Model Gold Portfolio: Exit Short to Neutral (formerly a short position). Signal date= 10/27.
Technical Read: The retracement off the high (10/21) has moved the gold market off its overbought position. On a longer time frame, speculators can make a bearish case, but for the trading window I inhabit, the risk (upside vs downside) is balanced. The trade (10/01 to 10/27) is technically a loss of a buck and change (on the GLD). This is within the category of a modest loss and the mummy certainly did not crush us. I would have liked to have spent more of October in money markets (neutral). The good news is we can begin looking for a new exciting entry point, hopefully in the next few weeks.
- Catalyst 1 – Simply put, the biggest plus for gold is the hair-trigger sensitivity of the market to a plethora of issues: Ebola, ISIS (or ISIL), Ukraine or the Gaza. These situations, and the possibility for them to worsen suddenly, are keeping the gold bears off balance.
- Catalyst 2 – The US dollar is in a choppy, trendless mode. If the greenback uptrend is on pause, the bearish headwind is too. We will have to evaluate this going forward.
- Catalyst 3 – The stock market is experiencing a new kind of stimulus (not from Fed interest rate policy): lower oil prices. The energy discount is going to add liquidity in a very broad based manner, helping all who manufacture, transport and purchase physical items. During this phase, this is bearish for gold.
- Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.
GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com