All posts by GHGarrett

Correction, Flatland, Lack of selling

Technical Read: First is the correction. Last comment, I showed the previous “eL” (exit long) on the graph occurring on June 19th (correct) but in the text I erroneously dated it as June 17th (incorrect). Be advised the exit was on the 19th. The “L” (buy) was on June 5th (this was a good trade).  So far the exit long signal (Flatland) has been good, as volatility has been bleeding out of the market. Missing this is positive as it can cause option positions to have premium decay. This week’s trading has also featured something else: a lack of selling. As we go into Friday (typically the Bull’s friend) it will be interesting to see if buying picks up or not.


What is next now? The Iraq quasi civil war is now a known event (thus no longer a surprise) and the gold market has factored it in. Early stage conflicts normally feature escalation and this appears to be happening with reports of Iran sending military advisors in and Syria employing airstrikes to support ISIS. Kerry (speaking from the safety of Brussels) advised for regional participants to insure “that nothing takes place” that could act as a flash point for further sectarian division. The unrest is limiting selling in the gold market as bears do not wish to be caught short should something happen.

Sitting in Flatland, June 24

Technical Read: The June 17th exit long (eL) signal is the dominant feature of today’s technical read. The massive rise on that day triggered the risk reward statistics to move the model portfolio to neutral on that day. The June 17th exit is probably the ‘easy money’ big trade of the month. To use a metaphor, we have all heard of the infamous night-of-the-long-knives. Going forward we are likely to see trading resembling night-of-the-SMALL- knives as volatility bleeds off from the gold market. The Conquer the Mummy website Is optimized for options trading (which decay with time) so the best course is not to be too eager to get back in, at least not until signals give a more favorable risk/reward reading. Remember the philosophy of this site: Thump the Mummy and get out, do not hang around to be grabbed and crushed.

What is next now? The civil war in Iraq (featuring the ascendancy of the Sunni ISIS movement) is no longer a surprise and the gold market has moved decisively to factor this in. So at this point, I am looking for the next catalyst to move the market. This week Secretary of State John Kerry is meeting with Kurdish leaders, reportedly to convince them to join a plan to overhaul the current Iraqi government. What the Kurds seem to really want is increased autonomy. Secretary Kerry is a very bright person but I fear he may fall into the trap of simply telling the Kurds what he wants them to do as opposed to trying to work a deal that is stable over a long time horizonCMT062414. A sizable portion of arrogance can negate intellect.

Market wisdom: Remember the old market adage about “bulls can make money, bears can make money, but hogs get slaughtered”. Do not get too eager to reenter. — GHG

Gold Prices Catapult, Signal Change.

CTM061914Technical Read: The uptend detected earlier proved to be a catapult for gold prices as nervous bears ceased selling and rising prices triggered buy stops (i.e. more buying) leading to a hyperbolic one-day price move. The action triggered a “exit-Long” signal for the model portfolio today, moving it to neutral (aka “flat”). Please be advised an “e-L” does not mean the uptrend has reversed but does indicate 2 events. A) The model portfolio is now neutral and B) the risk/reward ratio is no longer favorable for a bullish position. No GLD watcher should be mystified at an exit after a daily net-change of over $4.25. This was an excellent (profitable) ending for the June 5 entry. Taking a profit is generally a good thing. The mummy got thumped.

What is next now? The bears were simply routed as we approached a weekend with increasing signs that things are not going well for the government in Bagdad (i.e. reports of ISIS flags flying over a “key” refinery and  US military advisors gearing up for deployment). We will continue to monitor events, being “flat” can be a good thing if gold becomes overly news oriented here.

Gold advances off recent lows

Technical Read: Prices are advancing off the closing low of June 2 and the bullish model portfolio change (June 5). Previous oversold market provided support for the bulls. Trading action on June 15 was disappointing but not a trend change yet.

What is happening now? Problems in Iraq are providing most of the buzz though there are questions as to just how much of an oil disruption is ahead. To people who lived through the Vietnam era, the rapid advances of the “ISIS” group rings a bitter bell of remembrance of how quickly South Vietnamese forces caved in the face of the last North Vietnamese big push. Anyway, the news backdrop is supportive.CTM0616