Model Gold Portfolio: Neutral, last signal 12/01 “exit long”
Technical Read: The last 3 trading days have seen considerable intraday swings but not a lot of directional motion. We are still in the trading range (approx. 112-117.3, GLD basis). Is the 114 level going to hold? The market held on the 5th and 16th, but the last rebound is not convincing. Nonlinear trading analysis is not suggesting it will stabilize here. No signal.
Backdrop:
Catalyst 1 – The dollar rallied strongly on Wednesday and had a more muted follow-through today. The Russian ruble crisis is grabbing most of the headlines in this asset class (CNBC was quoting the ruble/dollar on its short-list currency screen). Dollar up is bearish for the yellow metal.
Catalyst 2 – The S&P 500 rocketed up over the last two days, putting it near resistance. The “Chiller” network carries the tag line “Scary Good” and to some extent the line has applied to the plunge in crude. The discount in energy prices (simulating a massive tax cut) is the “good.” But there has been concerns that a massive re-pricing of such a major asset class might result in a major financial institution getting caught on the wrong side and failing (ala Long Term Capital Management), hence the “scary” part. Jane Yellen’s comments labeling the plunge a net positive event has helped relieve the stress. The equity rally is a 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: Neutral, last signal 12/01 “exit long”
Technical Read: On Dec 15th gold fell back in the trading range (approx. 112-117.3, GLD basis). The 16th featured considerable intra-day volatility. Trading over the last couple of days and Dec 8th suggest that the 114 level may be the rallying point of a local bottom, however recent technical work does not confirm this yet. No signal.
Backdrop:
Catalyst 1 – The currency world was rocked today when the Central Bank of Russia hiked rates a stunning 650 basis points today. The increase came without warning and puts the county’s interest rate at 17%.The move is seen as an act of desperation to prop up the ruble. Russia’s currency is under considerable pressure during the plunge in crude (Western sanctions are a lessor factor). The US dollar fell in the aftermath and this is bullish for gold.
Catalyst 2 – The S&P 500 broke south of near-term support (approx. 2040). Big cap equities have been under the cloud of a looming deflationary storm. Uncertainty out of Russia is not improving things either. Anything resembling panic selling is going to be positive for gold on a short-term basis (longer-term deflation is not a positive for many asset classes).
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: Neutral, last signal 12/01 “exit long”
Technical Read: On Dec 9th gold popped, breaking above the recent trading range (approx. 112-117.3, GLD basis). My technical indicators had not registered that the market had enough energy to do this in a sustained way. The following 2 days the market drifted back. So the situation is the yellow metal is just above the recent range but technical work is not confirming the breakout. No signal.
Backdrop:
Catalyst 1 – The US dollar trend is generally up, though we have seen selling in recent days. The market mood is supportive for the greenback. This is bearish for gold.
Catalyst 2 – The S&P 500 had really unusual action this week. After making a new high, the market sold off the 8th then attempted to drop off the next day but buyers came to the rescue before the close. The next two trading sessions (10th and 11th) featured significant intra-day selling. The index is currently resting on support (approx. 2030). If this does not hold, lower S&P prices will be supportive for gold.
Catalyst 3 – Crude oil dropped below $60 today. Previously, pundits had signaled a floor near $70. If you look at a 5-year chart, you cannot help but be struck by the fact that all support has been violated and that the recent move has a parabolic theme to it. This energy cost reduction is going to act as a tax-cut for almost everyone and provide a stimulus effect, possibly giving cover for the Fed to end QA. But looking at the 5-year chart, you may feel a drop in temperature, like when a summer storm rolls in suddenly and drops the mercury. Does this mean deflation is on its way?
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: Neutral, last signal 12/01 “exit long”
Technical Read: Gold is going back and forth inside the range (approx. 112 to 117, GLD basis). The present technical read does not indicate enough energy (preponderance of sellers or buyers) to bust out the channel. So, we are back to the waiting game.
Backdrop:
Catalyst 1 – The US dollar has broken out of its recent trading range. The currency back drop of US economic out performance is a key factor. The National Association for Business Economics posted an upbeat forecast for US GDP in 2015: 3.1%. Estimates for Europe and Japan are closer to 1%. This is bearish for gold.
Catalyst 2 – The S&P 500 dropped off today. Overall, the trend is still up and this week featured new highs. This is mildly negative for Gold.
Catalyst 3 – Two pro-democracy hunger strikers in Hong Kong withdrew. At least one cited health reasons behind the capitulation. The protests began in earnest over two months ago. Short-term the movement may be waning, but Is there a longer-term cycle at work here? Is the groundwork laid for future pro-democracy gains in Hong Kong and China?
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: Neutral, last signal 12/01 “exit long”
Technical Read: Gold looks to be forming a new trading range based on the recent high/low established over the last 4 trading days. Using the GLD ETF as a proxy, the range would be 117 to 112 (approx.) Today’s closing price of 116.33 puts the indicator near the high end of the range. Can it push further north now? Technically, probably not.
Backdrop:
Catalyst 1 – The US dollar is breaking out of its trading range. Global growth problems in Japan and Europe are looming factors. A resumption of the dollar uptrend is negative for gold. With gold near-term overbought, this should argue against gold going much higher.
Catalyst 2 – The S&P 500 rallied the last two trading session. This makes it seem like big-cap equities are not ready to roll-over yet. Mildly negative for Gold.
Catalyst 3 –The world watches as crude prices plunge lower, below the psychologically important $70 level. Expectations are for US output to increase during 2015. Can OPEC rally to put the breaks on the slide? Sunni/Shite relations are not high. This is negative for commodities in general, and gold 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
Model Gold Portfolio: Neutral, today “exit long” (previous signal was “Long” on 11/20)
Technical Read: Gold was slammed during holiday thinned (a new phrase) trading on Friday but the bears’ dominance was decisively crushed with a substantial rally today. GLD is above our entry level (11/20) but now short-term overbought. Readings indicate it is time to go neutral (exit longs).
Backdrop:
Catalyst 1 – Friday’s gold crash did not manage to coincide with a dollar breakout (this was a clue to the “brief” aspect of the selloff). The US Dollar index is still in its trading range, so a positive for gold
Catalyst 2 – The S&P 500 had a downside reversal today as well. The uptrend is still in effect but the strength is starting to wane. Mildly positive for Gold.
Catalyst 3 – Moody’s (credit rating agency) cut Japan’s credit rating from AA3 to A1. US credit rating agencies don’t really have the reputation for great forward insight. Still, taken for what it is, another asset class on the ropes, mildly positive 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: Long, 11/20 (Today’s chart was produced intra-day so the closing price pictured is not really the official close).
Technical Read: GLD drifted higher from our bullish trend change signal. The current position continues to feature limited selling and thus would lead one to conclude higher prices for the yellow metal are ahead. I wish a happy Thanksgiving to the Mummy watchers!
Backdrop:
Catalyst 1 – The US Dollar Index bounced to the upper end of the recent trading range but failed break out and is selling back down to the lower end of the range. A well behaved dollar (not trending higher) is positive for gold.
Catalyst 2 – The S&P 500 has moved north of its previous range. This 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
Model Gold Portfolio: Long, 11/20 (previous signal neutral, 10/27)
Technical Read: GLD selling on the 19th did not gain any downside momentum for the 20th. Prices reversed to the upside and thus indicate a lack of selling power in the yellow metal. The Backdrop still has negatives for gold but has improved. The previous question was would the bullish trend have the strength to overcome some overbought positioning. The bulls have won out and the models are now positive.
Backdrop:
Catalyst 1 – The US Dollar index is now range bound, meaning the uptrend is on hold. Prices are now hugging the bottom range. The next surprise move for the greenback could be a stop hunting raid south (86.50 on DXY). This is neutral for gold (for now).
Catalyst 2 – The S&P 500 closed up and is holding above the pseudo break-out at 2040. It is not a blast off but the up-trend is still in place. This is mildly bearish for gold.
Catalyst 3 – The US Labor Department said its index for final demand increased .2% in October reversing a PPI decline of .1% in September. A modest decline was expected but the services sector component provided the boost. This is a rare bit of non-deflationary news and is a mild positive 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: GLD did not retrace much of the Nov 14 rally before it moved modestly higher. I am not sure the backdrop (see below) warrants a substantial bullish move but the technicals are improving. The real challenge on this front is whether the buying pressure is sufficient to move a modestly overbought market higher. The models are still neutral.
Backdrop:
Catalyst 1 – The US Dollar index appears to have paused but the price action is not indicative of a trend reversal. This is still mildly bearish for gold.
Catalyst 2 – Several posts ago, I opined the next likely move for the range-bound S&P 500 would likely to be up. Today was a breakout for equities. More to follow. This is bearish for gold.
Catalyst 3 – Japan unveiled the economic surprise of the week. The third quarter GDP posted a 1.6% contraction. This on the back of a 7.3% contraction in Q2 puts the third largest economy in a technical recession. The current policy tug of war between fiscal easing (stimulus) and raising taxes (tightening) does not provide an optimistic resolution.
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 blew though resistance on the back of a daily bearish reversal in the US dollar (see catalyst 1). The move came after several days if decreasing volatility (closing price differences) for the yellow metal. Never sell a dull market, they say. Gold traders should now set their sights on determining if this means a bullish move is now in motion. The alternate view is that it was of the Friday-short-squeeze flavor. The Friday pop may be too much (overbought) for a safe bullish entry immediately, but it has our attention. The models are still neutral.
Backdrop:
Catalyst 1 – The US Dollar index pushed higher on Friday but then reversed. The sudden appearance of technical buying in the euro and some disappointment in US payroll number could have been factors in the slide (er… ISIS announced its new currency too). Though the dollar reversed for the day, for it to be bullish for gold, the greenback must reverse its bullish trend. Friday’s currency action did NOT accomplish that (look at a chart). This is a neutral factor for now.
Catalyst 2 – Equities were unfazed by the currency/gold action. The S&P 500 ticked up less than a point, not uncharacteristic of recent days. This 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
“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 3 trading days have seen considerable intraday swings but not a lot of directional motion. We are still in the trading range (approx. 112-117.3, GLD basis). Is the 114 level going to hold? The market held on the 5th and 16th, but the last rebound is not convincing. Nonlinear trading analysis is not suggesting it will stabilize here. No signal.
