3-month
chart. Current price for a 4 symbol package = $7,500 quarterly.
Model
notes: This post was made Saturday (March 23rd) looking back at the chart
updated through March 22. The model is still under water from the “catch the
falling knife” buy (11/20 signal) but the recent bounce off the early Feb lows
looks convincing. The 5250 projection is northward (this is roughly in line
with our previous projection). Incidentally we have recently added a Bitcoin
price forecast to our comments, our research effort continues. The model is
still in-synch with the trading.
Note:
The following comments are based on using technical analysis to ‘flesh out’ our
nonlinear trading signals. TSP is defined as the closing price on the day following
the signal day.
Nonlinear
Trading Themes:
Bitcoin
forecast
($NYXBT): The Bitcoin market trend has reversed to the upside following lows in
mid-December and early February. We do have resistance ahead at the 4200 mark
but the nonlinear projection of 5250 indicates this should be broken going forward.
3-month
chart. Current price for 4 symbol package = $7,500 quarterly.
Model
notes: The was in good position for the November Bitcoin collapse, though the “catch
the falling knife” buy (11/20 signal) was a little early, the downside momentum
has dried up. The model is still in-synch with the trading.
Note:
The following comments are based on using technical analysis to ‘flesh out’ our
nonlinear trading signals. TSP is defined as the closing price on the day following
the signal day.
Nonlinear
Trading Themes:
Bitcoin forecast ($NYXBT): The model “falling knife” bull trend signal was a little early but not irrelevant as following trading revealed the downside momentum was drying up. There are some associated positive fundamental factors at work here too. The recent stock market drubbing (flight to quality), interest rate drop (asset valuation enhancement) and financial stress for Bitcoin miners (at the sub 4000 level) are all in play right now. And the outlook for the trade currently? 6000!
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
Model Gold Portfolio: Neutral (9/19 signal, exit short)
Technical Read: Today’s gold trading was a turbulent affair. Overnight selling set the stage for a gap-down opening in COMEX trading. There was a morning rally but it failed by the end of the day. At the close, GLD held at the approximate low levels of the recent pause. It was a long day for the bulls (not as long for the Mummy as our signal was neutral). My readings are not indicating significantly lower prices.
Backdrop:
Catalyst 1 – The strength of the US Dollar is pressuring gold prices and carries with it the whiff of global deflation (dollar strength and deflation are riding in the same car these days, unfortunately it is hearse). This is bearish for gold.
Catalyst 2 – Hong Kong demonstrations (and the police response) has taken less confrontational stance today as local politicians struggle to find a way out. This is bullish for gold as it is a new (and developing) situation.
Catalyst 3 – The verification of another victim of the Ebola virus in the US is probably not a market mover. But it does serve as a point of concern of thisng to come.
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
Technical Read: Gold traders prepared to start the week with renewed selling, however the bears did not manage rout the market. The yellow metal continued to hold the recent narrow range. This combined with the over-extended nature of the previous decline gives the gold market a mild bullish edge on the technical read front.
Backdrop:
Catalyst 1 – The US Dollar trading uptrend continues to be a formidable headwind (bearish) for the gold market. During the weekend this appeared to be the dominant trading story on the metal, BUT…
Catalyst 2 – Political unrest in Chinese produced stunning images as youthful demonstrators clashed with government police forces, in Hong Kong, through a haze of teargas. The scene brought back memories of Tiananmen Square in 1989. By the end of the day, the protesters remained in the streets but the clash seemed to lose its edge. This outbreak to flared up and caught markets off guard as a new risk factor. This new piece on the global chessboard is bullish for gold.
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. The Hong Kong unrest is positive (flight to quality) for US Treasuries and therefore supportive for gold.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Technical Read: Gold traders came into the day with a bearish disposition with pre-Comex trading down $9 dollars (see catalyst 1). Gold opened near the lows of the day. This level was a little lower than the previous near-term bottom (9/22). However, after triggering various sell-stops in place, the market rebounded (see catalyst 2) as sellers were unable to push their advantage. During the recent sustained downtrend, bears have become vulnerable to short-covering. With readings now neutral, traders can now enjoy the luxury of taking a moment to reflect on what the upcoming trend will be and prepare to take advantage of it.
Backdrop:
Catalyst 1 – The US Dollar broke out to the upside following a narrow trading that terminated on 9/16. The dollar-going-up theme (which is bearish for gold) was the dominant theme going into the day from European trading.
Catalyst 2 – Initial weakness in equities continued to accelerate during the day and at some point became supportive for gold. Traders began to question if being short gold was really a good idea ahead of a weekend with a possibility of an equity crash. My read is that stocks are not really in a bearish downtrend but today’s action did breakdown from a recent trading range. For now this is bullish for gold.
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 signal moved from short to exit short (neutral) and this has been a productive move. This is a white horse of sorts for bullish gold traders as it marks an end to the trend of rising rates.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Technical Read: When a market (gold) trend becomes sustained in a certain direction, eventually the market trend gains a certain fragileness (i.e. becomes unsustainable). Then a catalyst event changes things and the traders (whom may have become complacent) find themselves caught by a reversal. I believe the trend has now changed and the downtrend is now over. The good news is that the day after the signal, the market moved lower, thus providing a reasonable time for Mummy followers to exit their bearish positions.
Backdrop:
The bullish catalyst leading to Tuesday’s pop in the yellow metal, were the US airstrikes directed at ISIS/ISIL related targets in Syria. The widening of the conflict joins a loose confederation of regional anti-ISIS ground fighters with the heavy handed power of US airstrikes against the Islamic extremist forces. There is an added factor of some type or retaliation against the US (terrorism). Only time will tell how effective that will be. For now this is bullish for gold.
China’s (Flash) Manufacturing Purchasing Manager’s index (PMI) proved a little more robust (50.5 versus 50.0) than expected. This is a positive for the world’s financial markets but there was considerable nervousness about a contractionary reading before the report came out. Concerns about deflation are negative for gold.
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 signal went neutral. This is supportive for gold.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Model Portfolio: Signal Change: Now Exit Short (9/19) from Short Signal (7/31)
Technical Read: Okay, here it is: the gold mummy signals are no longer bearish but are now neutral (AKA flat). This is not the same as a trend change to bullish but simply indicates the trend is indeterminate and that gold traders should consider pulling the plug on their shorts. Momentum indicators have moved from bearish to overextended. This is primarily a technical call and I have no new ‘backdrop’ bullet points to share for now. Tip: Don’t let the gold mummy grab you!
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
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
“Use nonlinear research to help determine the future direction of the S&P and trading can become much less complex.” GH Garrett
