28 April 2016

Gold Daily and Silver Weekly Charts - Off We Go Into the Wild Blue Yonder

Gold and silver got some legs today, following through in a reasonably well-behaved manner to the upside in this current trend channel, which can be easily seen on the chart.

It is challenging its old nemesis, the overhead resistance at 1270 which has been capping rallies for several weeks.  I suspect gold will be breaking out to the upside once it can clear that resistance, and take a crack at running up to the top of the trend channel which is around 1310-1320 about the place where I think gold may meet it.

The cup and handle is looking good, but will not activate until we break out and stick a close through the top of this trend channel which nicely defines what is a slanted cup.

Last night I had a look at a different chart for gold that indicates that if the cup and handle does activate, it will reach its next big battle around the 1550 level, which is the lower bound of the trend channel that it had been in prior to the breakdown in price and the bear market which seems to be near ending.

Gold and silver are manipulated markets, being traded as currencies and abstractions, especially with regard to gold.   As you know I am expecting the pressures on the 'gold float' to assert their dominance over the highly leveraged paper markets at some time around midyear, maybe with the June contract.

However, forecasting markets that are rigged by determined financial engineering with a relatively free hand to do naughty and perhaps even foolish things is difficult.  So we ought to be prepared for a broader range of the usual outcomes from charts like these.

The buck went down today, most likely on the weaker than expected GDP estimate, and the likelihood that any Fed rate hikes will be short lived indeed.

Silver is not the leader at this point, as that role is being fulfilled by gold.  I don't think that says anything about a precious metals bull market.  It seems to indicate that this rally is being driven by more monetary issues particular to gold, and the structure of the physical gold market, than a general inflationary move in commodities.

You can see this if you chart up the ratios of gold to various commodities and metals with a commodity component like platinum, silver, and the CRB itself.   Yes at some point that may correct, but right now gold seems to be leading, and I think there are good reasons for it that are more secular to gold and the structure to its bullion demand.

People who say that supply and demand do not apply to gold because of the big store of it above ground are making the mistake of neglecting price.  And that is a big mistake.  Just because gold is in a vault does not mean  it is for sale at whatever price the wiseguys may choose to set for it.  This does not mean that their metrics are wrong.  Rather, the market is multidimensional, and in their mocking of other measures they set themselves up for the very narrow viewpoint that they deride.

So, all in all, it was a good day for the precious metals and miners.  Let's see if we can build on that.

Mary was released from hospital today, and is now in a rehabilitation facility out further in 'the country' where we live which is nice.  I expect she will be in there for some time but visitation is easy.  Her speech is improving rapidly but she has no conscious control of her right arm or leg.

We had a bit of a shocker yesterday from the unexpected death of my father-in-law back in Ohio.  That is why I said I was not sure how I might be posting.  He simply died of old age, peacefully with his children at his bedside after falling ill in the morning. He was a carpenter, a veteran of the Army Air Corp during WWII in Europe, an avid golfer, of Pennsylvania Dutch (Mennonite) heritage, a simple, honourable man.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wobbling On Edge

Stocks were wobbly most of the day, as they have been most of this week, and finally slid off lower into the afternoon after the European close.

The economic news is poor, and the quality of the earnings reports coming in is weak, with earnings at times but not revenue, which is quite often an indicator of creative accounting moreso than growth and strength.

As you probably have heard the GDP estimate has come in weakly. No surprise there.

We will be looking rather hard at the support levels just under the major stock indices here. If they keep this weakness, with low volumes and price propping into the close, then I think it may not take much to get stocks rolling over with some conviction to the downside.

The Fed is blowing monetary policy in a big way. And the government is not doing much better. Both seem focused on taking care of the wealthiest few and the financial system. And this is not a prescription for a sustainable recovery.

Have a pleasant evening.

The Next Battleground for Gold Will Be At 1550 If the Cup and Handle Formation Completes

If and when gold breaks out of this cup and handle formation, which is a matter of probability and not certainty, the next real battleground in a new bull market will be around $1550. One of the more interesting variables will be the manner of any breakout, and the 'time' it takes to reach a minimum measuring objective.

This is quite appropriate as 1550 marks the major support level for the channel in which gold had been moving prior to the recent bear market.

A successful cup and handle formation, should this occur, would mark a bottom for gold and quite possibly a resumption of another leg of the bull market.

It will be interesting to see how the future movement of gold as a cross to the US dollar may unfold. If the money masters were wise, they would permit it to rise back into the old trend channel and seek to find a balance in the wagers with the available physical supply.

However, wisdom so often being overlooked by power and overwhelmed by it, we may have to consider that a 'break' in the market may precipitate this activation of the cup and handle and therefore the next move higher, and a challenge to 1550 that completes rather more quickly then might otherwise happen.

In seeking to extend control and overreaching, people sometimes bring about the very circumstance that guided the fear that led to their overconfidence and misjudgment.
O, what a tangled web we weave when first we practise to deceive!

Walter Scott, Marmion
And this is what continues to muddy the waters in too many markets these days.  That there has been and continues to be manipulation of prices of too many important benchmarks and assets is no longer a serious question for open minds.    There are still too many minds that remain stubbornly, or wilfully, closed to the necessity for reform.   It is not the original offense but the overreach and coverup that knocks holes in the edifice of established power.

Rather, what remains puzzling are the details: the extent of it, the actual players who are involved besides the usual suspects, and of course, any motivations that may exist then the mere greed for illicit and outsized trading profits.

27 April 2016

No Updates Tonight

I will probably only post once in a while until next week.

Quite a bit going on.

26 April 2016

Precious Metals and Stocks at the Close

Gold and silver were up a bit on a weaker dollar.

The stock market is waiting for AAPL.

Twitter is getting spanked after the close.

Stock and Precious Metals Charts - Comex Option Expiry - FOMC Meeting

Stocks pulled off a strong push higher into the close yesterday, taking back much of the losses they had been showing during the daily trade.

It is reported that we are in the 13th week of the selling of US equities by the 'smart money.'

Notice how nicely and neatly this ramp higher has been moving in the SP 500 futures just below.  I suspect that this is an operation designed to hand off equities to the 'non-smart money' ahead of another sharp decline in equity prices.  But only time will tell.  The big tickle tonight will be APPL reporting its numbers after the bell.

It is hard to handicap these markets with the lax regulatory oversight, the generally poor quality of the numbers not only from the trading feeds but also the corporate earnings reports.  So let's try and lean a little harder on the charts.

As for gold and silver, the FOMC will be meeting this week, and I doubt very much if they will raise rates.   But gold especially is the target of those financial engineers who seek to manage perceptions in the face of their serial failures, as well as traders who have lost their way in understanding the role that they play in interacting with reality.  And this is a dangerous divergence that is yet to be resolved.

This morning's economic news continues to reinforce the weakness in the broader economy despite the remarkable monetary and other support that the Fed has been extending to the largely unreformed financial sector that continues to distort capital allocation and act as a drag on the real economy.

I will try to update at the end of the day but I may not be in a position to do so.  So for now I will post the charts and information as they are as of 10:45 AM today.