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
“Use nonlinear research to help determine the future direction of the S&P and trading can become much less complex.” GH Garrett
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.