Technical Read: The last week of trading featured daily hefty market swings that really did not form a trend, however the price action did confirm the recent lows (112.5 GLD basis). Nonlinear trading analysis indicates the highs established on the 30th (116.25 GLD basis) will not halt the upward pressure. The gold trading signal is still long..
Backdrop:
Catalyst 1 – The S&P 500 really continued the rollover today. Chart support is still 50 points away. Big cap stocks are wrestling with global slowing with the new touchstone being Greece (possible leftist gains resulting in some type of Euro decoupling). This is positive for gold.
Catalyst 2 –The US dollar index pushed north on the back of many of the reasons stocks are going down. This is normally a headwind for gold prices but as gold is also a candidate for flight-to-safety buying, it can be a near-term neutral.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info. Currently available.
Currency Trading Signals. I will be offering a similar process for currencies (the US Dollar, plus one more) after Jan 31.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com
Model Gold Portfolio: Now (12/29) “long” previous signal 12/01 “exit long”
Technical Read: The drop in gold today restored short-term the risk/reward reading to an acceptable level. GLD is finding support at the 112-112.5 level (12/01 and 12/22) and unlike the 114 support level, the nonlinear trading analysis indicates 112 should hold. The holiday truncated trading week should help the bulls too. Gold trading signal: We have a buy. This signal is mostly generated as a result of technical models.
Backdrop:
Catalyst 1 – The US dollar index has paused from its recent bullish move. The trend is still up but the greenback may hover here for a while, meaning a limited headwind for gold. If the dollar falls back, it will be a bullish for the yellow metal.
Catalyst 2 – The S&P 500 continues to inch its way up but after 8 positive days (I am fudging on the 24th) a pause is warranted here as well. Since a down day is due, this is a mild positive for gold.
May the Mummy watchers enjoy the New Year’s Day festivities, but I would also invite you to take time and ponder the new year: the doors that will be opened, the doors that will be closed and the “brief authority” in which we all operate.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info. Currently available.
Currency Trading Signals. I will be offering a similar process for currencies (the US Dollar, plus one more) after Jan 31.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com
Model Gold Portfolio: Neutral, last signal 12/01 “exit long”
Technical Read: GLD fell near to the bottom end of the range (approx. 112-117.3, GLD basis) then bounced from the low energetically on Friday. This isn’t bad action for the bulls (nonlinear trading analysis generally supports this), unfortunately Friday’s 2 pt bounce was sufficient to make the market overbought in the current range bound environment. We will have to see what happens next week. Gold trading signals: No signal.
Backdrop:
Catalyst 1 – The US dollar index is still in good shape. Both this and US equities are benefiting from the recent revision in the 3Q GDP up to 5%. This is a very salubrious number from the US and will attract assets from all over the world. Dollar action is bearish for the yellow metal.
Catalyst 2 – The S&P 500 is hugging the top end of its recent trading range. Equity bears are looking for technical selling. The bulls are powered by more fundamental factors. The edge is on higher prices here. This is mildly bearish for the gold trading.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info. Currently available.
Currency Trading Signals. I will be offering a similar process for currencies (the US Dollar, plus one more) after Jan 31.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com
Model Gold Portfolio: Neutral, last signal 12/01 “exit long”
Technical Read: I posted last time that the GLD 114 nascent support level (partially established Dec 5th and 16th) was not confirmed by nonlinear trading analysis. Today’s drop through the level confirms this opinion. We are still in the range (approx. 112-117.3, GLD basis) but rapidly approaching the low end. The next support level is 112, I think this is more likely to hold than 114, however a buy signal has not been generated yet. No signal.
Backdrop:
Catalyst 1 – The UD dollar index has moved north and taken out the monthly highs. Dollar action is bearish for the yellow metal.
Catalyst 2 – The S&P 500 is not retreating from the near-term resistance (approx. 2080). Traders should be wary that a breakout is likely. A move higher would be bearish for the yellow metal.
Ponderable – May the mummy watchers have a considerable amount of Christmas cheer on the 25th!
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
Technical Read: With the GLD now picking up support at the $110 level, the downtrend has been largely negated. On my last post, I mentioned that expected returns (via calculations) had dried. Recent trading has the gold surrogate ETF bound in a tight range ($110-$113). Now what? It is a waiting game. Putting on a position too early could lead to the eager trader getting chopped up. Watch the market for changes.
Backdrop:
Catalyst 1 – The S&P 500 pushed a tad higher today, extending a series of miniscule gains. There is a difference between stocks and gold: the expected returns calculations are pointing to a hefty move ahead. With shorts being treated to days of losses, the most likely outcome would be a short capitulation, triggering additional buy-stops. Good health for stocks is mildly 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
Technical Read: Gold picked up support today as the GLD bounced off the $110 level. This was to be expected as the previous down move was pretty extreme and placed the market in an oversold situation. I am looking for a trade but my readings are not positive for a buy. My expected returns calculations are very anemic (less than $1!). So the plan for the Mummy is to stay neutral and try to gauge the direction for a profitable move.
Backdrop:
Catalyst 1 – The S&P 500 continues to inch higher after the Nov 3rd pivot point. The chart action is a bit over-extended but there is no clear sign of reversal. My indications are still positive for stocks. This is bearish for gold.
Catalyst 2 – The US dollar is trending up against a backdrop of European deflation fears. In a recent interview (CNBC), Juergen Fitschen (German Banking Association) advised that it was “undeniably that we have slowed down recently” ahead of the anticipated German third quarter GDP release. Apparently the association chair was preparing traders for bad numbers. Germany economic growth is key for the faltering European economy. Serious economic contraction could be a bottomless pit for the world economy. Weakness in the Rhineland would likely spur the ECB to take dovish action, which would weaken the currency (euro) and be bearish for gold (via the dollar). By the way, the yen is having tough slogging against the dollar as well.
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
Technical Read: GLD broke down further with just the most nascent sign of a support. The longs were popped pretty hard. The break of the Oct 3 low signals that the trend is down but the gold market is very very oversold making a profitable short trade entry unlikely (the horse has already left the barn) at this point. Gold traders need to be patient and watch for a higher probability entry point.
Backdrop:
Catalyst 1 – OPEC signaled expectation for continued oil price softness in the organization’s annual World Oil Outlook. The expectations of sliding energy prices are helping US equities and covering the Fed’s QE exit. The S&P chart looks good, this is bearish for gold.
Catalyst 2 – ECB President Mario Draghi affirmed the European Central Bank is preparing for further easing action to help EuroLand’s economy. This is bearish for the euro and bullish for the US dollar. This in turn, is bearish for gold.
Catalyst 3 – Another blot on the sunshine of economic growth came this week as the OPEC annual report downgraded expected growth in the “BRIC” countries (Brazil, Russia, India and China). This is another point for global deflation which is also 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
Technical Read: During the second part of the week, GLD (see catalyst 1) really collapsed, despite some initial base building around the 118 level. So what now? From a trend perspective, gold is heading down, however the Wed-Thu-Fri drop has made this market very oversold (we look at things in a trading time frame). Trend down but market oversold readings mean step aside now and wait for an advantageous trade entry point.
Backdrop:
Catalyst 1 – The Fed announced an end to its quantitative easing program Wednesday. This was potentially a destabilizing event but the time occurred during a bout of low oil prices. The energy dividend (tax cut effect) is stepping in to mask the Fed move out of QA. Is Yellan that smart, or just lucky? Stocks broke north of trading resistance in the aftermath. This was bearish for gold.
Catalyst 2 – The US dollar rallied post-Fed and the language in the statement was a little more salubrious than expected. Stronger economy = higher interest rates = more selling pressure for gold.
Catalyst 3 – A moment to ponder, this week we save two highly visible space travel accidents (the NASA space station resupply rocket explosion and later the Virgin Galactic SpaceShipTwo tourism rocket crash). Maybe it wouldn’t hurt traders to be wary of overbought (or oversold) situations.
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: Exit Short to Neutral (formerly a short position). Signal date= 10/27.
Technical Read: The retracement off the high (10/21) has moved the gold market off its overbought position. On a longer time frame, speculators can make a bearish case, but for the trading window I inhabit, the risk (upside vs downside) is balanced. The trade (10/01 to 10/27) is technically a loss of a buck and change (on the GLD). This is within the category of a modest loss and the mummy certainly did not crush us. I would have liked to have spent more of October in money markets (neutral). The good news is we can begin looking for a new exciting entry point, hopefully in the next few weeks.
Backdrop:
Catalyst 1 – Simply put, the biggest plus for gold is the hair-trigger sensitivity of the market to a plethora of issues: Ebola, ISIS (or ISIL), Ukraine or the Gaza. These situations, and the possibility for them to worsen suddenly, are keeping the gold bears off balance.
Catalyst 2 – The US dollar is in a choppy, trendless mode. If the greenback uptrend is on pause, the bearish headwind is too. We will have to evaluate this going forward.
Catalyst 3 – The stock market is experiencing a new kind of stimulus (not from Fed interest rate policy): lower oil prices. The energy discount is going to add liquidity in a very broad based manner, helping all who manufacture, transport and purchase physical items. During this phase, 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: 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
“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 last week of trading featured daily hefty market swings that really did not form a trend, however the price action did confirm the recent lows (112.5 GLD basis). Nonlinear trading analysis indicates the highs established on the 30th (116.25 GLD basis) will not halt the upward pressure. The gold trading signal is still long..
