092314 – Downtrend Over

Model Portfolio: Neutral (9/19 signal)

CTM140923Technical Read: When a market (gold) trend becomes sustained in a certain direction, eventually the market trend gains a certain fragileness (i.e. becomes unsustainable). Then a catalyst event changes things and the traders (whom may have become complacent) find themselves caught by a reversal. I believe the trend has now changed and the downtrend is now over.  The good news is that the day after the signal, the market moved lower, thus providing a reasonable time for Mummy followers to exit their bearish positions.

Backdrop:

  • The bullish catalyst leading to Tuesday’s pop in the yellow metal, were the US airstrikes directed at ISIS/ISIL related targets in Syria. The widening of the conflict joins a loose confederation of regional anti-ISIS ground fighters with the heavy handed power of US airstrikes against the Islamic extremist forces. There is an added factor of some type or retaliation against the US (terrorism). Only time will tell how effective that will be. For now this is bullish for gold.
  • China’s (Flash) Manufacturing Purchasing Manager’s index (PMI) proved a little more robust (50.5 versus 50.0) than expected. This is a positive for the world’s financial markets but there was considerable nervousness about a contractionary reading before the report came out. Concerns about deflation are negative for gold.
  • US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond signal went neutral. This is supportive for gold.

GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com

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