Model Portfolio: Flatland (Neutral signal = 7/14)
Technical Read: Spot gold prices staggered as overseas selling put the yellow metal on its heels from the start of trading. The selling was potent enough to reverse the recent uptrend. A breakout from a relatively flat trading range is a pretty good signal, making the reversal down back through the range potentially devastating. Spot gold closed down $32 hitting nearby stops short-term traders, including the Mummy website. The trade is classified as loser as the long exit is lower than the entry. The good news is losses were substantially lessened (approximately 2 to 1) as we signaled a long trend near the bottom of the recent multi-week range. The position shift today to neutral puts us in a good position, more weakness and we are clear of it. It is unlikely there will be an immediate upside reversal. It is too early to consider shorting the market.
- Not a lot has changed in the gold trading backdrop. Both the Dollar and longer-termed interest rates were well behaved. Stocks climbed today but with the S&P 500 capping its gains a 10 points, it was not particularly eye opening.
- The Israeli-Gaza air ware did not escalate into a full ground war. The aerial duel of airstrikes versus rockets is still on.
- With a weekend ahead and limited fundamental news changes, it will be interesting to see if the bears can push gold down much lower.
GH Garrett – Veteran Commodity Watcher