Model Portfolio: Short Signal (7/31)
Technical 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
Model Portfolio: Short Signal (7/31)
Technical 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
“Use nonlinear research to help determine the future direction of the S&P and trading can become much less complex.” GH Garrett
Technical 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.