we've had a couple of tests of the mid-1070's so far & rejected pretty swiftly each time. Really needs to hold these levels to keep the happy-happy-joy scenario going....
Back to gold – speculative long liquidation continues its rather torrid pace dropping off substantially in yesterday’s down market. Both longs and shorts are getting out with the shorts having their intentions frustrated by the buyer of size that continues to make their presence felt below and near the $1,080 region. It is evident that physical demand for gold is helping to stem the rate of price decline in gold. Bears are continuing to pressure the metal trying to reach further fund stops below the $1074 level but are being stymied by the strong buying that is occurring. The longer gold can bounce back from the current lows near $1,080, the stronger that support becomes technically as tentative speculative longs will begin dipping their feet in the water with nervous shorts quickly ringing the cash register when prices dip down near this level. That serves to reinforce the level further. As usual, time will make it clear for us. I am encouraged however to see this determined buyer continuing to surface on these selling bouts. Could it be China or India?
For now, the technical posture in gold remains bearish for the short term so rallies will continue to find willing sellers until price moves back above the $1100 level and remains there for a least two consecutive sessions. Support remains near the $1075 level with another level of support beneath that at $1,030 – $1, 025. Incidentally, February gold enters its delivery period next week so the speculative action will be focused on the April contract. It will be interesting to see what we get in the way of gold deliveries, not that most of us believe anything that the Comex warehouses report. You could probably have 8000 contracts of gold stopped and the warehouses would report a movement of 1,200 ounces out.
I will send up a monthly gold chart later on today.
One of the big problems that the gold bulls have is the poor technical performance of the gold shares. It is difficult to get too excited about the metal’s prospects when you have hedge funds leaning on the shares with their ratio spreads. We really need to see the HUI get above 407 – 410 to garner some bullish excitement and give us some signs of life. For right now, about the best thing I can say for the shares is that many of them are extremely oversold on the daily charts.
No discussion here today of the near $50 fall in the Gold price overnight????? I can understand why the USD rallied last night (capital feeling the Euro), but why such a big sell off in Gold in such a short time?
Cheers,
Beej
does anyone have any idea what may happen to gold if countries in Europe defult of their debts......may guess is currencies will fall against the US and a sell-off on the markets, but will gold rise in this instant.......will gold stocks be sold off along with the rest of the market.....any thoughts
does anyone have any idea what may happen to gold if countries in Europe defult of their debts......may guess is currencies will fall against the US and a sell-off on the markets, but will gold rise in this instant.......will gold stocks be sold off along with the rest of the market.....any thoughts
I'm really wanting to move into gold and silver commodities at the moment but need to build of some starting capital first. I don't want to miss this.
"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy..."
Alexander Fraser Tytler, Scottish lawyer and writer, 1770
No discussion here today of the near $50 fall in the Gold price overnight????? I can understand why the USD rallied last night (capital feeling the Euro), but why such a big sell off in Gold in such a short time?
Cheers,
Beej
My market positions and charts remain unchanged - until 1137 is breached I am holding shorts from just under 1151 happily locked in some profits. Still waiting to see the trendline test.
Talk on the wire this week of China+India bids waiting on the interbank market at 1050. We might see other banks retract their bids to get those orders filled (this seemed to have happened in EURUSD this last week!). Just as I offloaded longs into Tokyo weakness earlier this month - I will offload shorts into China strength as it comes around. For me this is a prudent strategy.
Looking at lower timeframe charts - seem some heavy demand was fed in around the London close. Could have been LIFFE traders exiting their short positions ahead of the weekend or strong demand for gold into the 1600GMT fix. I am also looking at 1075.8 as a possible bear trap where retail goes short and CBs go long to smash the market out - so be careful around this area!
Posted: Feb 06 2010 By: Dan Norcini Post Edited: February 6, 2010 at 12:42 am
Filed under: Trader Dan Norcini
Dear CIGAs,
The COT chart for gold is going to be a bit misleading in that it consists of data that only covers through Tuesday of this week and did not catch the sharp move lower of the last two days of the week. On both Monday and Tuesday of this week, gold had rallied strongly off the $1,080 level where a buyer of size had been very active. That buying took prices $40 higher off that support level reaching $1120 as of the close of trading Tuesday. If you look closely at the managed money position, you can see that the net long position actually showed an increase which corresponds to the rise in price.
That was prior to Wednesday when sellers came into the market with strong selling tied to long liquidation and fresh shorts. That of course took gold down $80 in the course of 3 days time. We will unfortunately have to wait until next week to see how much further the spec long category was whittled down.
I should point out that the Producer/Merchant/Processor/User category has seen a rather significant reduction in their overall net short position and is now back at levels last seen in September 2009 when gold was trading near $1,000. Look for that position to be even smaller after this past Thursday and Friday’s debacle. The same holds true for the Managed Money position.
The small specs have bled down 19,000 net longs during the last few weeks.
We will need to see open interest stabilize before we get a solid bottom in the gold market. The comedown in total open interest is something we have seen repeatedly as this decade long bull market in gold has played out before us. There is nothing new here except for the fact this recent bout of long liquidation and open interest reduction is occurring from a new nominal high price and will find a floor at a HIGHER LOW price in gold than the previous long liquidation waves.
Posted: Feb 08 2010 By: Dan Norcini Post Edited: February 8, 2010 at 2:49 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Today was, “Let’s throw away the Dollar and Buy everything else in sight” day. The entire commodity sector had money flowing back into it in a big way today as both the Yen and the Dollar were jettisoned in favor of “risk” plays. Copper reversed its collapse building a bit on Friday’s bounce. Ditto for silver and for crude oil. Even pork bellies were higher today.
The effect of all this was a steady flow of buy orders into gold the entirety of the session. So far it has pushed to a high near $1,074. If it can get back above that critical level of $1,080 and hold there for a couple of days, it has a much better chance of entering a range trade rather than making another leg lower as technicians will point to bear-flagging action unless it recaptures the former broken support level where our big buyer of size had once been making their presence felt. While it is nice to see the gains in gold, technically it has a lot of work to do to repair the severe chart damage of the last week.
Once again the problem is the mining shares as the HUI still can barely manage even a bounce. The hedgies are continuing to sit on the shares with their ratio trades. The sheer “logic” of this trade reflects just how ignorant the majority of hedge fund managers are and how algorithms have taken over the markets at the expense of reality but it is what it is for now and with as much money at their command as they have, until these guys decide to either reverse those spreads or lift the short leg, the shares are going to underperform. Same comments as Friday – the HUI will need to get back above the 400 level to initiate more short covering and kick in some fresh buying.
You can get a pretty good feel for how the battle between the inflationists and deflationists is playing out by watching a few key markets such as copper and soybeans but a better picture still remains the Continuous Commodity Index ( I still do not like the CRB index because it is too heavily weighted in energies). The CCI needs a weekly close above 481 – 482 to give the inflationists a reprieve from the recent selling barrage in this sector and turn that weekly chart friendly again on the shorter term. Long term its uptrend still remains intact. Short term the trend encourages selling into rallies.
As usual we are back to watching the broader equity markets and the currency markets to gauge the psychology of investors/traders. The S&P 500 will have to climb above 1105 and hold there for two days to convince some of the shorts to get out. While the Dollar is moving lower today, as long as it remains above 79, the short term trend is in favor of the bulls. Money flows are what markets have become all about these days and it is those two primary markets that determine pretty much where that stuff goes.
Posted: Feb 11 2010 By: Dan Norcini Post Edited: February 11, 2010 at 4:45 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Gold put in a solid performance today slicing through the barrage of bullion bank selling centered near the $1,080 level and running all the way to the downtrending 20 day moving average before it halted. The sharp move higher came even as the Euro was knocked sharply lower which is quite positive for gold as it seems to indicate that gold is generating safe haven flows out of currency fears; something we have been hoping to see for some time now. The fact that the Dollar could not sustain its gains today is very telling. Unless the bulls can push the Dollar higher immediately, they are in real danger of losing downside support in the USDX on account of the extremely large number of stale long positions that have been built up in that market. Momentum to the upside has stalled so the bulls are going to have to impress right now to stem a counterattack by the bears. A technical washout in the Dollar will occur with a crack of 79.
Along that same line, the mining shares finally came back to life today. The surge in the HUI today took it above the 400 level and serves to confirm that it is indeed sold out for now having put in a double bottom near the 370 region. That level should hold on any subsequent moves lower if indeed these shares are set to resume their upward move. Its move higher turned its 10 day moving average higher which is also friendly and should encourage dip buying. Also, its session high cleared the 20 day moving average. If it can manage to close above that level, it would be most friendly. The next big test for the HUI will come somewhere near the vicinity of 418 -420.
Bellwether copper, had a very strong upside day today with its price move confirming a short term bottom and a swing in momentum over to the inflation camp and away from the deflation camp. You have to wonder if China has been active in the copper market the previous few days given the strong buying that has been present down near recent lows.
In general, commodities across the board were higher today, with the CCI, Continuous Commodity Index, now back above its ten day moving average.
Bonds are weaker but still have not fallen completely apart. They are trying to hang on to 117^00 for support for if they fail there, technicians will see that as a sell signal and attempt to take them down more sharply.
Today was a victory for the inflationist camp and a blow to the deflationists. Tomorrow is Friday and one never knows what a Friday will bring with all the pre-weekend book squaring especially coming in front of a holiday on Monday of next week. But for today, the friends of gold must be pleased.
That's an interesting count, SeM0s!
Can you give a larger degree chart with your premise for wave B
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