Model Gold Portfolio: Neutral (1/13), previous long (12/29)
Technical Read: Gold leapt on the back of early morning reports that the Swiss National Bank initiated an unexpected policy change (see Catalyst 2). The Swiss central bank neglected to tip Conquerthemummy.com off ahead of time. The 1/13 exit signal came on the back of a flat lining nonlinear trading analysis readings and the fact that price had become overbought, not to mention was now trading at the upper end of the range (119 GLD basis). Now what? The event powered jump put prices above the recent range but nonlinear readings are still not overly bullish. The reasonable decision is to hold our model portfolio as neutral and wait for events to clarify. I would also take this time to reiterate some good news, we closed out a positive trade and were not caught short by the news-oriented event.
- Catalyst 1 – The S&P 500 took the hit on the back of the Swiss news. Blue chips had already worked off overbought technical readings with previous selling. We will have to evaluate this in light of more time. Near-term support is about 15 points away. Neutral for gold, for now.
- Catalyst 2 –The US dollar index had a wild, though ultimately positive day as the Swiss central bank announced it would no longer hold the Swiss franc to a fixed level with the euro. Global markets were caught by surprise. The question is why did the Swiss do this? The leading theory is that they were tipped off about coming ECB action (quantitative easing) and wanted to get out of the way ahead of time. This was positive for gold today.
- Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info. Currently available.
- Currency Trading Signals. I will be offering a similar process for currencies (the US Dollar, plus one more) after Jan 31.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com “Nonlinear signals that matter in gold trading.”