The End of the Beginning?

Model Gold Portfolio: Short Position, (signal= Oct 1)

CTM141015Technical Read: GLD moved decisively higher mid-day before settling near the lows of the day (with similar action in bonds and the S&P). This rally in the yellow metal has been painful for the Mummy. My indicators are very divided at this point, with the edge going to a resumption of a bearish move. This scenario would indicate we are at the top end of a trading range with little energy left. The current concerns in the market place have limited sellers thus inducing lift for the past week or so. I hope this will soon resolve itself. By the way, the quote is from Churchill.

Backdrop:

  • Catalyst 1 – The deflation alert is on. Petroleum watchers are now expecting OPEC to maneuver in favor of market share not price increases. This translates into no-price-hikes for Texas Tea and the crude market is reflecting that. A global economic contraction is negative for asset prices. That has negative implications for gold.
  • Catalyst 2 – The US dollar index traded lower before trimming losses by the end of the New York session. The close at 85.09 is below the approximate 85.50 support level. This is bullish for gold.
  • Catalyst 3 – The S&P 500 had an eye-popping day featuring a hefty bolt-the doors selloff midday, with losses being trimmed significantly by the close of the day. If the S&P can hold here, it would be negative 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