I agree that gold is reaching the end of a consolidation, and I think we'll see a resolution this week. At the moment the resolution appears like it will be upward, so I am cautiously bullish. There are two things though... we usually see gold higher for the rest of the year after some point in June, however, the summer is usually sleepy. But economically this year is anything but typical.
Stocks (SP500) appear to be putting in a reversal, so I think it may be time to get back into stocks, both SP & miners, although SP500 will probably need a bit more time to make any headway after today's surge.
Edited to add: This morning's newsletter made an interesting observation: Speculative traders have been curtailing their net-long position in Gold futures, with the most recent Commitment of Traders report showing that the combined non-commercial and non-reportable long positions in Gold were cut by nearly 12,000 contracts as of June 14th. This reduction in the bullish sentiment for Gold leaves plenty of room for additional buying to emerge should the market break-out if its summer slump.
It also pointed out that the 2 day FOMC meeting ends today...
Lightened up on the miners to take some risk off the table. FOMC minutes today and Greece are still wild cards. And PM options expiration train is closing in on us.
Interesting how GDX, SIL, and GLD easily closed their gaps from the close on Thursday June 9th. GLDX just closed out today. But GDXJ is still struggling though only 8c short at the moment. SLV is still around a buck short. Maybe an SLV gap-fill doesn't happen, at least not today. SPY back to the top of the range it's been in for the past 2 weeks. Of concern are all the gaps sitting much lower from Tuesday's strong open. As I've mentioned before, GDX and Co. seem to dislike gaps being open for any length of time.
Afternoon update: GDXJ filled its gap shortly before 2 pm - 35.26. Now all is right with miner equity gap fills and the shorts can proceed to "crush" them. A re-test of HUI 500 would accomplish lower gap fills and a breakout retest.
<< <i>Only a $2.50 to $3 difference between the July and April 2012 gold contract. Interesting. >>
What is it usually? At this exact moment the difference between Bids is $5, which seems about right. If you're looking at "Last" price the Apr contract can get close to the current contract simply because there is much smaller volume and hasn't been a recent sale.
--- The latest McLellan newsletter is foreseeing a major decline in stocks this summer after a recovery bounce that will last a week or two. This decline in stocks is due to predicted illiquidity, mainly due to QE2 ending but also due to an indicator associated with some euodollar futures index... Regardless, it is a pretty stiff headwind for stocks. This headwind is also expected to affect gold with a good decline coming to establish a low this summer. Again, this decline is probabaly a few days to a week or so away. My prediction is probably a retest of the all time high before breaking down. But the breakdown is not expected to be drastic.
Bottoms in gold are expected Jun 29-30 and July 7-8, with a more significant bottom coming July 27.
The July 27 date is interesting to me... It's about a week away from "debt ceiling d-day" which tells me these could be related. It's also supposed to be a bottom for stocks.
<< <i>Only a $2.50 to $3 difference between the July and April 2012 gold contract. Interesting. >>
What is it usually? At this exact moment the difference between Bids is $5, which seems about right. If you're looking at "Last" price the Apr contract can get close to the current contract simply because there is much smaller volume and hasn't been a recent sale.
--- The latest McLellan newsletter is foreseeing a major decline in stocks this summer after a recovery bounce that will last a week or two. This decline in stocks is due to predicted illiquidity, mainly due to QE2 ending but also due to an indicator associated with some euodollar futures index... Regardless, it is a pretty stiff headwind for stocks. This headwind is also expected to affect gold with a good decline coming to establish a low this summer. Again, this decline is probabaly a few days to a week or so away. My prediction is probably a retest of the all time high before breaking down. But the breakdown is not expected to be drastic.
Bottoms in gold are expected Jun 29-30 and July 7-8, with a more significant bottom coming July 27.
The July 27 date is interesting to me... It's about a week away from "debt ceiling d-day" which tells me these could be related. It's also supposed to be a bottom for stocks. >>
The difference between the current month and Feb had been fairly consistant at about $5. It did narrow to only about $2.50 earlier today, before the Fed announcement. Im looking to see if gold can go into backwardation. Today may have been the second failure to do so, we''ll have to wait and see.
Another 5 weeks of downside for gold? Very possibly. Thats more than enough time to test the 200dma.
For the record, I am long DZZ--entered last week, and long ZSL, entered this morning.
Nice move today on the ZSL (+6%) and DZZ. Gold faked a breakout of the triangle and then succumbed to a quickly shifting dollar and options expiration. With the rapid drop in miners GDX is pretty close to filling Tuesday's morning gap. But in the process has left a huge gap on today's open...it will be back. Not white towel time yet but gold has penetrated the Feb-June uptrend line by a couple of dollars. Oil seems close enough now to fill the long-standing gap from $88-$90 with the 60 MILL bbl boost.
Not white towel time yet but gold has penetrated the Feb-June uptrend line by a couple of dollars
Yeah, tomorrows closing prices are going to be very important. Silver might be breaking the uptrend from August. The dollar may also be breaking the downtrend from last June.
Europe could get ugly VERY FAST. Watch yields on Spain 10yr paper. Its been capped at 5.50% all year, but could break to the upside anyday. I would expect at least a 150bps move. Ireland 10yr rates have moved from under 9% in Jan to nearly 12% today.
GLD following the same pattern it put in during end of last year. That is, 3 monthly peaks (AB corrective waves) followed by a strong daily gap down in a final C wave lower. BB's pinching high and then widening out as prices dropped. The oscillators for both time periods are in about the same place as well. This would also fit with an approx 25 week (6 month) bottom due in July. Doesn't help either that there are still 2 more days until options expiration (Monday). A reasonable guess would be that if this is a C leg, that it continues until the next options expiration week (July 26th or PC's suggested next major low). Severe gap downs in GLD are fairly rare beasts and don't seem to get filled too quickly (weeks to months). Rut-row.
Gold did break higher out of that $1550 triangle.....for about 6 hours. HUI bounced exactly off the 500 level today. What was unusual was that while the HUI, SPY and other equities bounced nicely to try and fill those large morning gaps, GLD and SLV made pitiful attempts at a bounce.
Is there any possibility that chart-reading traders expect certain patterns to form, than act on those beliefs, which in turn causes the expected pattern to then form?
<< <i>Is there any possibility that chart-reading traders expect certain patterns to form, than act on those beliefs, which in turn causes the expected pattern to then form? sort of like self-fulfilling prophecies? >>
Probably. However, seeing it, then acting on it with your own money by buying into gut-wrenching bottoms and going short at bullish peaks is a different story. The patterns and cycles are certainly there or else guys like Cohodk wouldn't be able to make a living off of it. The problem is that in most cases the herd doesn't recognize the pattern until it's too late or the move is basically done. A lot of traders don't even care that much about the patterns, they just buy and sell based on resistance levels (buy low, sell high). Human nature is no doubt filled with many self-fulfilling prophecies. If it weren't so it would put most politicians and bankers out of work.
<< <i>Is there any possibility that chart-reading traders expect certain patterns to form, than act on those beliefs, which in turn causes the expected pattern to then form?
sort of like self-fulfilling prophecies? >>
I often trade in anticipation of a chart pattern that I believe will form. This can be a dangerous game though as it means being first to the party--sometimes parties are cancelled, but also means the first to leave--sometimes the house burns down.
A more risk adverse and hence lower return trading strategy is to wait for patterns to develop then act. This can lead to whipsaws and frustration. The best traders usually blend these techniques.
But to answer your question directly....yes, I do believe there are times when everyone watches the same charts and act similarly at nearly the same time. This is why you see sharp price moves, especially on a very short term basis. Over the longer term however, I do not believe traders can create self-fullfilling chart patterns.
I am sure a lot of traders are currently watching the chart I have linked below...
Thanks Cohodk, that pretty much sums up Gold and Silver.
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so. Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
Here's Clive Maund's view of PM's and the major markets....not very rosy. Lot's of dome-like tops in play.
<< <i>Thanks Cohodk, that pretty much sums up Gold and Silver.
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so. Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
roadrunner >>
For "price at the pump" on gasoline add about 60-80c (taxes). So a drop to $2.40 would mean $3.00 to $3.20 that we pay. Heating oil is still stubbornly high--maybe due to diesel demand.
Im not quite sure where silver is headed, other than that $30 looks to be a given. Parabolic/backwardation moves could easily result in 60-70% declines which would mean high teens/lows 20s. That area is possible, especially if the run up was all manipulated. If gold drops to the $1400 area I would guess the GSR to be in the high 40's, lets say 47.50 which which is about $29.50. That pretty much confirms the inevitable test of the 200dma and Nov-Jan consolidation area.
A 38% retrace of the move in gold from Jan 2010 projects to the 1375 area--interesting how this works sometimes. But it has also been quite some time since gold has had a 20% drop--there is no specific reason why it would, but also no reason why it wouldnt. This would project to 1250--last summers highs (consolidation) and a 62% retrace of the Jan 2010 uptrend. So I dont think a drop to $1250 would be anything more than typical. However a drop to this level in gold, would probably push the GSR into the mid 50s. At 55 this would imply $23 silver, again not an unreasonable assessment.
Will these price objectives be met? I have no idea, but if they are, no one should be surprised.
<< <i>Thanks Cohodk, that pretty much sums up Gold and Silver.
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so. Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
roadrunner >>
For "price at the pump" on gasoline add about 60-80c (taxes). So a drop to $2.40 would mean $3.00 to $3.20 that we pay. Heating oil is still stubbornly high--maybe due to diesel demand.
Im not quite sure where silver is headed, other than that $30 looks to be a given. Parabolic/backwardation moves could easily result in 60-70% declines which would mean high teens/lows 20s. That area is possible, especially if the run up was all manipulated. If gold drops to the $1400 area I would guess the GSR to be in the high 40's, lets say 47.50 which which is about $29.50. That pretty much confirms the inevitable test of the 200dma and Nov-Jan consolidation area.
A 38% retrace of the move in gold from Jan 2010 projects to the 1375 area--interesting how this works sometimes. But it has also been quite some time since gold has had a 20% drop--there is no specific reason why it would, but also no reason why it wouldnt. This would project to 1250--last summers highs (consolidation) and a 62% retrace of the Jan 2010 uptrend. So I dont think a drop to $1250 would be anything more than typical. However a drop to this level in gold, would probably push the GSR into the mid 50s. At 55 this would imply $23 silver, again not an unreasonable assessment.
Will these price objectives be met? I have no idea, but if they are, no one should be surprised. >>
I AGREE!
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I agree with the previous as well, as my 1-2 month outlook is bearish. In fact, I'm looking for any kind of a rally to the 1515 area as a chance to get short. However, I dont think we're lookat at any decline breaking 1400. I think summer is going to be slow as usual, possibly breaking around late July/ very early August when I think Washington will extend the debt ceiling. However, my OXPS newsletter today makes some interesting points:
The question of European debt has proved to be an enigma for traders. On one hand, the debt situation makes Gold appealing to traders as a risk aversion tool. On the other hand, it has help fuel the US Dollar versus the Euro, which has made Gold and other commodities unappealing in dollar terms. Ultimately, traders may have to look past the currency situation and look at the bigger picture with Gold. The recent sharp drop in prices could provide value-minded traders with a buying opportunity.
Gold futures have followed riskier commodities lower in recent sessions due to risk aversion. The Greek situation has caused many investors to be more cautious, as there is no guarantee that austerity measures will pass. Investors are now left with the question of how much Gold will fall before prices stabilize. The Gold market still has very strong fundamentals, even with lower growth and inflation forecasts. The sovereign debt concerns in Europe are far from being over, and the possibility that Greek austerity measures will not pass could create safe haven demand. The Euro versus Dollar could, however, continue to plague the Gold market. The US Dollar itself continues to lack strong fundamentals. Mounting US debt, low interest rates and slower growth forecasts are all negative factors for the greenback. Traders have looked past these suspect fundamentals and have been buying US treasuries, which has lifted the Dollar. If Europe sees contagion in the debt situation, it could fuel further buying of US Dollars, which could potentially put a damper on the Gold market.
The Gold market still has very strong fundamentals, even with lower growth and inflation forecasts
I will agree with this, however, two very important things have changed in the last 6 months. First, as pointed out, growth and inflation forcasts come down , while the price of gold has increased 15%. In a relative environment, one could say that the gold price has now overshot its fundamentals. Just as CSCO stock had very strong fundamentals in 2000---which largely proved accurate, the price of the stock fell dramatically.
No matter how rosy or dire fundamentals appear for an asset, there reaches a point when those fundamentals are completely discounted in the that asset's price--fundamental predictions prove accurate, yet there is no asset appreciation. Please keep in mind that I am not making any prediction on the future price of gold, just stating how markets tend to price assets.
A few days ago I felt that miners would have a nice bounce to fill some gaps left from last Wed/Thurs. It helped that the weekly chart I posted of GDX showed a bottoming of key oscillators. I took a small GDX position but decided to leave yesterday as it didn't seem they could reach that high. But sure enough they're making a final push today and GDX has filled that gap in the 54.5 range. SIL and GDXJ have a bit more work to do but are close. The kicker is that the GLD and SLV gaps are way up there and appear out of reach as it would call for $1552 gold and $36.50 silver to get there.
I wouldn't expect much more than another couple of days on this run now that the GDX gap has been filled. Note that the SPY filled its gaps a bit earlier but has left some lower ones sitting in the wake (hourly chart). Headwinds now include the end of published QE2 this Friday. On the plus side we're coming out of TBond auction week as of Thursday which often provides a boost. Then we're into a new month, quarter, and half year on Tuesday. Hmmm, long weekend, wonder what the cartel boyz will have in store by Tuesday morning for PM's. I don't think we'll make it that far though. New moon appears Friday which over the past few months has lined up fairly well with equity peaks. As PC has mentioned I think July 1-7 will be a corrective period the way things are lining up. I don't give this current mining stock rally more than another 1-2 days. It was nice that it occured but it was a pretty rare thing to see miners outpace bullion for a change during a downturn no less. But I'll temper the bet with GDX having the potential to ride up to the upper BB (56-57) which gives SIL and GDXJ time to gap fill as well. Also note that GDX did break below it's 5 month H&S neckline recently but then bounced back above. It's cycled around the neckline for the past 3 weeks and once again headed back up...for now. It does seem that the miners have more strength than gold and silver. They've already been beat down to levels that existed when gold was $800/oz.
Both gold and silver broke uptrends and it is not unusual to see a retest of those trendlines from below. Prices are usually turned back at those trendlines. I did cover 1/2 my ZSL position at 20.40, but bought it back today.
Equity markets have been very stong the last 3 years during July. Can they make it 4 in a row?
Gold has pretty much achieved the bounce I expected to 1515, so I am looking to get short on the next little surge. Looking for about a $50-70 drop from this level.
Good charts Dave................except I don't personally like how you drew the upper trend line on the gold chart . Kind of hinky and not enough touches.
The $USD chart is looking extremely weak (now below the 200 and 50). It will be interesting to see how this plays out in some of the charts Dave posted (and watch what tail is wagging which dog).
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>Good charts Dave................except I don't personally like how you drew the upper trend line on the gold chart . Kind of hinky and not enough touches.MJ >>
I agree. The line should be shifted a bit "higher" to show a break actually occured in early June--which I wrote about at that time. It then bounced and retested the bottom of that line. In either case, $1400 or so looks very probable. Im still holding DZZ and ZSL.
Gold and silver fell below this week's short term uptrend lines, retested the break, and are now consolidating under the trend line. Gold is also now sitting on top of the uptrend line from the pair of May bottoms. The uptrend line from August is currently at $1450.
Silver dipped below the August-May (bottom) uptrend line on Monday. It's now back up against that uptrend line.
The miners have put in a decent looking cup and handle formation over the past 2 weeks. HUI projecting up to 555....assuming gold doesn't get taken down hard in the next week and the SPY continues heading up. In checking past years, rising through or just after the July 4th holiday is not unheard of. Equities appeared pumped this week with the final 4 days of POMO and fund managers looking to lock in stronger bonuses for the quarter. Friday July 1st brings things back to reality....no POMO. No window dressing.
Dollar put in a gap up at 8 pm tonight after meeting the projected 74.50 target of the last H&S (Wed-Wed). Looks to be an island bottom formation with an exhaustion gap put in yesterday. For starters would probably head up at close the gap at 75.0
Comments
Stocks (SP500) appear to be putting in a reversal, so I think it may be time to get back into stocks, both SP & miners, although SP500 will probably need a bit more time to make any headway after today's surge.
Edited to add:
This morning's newsletter made an interesting observation:
Speculative traders have been curtailing their net-long position in Gold futures, with the most recent Commitment of Traders report showing that the combined non-commercial and non-reportable long positions in Gold were cut by nearly 12,000 contracts as of June 14th. This reduction in the bullish sentiment for Gold leaves plenty of room for additional buying to emerge should the market break-out if its summer slump.
It also pointed out that the 2 day FOMC meeting ends today...
http://www.cmegroup.com/trading/metals/precious/gold.html
Knowledge is the enemy of fear
Interesting how GDX, SIL, and GLD easily closed their gaps from the close on Thursday June 9th. GLDX just closed out today. But GDXJ is still struggling though only 8c short at the moment. SLV is still around a buck short. Maybe an SLV gap-fill doesn't happen, at least not today. SPY back to the top of the range it's been in for the past 2 weeks. Of concern are all the gaps sitting much lower from Tuesday's strong open. As I've mentioned before, GDX and Co. seem to dislike gaps being open for any length of time.
Afternoon update: GDXJ filled its gap shortly before 2 pm - 35.26. Now all is right with miner equity gap fills and the shorts can proceed to "crush" them.
A re-test of HUI 500 would accomplish lower gap fills and a breakout retest.
roadrunner
<< <i>Only a $2.50 to $3 difference between the July and April 2012 gold contract. Interesting. >>
What is it usually? At this exact moment the difference between Bids is $5, which seems about right. If you're looking at "Last" price the Apr contract can get close to the current contract simply because there is much smaller volume and hasn't been a recent sale.
---
The latest McLellan newsletter is foreseeing a major decline in stocks this summer after a recovery bounce that will last a week or two. This decline in stocks is due to predicted illiquidity, mainly due to QE2 ending but also due to an indicator associated with some euodollar futures index... Regardless, it is a pretty stiff headwind for stocks. This headwind is also expected to affect gold with a good decline coming to establish a low this summer. Again, this decline is probabaly a few days to a week or so away. My prediction is probably a retest of the all time high before breaking down. But the breakdown is not expected to be drastic.
Bottoms in gold are expected Jun 29-30 and July 7-8, with a more significant bottom coming July 27.
The July 27 date is interesting to me... It's about a week away from "debt ceiling d-day" which tells me these could be related. It's also supposed to be a bottom for stocks.
<< <i>I've been out of the miners for awhile and I'm still in no hurry to get back in. Not even a nibble ...............yet. MJ >>
MJ,
Your call has been good, but I'm wondering why or how you decided to stay out.
<< <i>
<< <i>Only a $2.50 to $3 difference between the July and April 2012 gold contract. Interesting. >>
What is it usually? At this exact moment the difference between Bids is $5, which seems about right. If you're looking at "Last" price the Apr contract can get close to the current contract simply because there is much smaller volume and hasn't been a recent sale.
---
The latest McLellan newsletter is foreseeing a major decline in stocks this summer after a recovery bounce that will last a week or two. This decline in stocks is due to predicted illiquidity, mainly due to QE2 ending but also due to an indicator associated with some euodollar futures index... Regardless, it is a pretty stiff headwind for stocks. This headwind is also expected to affect gold with a good decline coming to establish a low this summer. Again, this decline is probabaly a few days to a week or so away. My prediction is probably a retest of the all time high before breaking down. But the breakdown is not expected to be drastic.
Bottoms in gold are expected Jun 29-30 and July 7-8, with a more significant bottom coming July 27.
The July 27 date is interesting to me... It's about a week away from "debt ceiling d-day" which tells me these could be related. It's also supposed to be a bottom for stocks. >>
The difference between the current month and Feb had been fairly consistant at about $5. It did narrow to only about $2.50 earlier today, before the Fed announcement. Im looking to see if gold can go into backwardation. Today may have been the second failure to do so, we''ll have to wait and see.
Another 5 weeks of downside for gold? Very possibly. Thats more than enough time to test the 200dma.
For the record, I am long DZZ--entered last week, and long ZSL, entered this morning.
Knowledge is the enemy of fear
roadrunner
Yeah, tomorrows closing prices are going to be very important. Silver might be breaking the uptrend from August. The dollar may also be breaking the downtrend from last June.
Europe could get ugly VERY FAST. Watch yields on Spain 10yr paper. Its been capped at 5.50% all year, but could break to the upside anyday. I would expect at least a 150bps move. Ireland 10yr rates have moved from under 9% in Jan to nearly 12% today.
Knowledge is the enemy of fear
GLD chart
Gold did break higher out of that $1550 triangle.....for about 6 hours. HUI bounced exactly off the 500 level today. What was unusual was that while the HUI, SPY and other equities bounced nicely to try and fill those large morning gaps, GLD and SLV made pitiful attempts at a bounce.
roadrunner
sort of like self-fulfilling prophecies?
Liberty: Parent of Science & Industry
<< <i>Is there any possibility that chart-reading traders expect certain patterns to form, than act on those beliefs, which in turn causes the expected pattern to then form?
sort of like self-fulfilling prophecies? >>
Probably. However, seeing it, then acting on it with your own money by buying into gut-wrenching bottoms and going short at bullish peaks is a different story. The patterns and cycles are certainly there or else guys like Cohodk wouldn't be able to make a living off of it. The problem is that in most cases the herd doesn't recognize the pattern until it's too late or the move is basically done. A lot of traders don't even care that much about the patterns, they just buy and sell based on resistance levels (buy low, sell high). Human nature is no doubt filled with many self-fulfilling prophecies. If it weren't so it would put most politicians and bankers out of work.
roadrunner
<< <i>Is there any possibility that chart-reading traders expect certain patterns to form, than act on those beliefs, which in turn causes the expected pattern to then form?
sort of like self-fulfilling prophecies? >>
I often trade in anticipation of a chart pattern that I believe will form. This can be a dangerous game though as it means being first to the party--sometimes parties are cancelled, but also means the first to leave--sometimes the house burns down.
A more risk adverse and hence lower return trading strategy is to wait for patterns to develop then act. This can lead to whipsaws and frustration. The best traders usually blend these techniques.
But to answer your question directly....yes, I do believe there are times when everyone watches the same charts and act similarly at nearly the same time. This is why you see sharp price moves, especially on a very short term basis. Over the longer term however, I do not believe traders can create self-fullfilling chart patterns.
I am sure a lot of traders are currently watching the chart I have linked below...
Spanish 10 yr yield
Knowledge is the enemy of fear
Everyone would like to see this chart verify...
Knowledge is the enemy of fear
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the
B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so.
Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
Here's Clive Maund's view of PM's and the major markets....not very rosy. Lot's of dome-like tops in play.
Clive's Corner
roadrunner
<< <i>Thanks Cohodk, that pretty much sums up Gold and Silver.
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the
B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so.
Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
roadrunner >>
For "price at the pump" on gasoline add about 60-80c (taxes). So a drop to $2.40 would mean $3.00 to $3.20 that we pay. Heating oil is still stubbornly high--maybe due to diesel demand.
Im not quite sure where silver is headed, other than that $30 looks to be a given. Parabolic/backwardation moves could easily result in 60-70% declines which would mean high teens/lows 20s. That area is possible, especially if the run up was all manipulated. If gold drops to the $1400 area I would guess the GSR to be in the high 40's, lets say 47.50 which which is about $29.50. That pretty much confirms the inevitable test of the 200dma and Nov-Jan consolidation area.
A 38% retrace of the move in gold from Jan 2010 projects to the 1375 area--interesting how this works sometimes. But it has also been quite some time since gold has had a 20% drop--there is no specific reason why it would, but also no reason why it wouldnt. This would project to 1250--last summers highs (consolidation) and a 62% retrace of the Jan 2010 uptrend. So I dont think a drop to $1250 would be anything more than typical. However a drop to this level in gold, would probably push the GSR into the mid 50s. At 55 this would imply $23 silver, again not an unreasonable assessment.
Will these price objectives be met? I have no idea, but if they are, no one should be surprised.
Knowledge is the enemy of fear
<< <i>
<< <i>Thanks Cohodk, that pretty much sums up Gold and Silver.
I rarely see the Gasoline chart so this is neat. H&S is projected to around $2.47 which equates well to a retest of 2010's cup formation breakout. There never was a good retest of the
B/O.
Gold is very closely mirroring the path of May-August of last year. Maybe shifted 2 weeks or so.
Silver has a very steep H&S which is targeting $21. But I'm not convinced the pattern is good because of the poor symmetry.
roadrunner >>
For "price at the pump" on gasoline add about 60-80c (taxes). So a drop to $2.40 would mean $3.00 to $3.20 that we pay. Heating oil is still stubbornly high--maybe due to diesel demand.
Im not quite sure where silver is headed, other than that $30 looks to be a given. Parabolic/backwardation moves could easily result in 60-70% declines which would mean high teens/lows 20s. That area is possible, especially if the run up was all manipulated. If gold drops to the $1400 area I would guess the GSR to be in the high 40's, lets say 47.50 which which is about $29.50. That pretty much confirms the inevitable test of the 200dma and Nov-Jan consolidation area.
A 38% retrace of the move in gold from Jan 2010 projects to the 1375 area--interesting how this works sometimes. But it has also been quite some time since gold has had a 20% drop--there is no specific reason why it would, but also no reason why it wouldnt. This would project to 1250--last summers highs (consolidation) and a 62% retrace of the Jan 2010 uptrend. So I dont think a drop to $1250 would be anything more than typical. However a drop to this level in gold, would probably push the GSR into the mid 50s. At 55 this would imply $23 silver, again not an unreasonable assessment.
Will these price objectives be met? I have no idea, but if they are, no one should be surprised. >>
I AGREE!
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The question of European debt has proved to be an enigma for traders. On one hand, the debt situation makes Gold appealing to traders as a risk aversion tool. On the other hand, it has help fuel the US Dollar versus the Euro, which has made Gold and other commodities unappealing in dollar terms. Ultimately, traders may have to look past the currency situation and look at the bigger picture with Gold. The recent sharp drop in prices could provide value-minded traders with a buying opportunity.
Gold futures have followed riskier commodities lower in recent sessions due to risk aversion. The Greek situation has caused many investors to be more cautious, as there is no guarantee that austerity measures will pass. Investors are now left with the question of how much Gold will fall before prices stabilize. The Gold market still has very strong fundamentals, even with lower growth and inflation forecasts. The sovereign debt concerns in Europe are far from being over, and the possibility that Greek austerity measures will not pass could create safe haven demand. The Euro versus Dollar could, however, continue to plague the Gold market. The US Dollar itself continues to lack strong fundamentals. Mounting US debt, low interest rates and slower growth forecasts are all negative factors for the greenback. Traders have looked past these suspect fundamentals and have been buying US treasuries, which has lifted the Dollar. If Europe sees contagion in the debt situation, it could fuel further buying of US Dollars, which could potentially put a damper on the Gold market.
I will agree with this, however, two very important things have changed in the last 6 months. First, as pointed out, growth and inflation forcasts come down , while the price of gold has increased 15%. In a relative environment, one could say that the gold price has now overshot its fundamentals. Just as CSCO stock had very strong fundamentals in 2000---which largely proved accurate, the price of the stock fell dramatically.
No matter how rosy or dire fundamentals appear for an asset, there reaches a point when those fundamentals are completely discounted in the that asset's price--fundamental predictions prove accurate, yet there is no asset appreciation. Please keep in mind that I am not making any prediction on the future price of gold, just stating how markets tend to price assets.
Knowledge is the enemy of fear
I wouldn't expect much more than another couple of days on this run now that the GDX gap has been filled. Note that the SPY filled its gaps a bit earlier but has left some lower ones sitting in the wake (hourly chart). Headwinds now include the end of published QE2 this Friday. On the plus side we're coming out of TBond auction week as of Thursday which often provides a boost. Then we're into a new month, quarter, and half year on Tuesday. Hmmm, long weekend, wonder what the cartel boyz will have in store by Tuesday morning for PM's. I don't think we'll make it that far though. New moon appears Friday which over the past few months has lined up fairly well with equity peaks. As PC has mentioned I think July 1-7 will be a corrective period the way things are lining up. I don't give this current mining stock rally more than another 1-2 days. It was nice that it occured but it was a pretty rare thing to see miners outpace bullion for a change during a downturn no less. But I'll temper the bet with GDX having the potential to ride up to the upper BB (56-57) which gives SIL and GDXJ time to gap fill as well. Also note that GDX did break below it's 5 month H&S neckline recently but then bounced back above. It's cycled around the neckline for the past 3 weeks and once again headed back up...for now. It does seem that the miners have more strength than gold and silver. They've already been beat down to levels that existed when gold was $800/oz.
roadrunner
Both gold and silver broke uptrends and it is not unusual to see a retest of those trendlines from below. Prices are usually turned back at those trendlines. I did cover 1/2 my ZSL position at 20.40, but bought it back today.
Equity markets have been very stong the last 3 years during July. Can they make it 4 in a row?
Knowledge is the enemy of fear
The $USD chart is looking extremely weak (now below the 200 and 50). It will be interesting to see how this plays out in some of the charts Dave posted (and watch what tail is wagging which dog).
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>Good charts Dave................except I don't personally like how you drew the upper trend line on the gold chart
I agree. The line should be shifted a bit "higher" to show a break actually occured in early June--which I wrote about at that time. It then bounced and retested the bottom of that line. In either case, $1400 or so looks very probable. Im still holding DZZ and ZSL.
Knowledge is the enemy of fear
Gold is also now sitting on top of the uptrend line from the pair of May bottoms. The uptrend line from August is currently at $1450.
Silver dipped below the August-May (bottom) uptrend line on Monday. It's now back up against that uptrend line.
The miners have put in a decent looking cup and handle formation over the past 2 weeks. HUI projecting up to 555....assuming gold doesn't
get taken down hard in the next week and the SPY continues heading up. In checking past years, rising through or just after the July 4th holiday
is not unheard of. Equities appeared pumped this week with the final 4 days of POMO and fund managers looking to lock in stronger bonuses for the
quarter. Friday July 1st brings things back to reality....no POMO. No window dressing.
Dollar put in a gap up at 8 pm tonight after meeting the projected 74.50 target of the last H&S (Wed-Wed). Looks to be an island bottom formation with
an exhaustion gap put in yesterday. For starters would probably head up at close the gap at 75.0
roadrunner