipate a pullback to be this severe (obviously).

As I said before, part of my problem is reconciling long, medium, and short term charts together. Long term and medium term, the charts are very bullish, IMO. It's the short term that I have the most trouble with. Although at least for the next week or so I think this one's easy if I'm correct about establishing an important bottom last week. >>

roadrunner

A nice early fake out in gold this morning as the metal dropped back to $1174 in London trading morning. But since the GSR continued to drop, and all the other PM's held ground or advanced, it wasn't a particularly convincing fake, though it no doubt scarfed up a pile of shorts before moving higher to $1190 by 10am. Gold forward (GOFO) rates did spring back today and recovered Friday's large drop and then some.

roadrunner

cohodk

You have stated and are convinced that gold is stuck in a range, and not going higher. This has caused you to make erroneous calls here on the message boards as well


Gold is where it was 8 months ago. Sounds like a range to me. I have not lost any money on my calls.




As I said before, part of my problem is reconciling long, medium, and short term charts together. Long term and medium term, the charts are very bullish, IMO. It's the short term that I have the most trouble with

What is the topic of this thread? Short-term trading. I can look at a chart of the DOW over the last 50 years and see a similar bullish pattern. Trying to make time horizons match investment strategies is a mistake that most people make, including professional money managers. And time is the MOST IMPORTANT consideration in trading/investing. Most people have no concept of time, other than to read a clock.

I also find that people have very little concept of simple mathematics. For example assume that one year you have a 30% loss. Then assume that you have 20% gains in each of the next 2 years. Most people think they are now doing well, when in fact they have a net gain of less than 1% over a 3 year period. Investment losses are incredibly difficult to get back and big losses nearly impossible. Thats why my #1 rule is NEVER TAKE BIG LOSSES. Also keep in mind the value of time. Three years of your life, perhaps 7-8% of your working life has now gone by. How did you get that back? Losses are devastating. Understanding that it is often better to have not made than to have lost can go along way toward reaching one's investment goals. I thought it important to not only the OP, but to others who may read these threads, to understand the power of a loss, and thats why I used hypothetical numbers to explain the OPs returns. One could easily see returns of 103%, 15%, 38%, followed loss of 62% and still think a huge amount of money was made. Afterall, 103+15+38-62 is still a positive 94%, right?


Wolf.....Do you think Tiger Woods likes hearing that his swing is off when he doesnt make the cut? Of course not. He has a big ego. But he is smart enough to realize that if he has a bad round and other people notice something wrong, then he at least takes into consideration the possibilty that he may need to change something. This is what makes him so good.

If you dont like what I have to say, then you are free to not listen. Im reminded of a quote from that movie "A Few Good Men".....


Roadrunner, what was today's fake out? The early dip or the subsequent rally?

roadrunner

Roadrunner, what was today's fake out? The early dip or the subsequent rally

Both?

The drop back from $1190 to $1180 did a number on the miners. The action looked quite spikey at the top as well. Basically closed out all my larger mining positions. The action in the seniors looked bad esp. BVN's monster red candle. Maybe by the end of the day that will shrink a tad. It has been about 2 weeks on this slight run up for the juniors and that might be it for miners. If they shook out me out on chart painting so be it. Still expect/hope to get one more opportunity before August is out. As Cohodk said, the action here does appear to be somewhat dead even if there is some decent volatility at times. I profited on those positions which is better than losing. Many of the ags, coppers, pgm & base metals, steels, oil-gas-energy, shipping stocks have that same toppy/overextended/gapped out look to them. How much further can they all go? For now, content to sit back, reassess for other entry points, and see how this Cardinal cross week shakes out. Oil, pgm's, and silver all well up today....was gold targeted today for a surgical whipsawing?

roadrunner

Justacommeman

getting close

The US dollar continues it's plunge. Strong support around the bend. Stock market rally interuptus? MJ

zrlevin

Is there a thread, website, or other resource that explains the basics of this? I don't want to get into futures trading now, but I find this thread very interesting and I think it would probably be more so if I knew what the heck you were all talking about.

cohodk

<< <i>getting close

The US dollar continues it's plunge. Strong support around the bend. Stock market rally interuptus? MJ >>



Yup. Pretty strong move in FXB today. Biggest price changes usually occur at the beginning and end of moves.

Getting ready to re-enter copper short.


Roadrunner, yes whiplash is a very real concern right now. I've experience whiplash in my trading account as well as physically(rolled a snowmobile down a hill) and can tell you it is an unpleasant experience. Another of my rules is....When in doubt, stay out!!

pmcollectour

Gold will stay stagnant at best, perhaps declining as we see a fake rally in stocks to well
above the 11,000 level on the DJIA. Even a 12,000 DJIA is not out of the question by Easter. Gold to 1,030
by Easter is also a possibility. When I see the 12,000/1,000 ratio getting closer, then it's time to start adding S&P puts
and lots of physical gold. Just another low volume fake wall street rally IMO.

roadrunner

Gold's already been on the sidelines for 8 months. I just don't see it sitting out the fall and spring seasons as well. The rise to $1266 was done under relatively low sentiment so a shorter term correction would make sense rather than an extended one. Even the first move to $1226 was on lower than normal sentiment compared to the runs to $1033 or $735. The logic being presented now is that gold falls when the dollar rises....and also falls when the Euro rises, leaving no room in the sandbox for gold. ???

Big news in the miners today was Kinross making an announcement to acquire Red Back mining for $7B which owns a pair of gold mines in Western Africa as well as other properties. Red Back has been one of the best performers coming out of the November 2008 bottom by increasing 9X. The seniors will have to continue fighting over the juniors/intermediates if they plan to survive long term. This is the same way our too big too fail banks got so big. Eat or be eaten.

Looks like the previous 3 moves were all head fakes. Is 3 allowed?

roadrunner

Justacommeman

They keep pulling me back in. Short the market. I'm giving this trade some room to work.

Using SDS as the vehicle.

MJ

cohodk

<< <i>They keep pulling me back in. Short the market. I'm giving this trade some room to work.

Using SDS as the vehicle.

MJ >>



I bot EUO yest, sold today. Made 1.4%. Also re-entered copper short at about noon today. Also short British pound. Shoulda shorted FXF.

MJ, be watchful for a false downmove in the dollar. Might not happen, but if it does dont be surprised.

Interesting that AAPL cant seem to get out of its own way. Its 20% of the Naz-100.

Justacommeman

Noted and agree.

FYI- I 'm not married to my trades. I only take trades that have at leat a 2.5/1 RR ratio which means I really only have to be right on 40% of my trades to make money providing I don't let losers run away from me. It's all about risk/reward management for my style of trading. My entries are the fulcrum for my trades. MJ

Edited for adding the following ---------Taking a second equal position @ $30.95

TWQG

<< <i>Also re-entered copper short at about noon today. >>


You've got to be nimble. It's been on a tear lately.

cohodk

Nimble is my middle name. , although some would say it is numbskull.

MJ, maybe the jobs number will show the US economy is/has not dropped off a cliff? Could provide the spark(reversal) we are looking for.

Im back in the copper trade as the price is now up against an uptrendline that was broken in May. Usually prices bump up against those trendlines and fail. Sometimes they find strength and break through. If thats the case then I'll have to close my position with a small loss. Like MJ, all trades are entered with full knowledge of risk/reward possiblities.

ProofCollection

Haven't had a lot of time to post lately.

Cohodk:

<< <i>Gold is where it was 8 months ago. Sounds like a range to me. I have not lost any money on my calls. >>



Your trading range was expanded significantly and has been well over $100 over the top of your range, and for a significant period of time. While not losing money is probably the most important part of trading, failing to make money and missing out on $100 moves because of a bias is no achievement.



<< <i>What is the topic of this thread? Short-term trading. I can look at a chart of the DOW over the last 50 years and see a similar bullish pattern. Trying to make time horizons match investment strategies is a mistake that most people make... >>



Good points, but I also realize we might not be using the same definitions. Long term for me is about 12 months or more, medium term would be 2-9 months, and short term would be the immediate future (~8 weeks). The thread is for short term discussion because it's the most interesting and discussion topics come up daily. But that doesn't mean that we're all making day or swing trades.

Now onto the rest of the post...

So there'sa lot of evidence now that the bottom is in, but I'm still looking for confirmation by a decisive move over 1210. All of the charts are loaded with energy. I expected a good move today and I thought we were getting it, but it did peter out by the end of the day. We still seem to have cleared the 1192 level decisively. I wouldn't have expected gold to get bogged down at this level once it cleared 1192, so it will be interesting to see how long it takes to get and stay over $1200.

A few things I've observed and read about lately regarding "the bottom." It has been observed that when gold investors start to lose enthusiasm and interest that these often mark bottoms. It certainly seems true just in the general sentiment I'm seeing overall. Additionally:
-GLD ETF holdings change has declined to its 50day SMA where it typically bounces
-RYPMX asset holdings have hit a level where things typically bounce
-Dollar index is starting to become oversold, and assuming the direct relationship holds, should boost gold
-Timing models show a bottom Aug 6

A few days ago I boosted holdings of IAG, and I added a little to long futures positions last night at ~1192 and again today on the pullback to ~1197.

USD will probably bounce at ~80.0. Quite an incredible range this year - lots of volatility.

Stocks continue to look good as it consolidates recent gains. I think stocks in general are poised to continue to rally for most of the rest of the year.

Bonds poised to fall, although not necessarily right away. The fed keeps supporting bonds and keeping them inflated unnaturally, which is only delaying the inevitable, but watch out below when the fed removes their support for bonds. Sentiment on bonds is too bullish. COT reports show traders are increasingly become less long on bonds.

The short copper play may be a good move for the next week or at least the next few days as I think recent moves need to pullback and consolidate.

pmcollectour

<< <i>

Stocks continue to look good as it consolidates recent gains. I think stocks in general are poised to continue to rally for most of the rest of the year.

. >>



Agree about the S&P heading to new highs, the DJIA probably making it to the 12,500 range before uncertainty sets in,
but playing individual companies now is a crapshoot at best. Citigroup, Monsanto, Exxon Mobil, you name it, all these stocks
are trading flat to slightly higher, and even lower, at best.

I hope you're right about gold forming a bottom, but I hope to see 1,100 by November. I want to buy much more

roadrunner

GSR appears to be headed back up for a bit which will provide some head winds for PM's and miners. $USD might assist in that as well esp with the euro, yen, pound, cando, and aussie all now running into historically strong resistance areas. But it is getting close to the time for gold to start outperforming all the other commodities again following this June-July lag period.

My guess would be for the dollar to bounce somewhat in August along with GSR and then for both to continue on down again.

roadrunner

cohodk

roadrunner

Nice charts. And there's that ominous wedge again in the gold chart....

The other PM charts show nice V shapes or ascending triangles (silver). Maybe physical gold has gotten ahead of itself....then again it is money to central bankers and to most of the non-American world. Note that the charts of HUI, GDX, XAU, and USERX (gold fund) all show ascending triangles. A few other gold funds I checked (GOLDX, TGLDX, USAGX) also show the bearish wedge. Does this mean gold stocks are set to outperform the bullion for a while?

GSR has formed a nice rising H&S pattern along that trend line. I think it will finally break to the downside after a brief rise during August.


roadrunner

ProofCollection

<< <i>Nice charts. And there's that ominous wedge again in the gold chart.... >>



Which chart are you referring to RR? He didn't post a gold chart... GSR, Precious Metals Index, but not gold... Not sure what all is in the $DJAPR index, couldn't find any info on it at Google or Yahoo finance or anywhere else. Not sure it makes sense to chart multiple precious metals in an index together. Gold, silver, platinum and others all do their own thing.

Friday is looking like it will be a big day with the jobs report. It won't matter really what's in the jobs report, but gold is definitely ready to move and it could be the spark to release all of the energy in the charts right now, otherwise we'll be waiting until Monday. I wouldn't be surprised to see a quick reaction to the downside followed by a quick bounce to take gold well over $1200. Support is at 1176.1, 1186.7, 1191.8, Support at 1197.3, 1202.4, 1207.9, and 1218.5.

Aug 6 is supposed to be the date for a pattern low but since they aren't always precise it's possible that Thursday's low around 1192 is it.

roadrunner

Yes, nice turn in gold today on the jobs report news. But for how long? This would be the end of a 2nd leg up or possibly 3rd since the $1156 bottom. More climbing to do yet to break free of the bear hold. Momentum has definitely been back in many of the miners. Upper BB around GLD of 119 ($1215-$1220) might be an ending point if this is merely a temp pull back. I do note that GLD finally closed that annoying gap at 117.7. But in the process has left 2 new gaps open on the downside....same for GDX/GDXJ. GDXJ still targeting that one higher open gap at 28.6-29.0 but I don't think it's going to get there as it already looks to be rolling over on loss of momentum. GDXJ lead GDX during the past few weeks so an earlier exit would be no surprise. With the Dow apparently running out of momentum as well can gold and the miners continue further up as liquidity flows pull back? Bankers may have pulled off a nice one here by bumping up gold one more time to suck in some new longs on the jobs report, and then to sell off their longs and pile on more shorts to tank it. Next week is a 3-10-30 yr bond week along with a FED meeting. Seasonal charts (5-15-30 yr) posted by Ira Epstein this week generally indicate that gold's move in August starts no earlier than the 14th and potentially a week or so beyond that. That could give at least one more week of sideways or downwards action. I see too many gold stocks not participating in this run up, a number of which have consolidation patterns. And the ones that have been moving up are now getting peaky on the stochastics if not rolling over as volume is waning. A mixed bag for sure.

Which chart are you referring to RR? He didn't post a gold chart... GSR, Precious Metals Index, but not gold... Not sure what all is in the $DJAPR index, couldn't find any info on it at Google or Yahoo finance or anywhere else. Not sure it makes sense to chart multiple precious metals in an index together. Gold, silver, platinum and others all do their own thing.


The DJ-UBS precious metals index is a reasonable surrogate for gold and tracks it quite closely. Over the long haul Platinum and Palladium for example more closely correlate their movements to gold than anything else. In comparing the gold chart to SLV, USERX and HUI this wedge hinges entirely on the fact that during the March 2008 run the miners rose relatively higher than gold and peaked out at that time. Gold has since put in 2 higher peaks though one could certainly argue that this entire 30 month period has been one long corrective period for PM's and commodities in general. If one puts all their marbles on the shape of the gold chart and ignores SLV, HUI, PLAT, PALL, etc. is that going to get the correct result for the PM sector? I certainly don't have that answer.

roadrunner

57loaded

the wedge...i see the floor pushing the ceiling

Justacommeman

<< <i>They keep pulling me back in. Short the market. I'm giving this trade some room to work.

Using SDS as the vehicle.

MJ >>





<< <i>

Edited for adding the following ---------Taking a second equal position @ $30.95 >>



Sold @ $31.96. Took the quick 3% plus gain and I'm not looking the gift horse in the mouth. MJ

ProofCollection

Friday's move got us clearly out of the 1190's, leaving us with the next hurdle at 1210. 1210 should normally and could be a big sticking point, but if today's move was the start of a trend, we should blow throw it on Monday. Otherwise we may need to go through a consolidation here at this level but I'm not expecting it so soon after the last consolidation. Today's pullback to 1204 accomplished a 38.2% retracement of the move up, so I think the pattern is ready to proceed further higher. A definitive move over 1215 would be a great time to buy or add to positions.

This daily chart is looking good, with a fairly reliable upward channel, and what appears to be lots of room left for gold to keep on trucking higher.

Stocks also shrugged off the jobs report decline today, which is also a bery bullish sign.

The USD took it on the chin, with futures bottoming at 80.17 today. But will 80.0 hold? It only held up for 2 months last year on the decline from 89.71 to 74.21 (15.5 pointS) which took 9 months. We just lost 9 points in 2 months. At some point I would expect a bounce. The gold to USD relationship isn't reliable right now, so hard to say how it will or won't affect gold.

roadrunner

I don't see how the PM's can fight the current headwinds with the SM, commodities (ags, steel, base metals, copper, energy) topping along with about every currency except the dollar. The Cando looks to be already headed down. The entire SM took on a nice monthly 5 wave up move that looks exhausted. Most of the foreign stock markets look the same. The Nikkei never participated and just consolidated sideways in a triangle during this period with downward momentum. The "on fire" ags, oils and gassers looked like they finally flamed out Friday. Plat, Pall, Copper are already dropping. Cohodk's short position in Copper looks to be primed. GSR is on the rise over the past several days after a 5 leg move down which doesn't bode well for silver and copper. Liquidity has been leaving the market for around 8-10 days though gold-silver and the SM indicies have been a bit slow to show it. But one can see too many stocks not participating over the past few weeks. The miner's action is spotty with about 1/2 the players still consolidating over the past month. Major players like GG, NEM, KGC, BVN, still floundering somewhat. I could see a pullback in gold and the miners to at least their breakout points of the past 2 weeks. Other headwinds they have to fight are next week's bond week and a FED meeting. PM's have been pulled along by this very strong move in the commodities and overall SPY over the past month, but only grudgingly as their performance severely lagged. Gold has just hit the 50% FIB level of the $110 drop from the $1266 high and this is a strong resistance zone. I think gold has to get deeper into August before the sails unfurl....maybe another retest in the $1180-$1200 range. In looking at Bullish Percentages, McCl. Osc, and other indicators all I see are reasonable signs of topping across the markets. Island tops potentially starting to appear in many markets. Gold and the dollar could buck this trend, but probably not silver or anything else metallic. Time for the final C wave of the summer in this on-going ABC? The timing all pointed to August 6th and the Cardinal Crossing....now gone. The gold forward rate briefly dipped on Thursday but then flipped back to Wed's number on Friday, a sign that the uptrend is technically still in play.

COT report was interesting in that open interest dropped a whopping 41,000 contracts. The commercials closed out a ton of shorts and longs as they whipsawed the market in the week ending on last Tuesday. Short to long ratio rose to 2.23 as more longs were closed than longs. It doesn't tell me a whole lot other than the banksters made a lot of money on closing out 32,500 contracts. Net short position is 222,000 which is on the low end of the summer's trading range. On the bounce from $1156 the net commercial short position was 215,000. So on that fact along with a huge drop in open interest would point to another bounce up....which is exactly what happened from this past Wendesday to Friday. And in that period you can bet the banksters closed longs and initiated new shorts to help raise the net short position back up a ways....and get ready to push PM's down to profit on new shorts. Just my 2 cents. Then again I could be out to lunch. A move by gold to the $1224 / 61% FIB level would not be out of character but with the previous all time high of $1226 at this level, that's very strong resistance. Gold has moved up for 8 days along with GDX (gravestone doji), 14 days for GDXJ, and 23 days for CDNX. In trying to count legs numerous ways among miners and indicies I can't come up with anything solid or consistent....no Goldcorp or other miner for example leaking out the coming direction of gold this time. It looks like it's time for a breather in GDXJ and SPY but GLD and GDX could still rise for another 2-3 days before resetting their Aroon10.

roadrunner

ProofCollection

I know what you mean, RR. An immediate upside doesn't look likely here, but the signs are somewhat mixed. That's why I'm looking for a decisive move over 1210... actually we might need a move over 1215 to be an indication as it is the next resistance pivot level. But if we see 1220, I'd have to say it's on...

For Sun night/monday, support is at 1196.9, 1205.1, and resistance is at 1215.6, 1223.8, 1242.5.

ProofCollection

Just read that the FOMC meads on Tuesday, and there is some speculation that easing measures... this could be a great spark for gold, and timely too: Link

Friday we have July CPI and July Retail Sales...

cohodk

Gold Vix, albeit only in existance for a few years, is at historical lows.

ProofCollection

<< <i>Gold Vix, albeit only in existance for a few years, is at historical lows. >>



What symbol are you looking at? GVZ, the CBOE Gold Vol Index is at 17.56, but it's all time low was 16.75 on 4-16-10. But it is close to an ATL, and usually when it gets to this level there's a pop in the VIX index to send it up a few points.

cohodk

<< <i>

<< <i>Gold Vix, albeit only in existance for a few years, is at historical lows. >>



What symbol are you looking at? GVZ, the CBOE Gold Vol Index is at 17.56, but it's all time low was 16.75 on 4-16-10. But it is close to an ATL, and usually when it gets to this level there's a pop in the VIX index to send it up a few points. >>



Yup. Im not going to quibble about a fraction of a point. Historically it has hit the low 17s and bounced. Will it do so again, or try to make a new low?

roadrunner

Where can I find a trackable $GVZ chart? I've looked in Stockcharts, BigCharts, and other places as well but no luck.

Gold volatility sentiment, and net commerical futures short interest has been relatively low for weeks now. It's just a matter of flicking the switch at some point to get gold moving again. Today's pullback to $1199 was an intial test. GSR is still trending up. We wait for tomorrow's FED meeting results and the first bond auction.

roadrunner

ProofCollection

<< <i>Gold volatility sentiment, and net commerical futures short interest has been relatively low for weeks now. It's just a matter of flicking the switch at some point to get gold moving again. Today's pullback to $1199 was an intial test. GSR is still trending up. We wait for tomorrow's FED meeting results and the first bond auction. >>



December futures didn't quite get that low, which was 1201.1. The charts are loaded with energy and a big move is imminent, either way.

I couldn't find it at any of the sites you use, but if you use ThinkorSwim it's there. On Ameritrade it's $GVZ.X. At yahoo it's here:
http://finance.yahoo.com/q?s=^GVZ

roadrunner

GSR continues to ramp up along with the dollar. With a second leg now down to $1190 (38% FIB from the move up from $1156) it would make sense to add a 3rd which would take gold to around $1177-$1183 (50-62% FIBS). But $1190 could be enough too as gold still hasn't reached the 50 dma or upper BB.

Found the latest Ski update rather interesting. I've been following this for a couple years now and keep a general eye on where his indexes are running. It can't hurt to take advantage of his 20 yr data base movements on the run patterns in gold. I found it fascinating that he considered the spring 2006 high of $735 in gold to be the actual "peak" of the first leg with the move to $1033 in March 2008 a "death run" (ie fumes). This would make the ABC correction from 2006 to be 735-1033-690 (ABC) with the B being an expanded move higher from $735. But this certainly violates EW "rules." The EWavers are still waiting for the C leg to drop since the 2008 peak.

Jeff Kern update on USERX Ski

roadrunner

cohodk

You can also get GVZ info on Market---watch.com.

Gold (GLD) got close enough to the 50dma to consider it a "test". The 50dma is now flat, maybe trending lower. All other moving averages are also nearly flat. At least they are still positively aligned.

Home prices in New Zealand are beginning to fall, as they will soon in Canada then Australia. The USA is not the only country to have enjoyed inflation for the last 78 years.

Closed British pound short. Missed the low--salmon fishing this morning, caught 5.

Still holding copper short and am short puts on MSFT, PFE. Long BIDU puts. Otherwise almost all in cash.

Banks have been weak. AAPL holding strong to the 50dma. A close below will lead to some Naz pain.

ProofCollection

As expected, the news from the Fed today ignited the gold market, and helped gold to recover from the downside drift and re-test of 1192. This was the third attempt on 1210, so there's a good chance the next attempt will clear the level and set us up for the next big resistance at 1228. Not sure if it will happen Wed, but by the end of the week is likely.

The USD was recovering nicely, pushing gold down until the fed news came out. I'm questioning whether the USD will be able to hold 80 for long.

I picked up some GLD calls when gold dipped under 1195. Looking to unload these on Wed for a quick gain.

Stocks also rejoiced with the Fed's news, and are looking bullish with only very minor weakness showing during this consolidation. I think SP500's looking good for more near-term upside.

For gold for Wed, support is at 1195.4, 1202.6, and resistance is at 1212.8, 1220.

cohodk

I thought the action of the market today was borderline miserable. It was very defensive. Utilities, bonds and pharma were the winners while banks, semiconductors, and energy was weak. I never seen a market advance when financials, energy and technology were laggards. Maybe the sentiment changes soon, but this looks like a "scared" market to me.

Another rising wedge in the making?

roadrunner

The action today on the miners was sort of miserable as well with most not getting back to their Friday peaks after a large spike down this morning. Those spikes seem to point to lower numbers as momentum wanes. GSR continues to slowly move up and liquidity measures like NZD/yen and Euro/Yen are still falling in a downtrend. CCI and CDNX falling off as well. One bright spot is BDI on the increase. After an intial jolt up for 2 days the Gold Forward Rates have stayed in a range of 35-36 or the past 5 days indicating gold doesn't really have a trend again....consolidating. Tossing in the stocks, banks, and others this seems to show liquidity flowing out of the market the past 1-2 weeks. Silver still has it's work cut out for it. Gold will hang better though. I still think PM's are going to go further into August before reigniting which is what the SKI-indexes were suggesting.

roadrunner

edmundfitzgerald

Little off topic here, but I think it's amazing that the CME is trading near 250 now. Remember when they bought the
CBOT for 200/share. Now both companies are only worth 250/share ? Wow, to say the least.

ProofCollection

Gold seems to be holding up well in spite of the USD strength. I'm maybe looking for a pullback in the USD to push gold over the tough 1210 resistance level, but that just might not happen today. SP500 taking a tumble, but probably a good bounce plat here at 1095.

Managed to close 60% of my GLD calls today for a good profit. Probably should have sold them all, but I'll hang on to a few and see what happens.