Tag Archives: Technical Analysis

100414 – Zowie!

Model Gold Portfolio: Short, (signal=100114)

CTM141004Technical Read: Gold fell hard in Friday’s trading as longs didn’t want to wait for Monday to liquidate positions. The move established a breakdown from the previous trading range and undoubtable triggered many mechanical trend following systems. Our last two signals have the advantage of giving traders time to re-position before the trend change.  What now? This crack is sufficient to send reverberations through the system (margin calls feeding the selling), so we should see more selling ahead. We are chasing the mummy.

Backdrop:

  • Catalyst 1 – The leap in the dollar broke the back of the bulls and is going to make it hard for them to regroup going forward. Another issue: Currency trends have a reputation for lasting. This (again) is bearish for the yellow metal.
  • Catalyst 2 – Stocks (as measured by the S&P 500) did not help gold on Friday either. The explosive rally largely erased Wednesday’s significant selloff. Despite the recent equity gyrations, the Mummy considers the US equity market as neutral. This is bearish for gold now but will probably not be sustained.
  • US Government Bond research. I am offering a similar Mummy process for bonds. Treasuries halted their advance over the last couple of days. Our signal on this is neutral, so the Mummy is on the hunt for a new signal. A valuable signal for some institution. See the “Bond” tab for more info.

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

100114 – Short Again!

Model Gold Portfolio: Now short, 100114 (from Neutral, 9/19 signal)

CTM141001Technical Read: Gold has been trying to form a trading bottom for almost 2 weeks, but it has been a sloppy, ill-defined bottom with not much conviction. Today my readings indicate the recent lows are not going to hold and Mummy watchers should expect lower prices ahead.

Backdrop:

  • Catalyst 1 – The dollar strength is throttling gold. Today gold managed an up day but one wonders if it would have been so if the S&P 500 hadn’t dropped 26 points. This is bearish for the yellow metal.
  • Catalyst 2 – The varied geo-political concerns (Hong Kong, Middle East and Ebola virus) are not really pumping the bulls here. The may provide some support going into a weekend. Mildly bullish.
  • 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 readings changed from short to exit short (neutral) and this has been a productive signal.

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

093014 – The Bears Press Their Attack

Model Gold Portfolio: Neutral (9/19 signal, exit short)

CTM140930Technical Read: Today’s gold trading was a turbulent affair. Overnight selling set the stage for a gap-down opening in COMEX trading. There was a morning rally but it failed by the end of the day.  At the close, GLD held at the approximate low levels of the recent pause. It was a long day for the bulls (not as long for the Mummy as our signal was neutral). My readings are not indicating significantly lower prices.

Backdrop:

  • Catalyst 1 – The strength of the US Dollar is pressuring gold prices and carries with it the whiff of global deflation (dollar strength and deflation are riding in the same car these days, unfortunately it is hearse). This is bearish for gold.
  • Catalyst 2 – Hong Kong demonstrations (and the police response) has taken less confrontational stance today as local politicians struggle to find a way out. This is bullish for gold as it is a new (and developing) situation.
  • Catalyst 3 – The verification of another victim of the Ebola virus in the US is probably not a market mover. But it does serve as a point of concern of thisng to come.
  • 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 readings changed from short to exit short (neutral) and this has been a productive signal.

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

092914 – Lows Narrowly Holding

Model Gold Portfolio: Neutral (9/19 signal)

CTM140929Technical Read: Gold traders prepared to start the week with renewed selling, however the bears did not manage rout the market. The yellow metal continued to hold the recent narrow range.  This combined with the over-extended nature of the previous decline gives the gold market a mild bullish edge on the technical read front.

Backdrop:

  • Catalyst 1 – The US Dollar trading uptrend continues to be a formidable headwind (bearish) for the gold market. During the weekend this appeared to be the dominant trading story on the metal, BUT…
  • Catalyst 2 – Political unrest in Chinese produced stunning images as youthful demonstrators clashed with government police forces, in Hong Kong, through a haze of teargas. The scene brought back memories of Tiananmen Square in 1989. By the end of the day, the protesters remained in the streets but the clash seemed to lose its edge. This outbreak to flared up and caught markets off guard as a new risk factor. This new piece on the global chessboard is bullish 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 readings changed from short to exit short (neutral) and this has been a productive signal. The Hong Kong unrest is positive (flight to quality) for US Treasuries and therefore supportive for gold.

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

 

092514 – Now What?

Model Gold Portfolio: Neutral (9/19 signal)

CTM140925Technical Read: Gold traders came into the day with a bearish disposition with pre-Comex trading down $9 dollars (see catalyst 1). Gold opened near the lows of the day. This level was a little lower than the previous near-term bottom (9/22). However, after triggering various sell-stops in place, the market rebounded (see catalyst 2) as sellers were unable to push their advantage. During the recent sustained downtrend, bears have become vulnerable to short-covering. With readings now neutral, traders can now enjoy the luxury of taking a moment to reflect on what the upcoming trend will be and prepare to take advantage of it.

Backdrop:

  • Catalyst 1 – The US Dollar broke out to the upside following a narrow trading that terminated on 9/16. The dollar-going-up theme (which is bearish for gold) was the dominant theme going into the day from European trading.
  • Catalyst 2 – Initial weakness in equities continued to accelerate during the day and at some point became supportive for gold. Traders began to question if being short gold was really a good idea ahead of a weekend with a possibility of an equity crash. My read is that stocks are not really in a bearish downtrend but today’s action did breakdown from a recent trading range. For now this is bullish 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 moved from short to exit short (neutral) and this has been a productive move. This is a white horse of sorts for bullish gold traders as it marks an end to the trend of rising rates.

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

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

091914 – Finally, Exit Short!

Model Portfolio: Signal Change: Now Exit Short (9/19) from Short Signal (7/31)

CTM140919Technical Read: Okay, here it is: the gold mummy signals are no longer bearish but are now neutral (AKA flat). This is not the same as a trend change to bullish but simply indicates the trend is indeterminate and that gold traders should consider pulling the plug on their shorts. Momentum indicators have moved from bearish to overextended.  This is primarily a technical call and I have no new ‘backdrop’ bullet points to share for now. Tip: Don’t let the gold mummy grab you!

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

091814 – Lower Yet

Model Portfolio: Short Signal (7/31)

CTM140918Technical Read: The gold mummy may be crushing someone but it isn’t us. The yellow metal broke to new cycle lows on Wednesday. Simple trend analysis is pointing down. Momentum readings are still negative. No real bottom in sight, yet.

Backdrop:

  • The only people surprised from the FOMC post-meeting comments were the ones expecting some kind of change. Here are some Fed-speak terms: “considerable time” (the Fed does not want to be rushed in raising rates) and “Significant underutilization of labor resources” (deflation is still hanging around). World markets are keying on the latter and that is bearish for gold.
  • The US dollar is still ticking up. Various geo-political events are supportive. It will be interesting to see how the Scottish succession vote goes. The euro is not quite up to taking the dollar’s place on the world stage.
  • US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. The current read is bonds are expected to go lower (model portfolio sell signal 9/5). This is also negative for gold.

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

091116 – Waiting on Yellen

Model Portfolio: Short Signal (7/31)

CTM140916Technical Read: Gold managed an uptick close today, but that masked two intra-day rallies that just couldn’t take hold. I am attributing this to some lightening on the shorts ahead of a news event.  Maybe some stop hunting too. Momentum readings are still negative and the down trend remains in place.  Lower highs and lower lows, the classic downtrend definition.

Backdrop:

  • The room is quiet, as the rows of reporters suck in their breath awaiting Yellen’s first words from the podium. The Federal reserve Chairwoman brings a fist down and says, “Blankety-Blank, this is it, no more QE and we are raising rates!” What is the chance of this happening? Not very likely. Europe is showing signs of contraction and there is considerable fear that a whiff of deflation is a step away. Not to mention the political fallout from the Democrats possibly facing re-election and a market correction. Expect the status quo and the wilting of gold prices.
  • US Government Bond vs gold comments (status still available). US Government bonds made a show of a rally but it failed by end of day. The bond trend is pointing to lower prices. So the pecking order for now: bonds go down, interest rates go up, the US dollar goes up, AND gold goes down.

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

091114 – Slip Sliding Away

Model Portfolio: Short Signal (7/31)CTM140911

Technical Read: Today’s closing gold price is now at the approximate levels of the late May/ early June lows (support level).   However, the downtrend is pretty solid and momentum readings are very bearish. I expect lower prices. One noted gold analyst I spoke to advised $1200 is not out of the question. I agree.

Backdrop:

  • Obama announced his strategy for dealing with ISIS (or ISIL with the “L” standing for Levant, a term for the Middle East area). The US president plans to use US airpower to degrade ISIS assets and form a coalition of partners, whom will provide ground fighters. This should probably viewed as a lessening of global risk as ISIS will now have cohesive resistance. Bearish for gold.
  • (Long-term US Government Bond consulting is still available for hire). US Government bonds came under pressure again today. The trading uptrend has now been broken. This is bearish for gold.

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