Model Portfolio: Short Signal (7/31)
Technical Read: As predicted on the weekend comments, the Sept 4 closing low did not hold. Lower lows spell the classical downtrend. I continue to seek an exit and discern the level that the current trend becomes overextended. I lament that my readings are not giving my two round trips per month, but I am glad to be on the right (short in this case) side of the market. I guess in the end, a trader must take whatever situation the market gives.
Backdrop:
- The quick headline news today was the new product announcements from Apple. The once maverick computer maker is beefing up their cell phone line and introducing a new personal electronic device: a watch. So what does this have to do with gold? The day started with expectations but the S&P 500 (and Apple stock) closed lower by the end the day. I think US stocks are going to be in a haze (largely non-trending) for a while. Neutral for gold.
- Japan’s Cabinet Office revised the countries 2nd quarter GDP figure to -1.8 quarterly. This simply adds to the possible future theme of global deflation. Bearish for gold.
- Long-term US Government bonds (as tracked by the TLO ETF) ticked lower today. Rates are now expected to be firmer by Conquer The Mummy website. This is bearish for gold.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Model Portfolio: Short Signal (7/31)
Technical Read: With spot gold dropping through the Aug 25
closing low, the yellow metal has now formed a downtrend. I had hoped to get some type of signal change last week (exit short or long) as I want this to be a trading website. I did the “grand slam” analysis this weekend but the current read is still coming up “Short Signal.” I do not expect Thursday’s closing low to hold.
Backdrop:
- Mario Draghi (ECB president) advised .01 percent point cut in European interest rates and an asset purchase program last week. While the knee jerk reaction might be this act could be bullish for gold prices (i.e. inflationary), in practice this is sending the dollar higher and raising the haunting specter that Euro-Land is losing the war with deflation. Both of these are negative for gold.
- The pace of manufacturing continued to expand with the ISM index of national factory activity up ticking to 59 in August. The previous month came in at 57.1 , this strength (and its European contrast) should underpin the dollar. Bearish for gold.
- On this site I am inaugurating a premium service for following US Government long-term interest rates. It follows that asset class in a similar way to the gold signals. I am looking to consult with only one organization at a time. Check the ‘Premium” tab on this site for details. The very first signal, based on Friday’s (9/5/14) close is “Sell Short” on bonds. By the way, this is bearish for gold too.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com
Model Portfolio: Short Signal (7/31)
Technical Read: Spot gold managed a drifting rally this week but there was not much gusto (especially just ahead of a three-day weekend). The breakdown from the upward trending channel is the last technical event of significance. Current readings are still bearish. I would note that (at least for the mummy site) this trade is getting long in the tooth. I hope to generate some type of signal this week. If Labor Day passes without much excitement, I would think selling would reappear.
Backdrop:
- This week (Friday actually), British Prime Minister David Cameron announced an increase in the country’s terrorist threat level to “severe” (the second highest level). One would think that would be good for gold, but the GLD fund actually closed down for the day. Maybe yellow metal watchers were calmed by Obama’s news conference comments that seemed much less urgent.
- According to Eurostat, consumer prices rose just .3 year to year. The number was in the expected range but none the less at a five-year low. My read on this is Europe is losing the race against the specter of deflation. If decreasing prices gain the upper hand, we could end up with a depression. This would be deadly for the highly fine-tuned economies of the West. And gold prices too.
- I am just pilling on. I saw reports that Eurozone PMI (purchasing managers index) ticked down in August. July unemployment for the region came in at a pasty 11.5%.
GH Garrett – Veteran Commodity Watcher
“Use nonlinear research to help determine the future direction of the S&P and trading can become much less complex.” GH Garrett
