Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: The past 2 days the GLD posted a tidy loss, equal to approximately a 33% retracement in the rally from the early October (closing) low. The yellow metal has twice now retreated from the rarified air above 120. To work off its overbought status, I would expect an attempt to challenge the lows established earlier in the month.
Backdrop:
- Catalyst 1 – The US dollar closed at 85.93, comfortably above the recent support area (84.80). The superior growth potential in the US (versus Europe) is helping. The recent uptick in interest rates hasn’t hurt either. This is a negative for gold.
- Catalyst 2 – Stock market bears expecting a resumption of the slide were disappointed as the S&P moved to two week highs. An after-market weak earnings report from cyber retailer, Amazon, may prove a challenge in the morning. By the way, my own research is positive for big caps. This is bearish 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
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: This has been a tough rally for the Mummy website. The initial short position went our way but the 3 week rally has been painful with only two down days. The lift seems to feature a lack of selling. GLD is picking up some resistance just north of the 120 level. A real reversal should dip below 119 this week. Near-term, gold is over bought.
Backdrop:
- Catalyst 1 – The US dollar initially traded lower but reversed to positive by the end of the day. Watch for follow-through buying on Wednesday. A close above 85.50 will be negative for the yellow metal.
- Catalyst 2 – The end-of-week rally in stocks garnered a fair amount of skepticism over the weekend from technically oriented pundits. The Monday/Tuesday follow-through buying has been quite powerful. My indicators do not signal a downtrend is in effect. If equities hold here, some of the fear theme should be sucked out of market watchers. This is bearish 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
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical 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
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: GLD managed to retake (plus a little) our sell signal levels, but still closed in the trading range (3 week or so) just below the 118 level. The four-day rally had a short-covering feel to it as if gold traders more interested in trimming their short positions instead of really going long. Momentum indications have pulled off their lows as well. We still have the short signal one but I am looking for this week’s trading to tip the hand of the gold market.
Backdrop:
- Catalyst 1 – The Fed minutes reeked of the phrase “data-dependent”, which basically means the central bank is laying the intellectual groundwork for delaying tightening. This along with reductions in Fed growth forecasts is signaling market watchers to be on the alert for deflation. As a side note, the IMF cut its global growth forecasts as well. Deflation is a negative for gold in general but in the knee-jerk aftermath of a crisis, the yellow metal could jump. Watch for signs of a refuge play.
- Catalyst 2 – The US dollar index went below the near-term 85.50 support level before closing the week back above it. In a crisis, the dollar is also likely to pick up a bid and this is negative for gold.
- Catalyst 3 – The S&P 500 had sustained some wild daily gyrations recently but Friday’s close has put the widely-followed index at the approximate lows of August. If stocks catch a bid it would be mildly bearish for gold. The Mummy is still neutral on the S&P.
- 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
Gold Signal Still Short
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: Gold climbed recovered about 2/3s of Friday’s loss (based on GLD trading) on Monday, reacting to a drop in the dollar (see catalyst 1) and possibly a story circulating that part of the previous week’s damage came due to a large errant trade. There was limited follow-through buying the next day. Tuesday’s close was roughly in line with the previous channel (lower) resistance, a dubious position for further advances this week. My readings are still negative and I would not be surprised if we have seen the highs of the week.
Backdrop:
- Catalyst 1 – The US dollar index had a bad day on Monday and limited follow-through selling the next day (roughly mirror imaging gold). The the dollar is now resting on near-term chart support (85.50). If dollar picks up a bid going into the weekend, this will be bearish for gold.
- Catalyst 2 – The S&P 500 sustained considerable selling today. Stocks are nervous about global slowing that appears to be centered in Europe. A sustained whiff of deflation could really shake the ground. However, I am not sure stocks have much more to fall in the near-term. The S&P bears face significant support just 25 points lower. The Mummy is not signaling much more to the downside either. Severe equity selling would be supportive for gold, but if it has a deflationary theme, both could end up going down together.
- 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
Model Gold Portfolio: Short, (signal=100114)
Technical 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
Model Gold Portfolio: Now short, 100114 (from Neutral, 9/19 signal)
Technical 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
“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 past 2 days the GLD posted a tidy loss, equal to approximately a 33% retracement in the rally from the early October (closing) low. The yellow metal has twice now retreated from the rarified air above 120. To work off its overbought status, I would expect an attempt to challenge the lows established earlier in the month.
