Gold Up, Dollar Down

The short position in JDST was exited during yesterday’s session with a decisive ding to one of the trading accounts.

Obviously, something was not analyzed correctly.

Pulling out to a larger view and looking at the correlated markets; bonds, the dollar and gold, it appears that bonds are moving higher first. 

It was probably a head-fake to think the dollar will move exactly in tandem.  That was the error plain as day, now.

The second error was not to see the first error. Enough said.

In fact, after yesterday’s session we see the dollar might be in the process of testing its trading range lows.

The dollar and the mining indexes, at this point are inversely correlated. 

The dollar was down sharply. The miners were up in an opposite move.

The dollar (UUP) chart below shows a potential forecast.  If UUP pushes lower from this point, it sets up a reversal condition (penetrating minor support) before it contacts major support.

Correspondingly, the miners and gold would be moving higher … for now.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold & Silver, Retrace Levels

If GLD and SLV maintain their pre-market, 181.40 for GLD and 23.15 for SLV, they will both open at 38% retrace levels.

They each have attempted to reach these areas two times in October and were rejected.

The last update stated that Junior Mining Index, GDXJ has its own Fibonacci level (38% retrace), in the vicinity of 56.80.

Pre-market activity for GDXJ is around 56.38 … very close.

In Wyckoff terms, yesterday’s trading activity for GDXJ was a Sign of Supply.  The index opened lower then tested (higher) and subsequently moved lower throughout the day into the close.

This firm’s trading action (not a recommendation, not advice) will be to monitor the first two hours of trading (GDXJ) to see if we tap the 38% retrace level and subsequently get hourly reversal bars … or some other indication of reversal.

We’re already short with a combined price of 10.93, in JDST. 

Currently, JDST is pre-market trading at 10.40, which equates to just over a 5% loss on the open position. 

Certainly that’s not desirable but then again, if this is all the market can hit us with, we’re willing to wait it out … although not for too long.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold Watch

The overnight session was active for gold.  The GCZ20, December futures contract traded between a high of 1,917.90, and a low of 1881.80, a 36-point range, nearly 2%.

Gold is now off the lows and testing its overnight highs.

From a regular session standpoint, we’ll be watching the 179.43, GLD level covered in the last update.

If that high is penetrated it does not mean that gold will continue on higher immediately. 

It would mean that probability is now about even to greater, higher prices are ahead.

From the Junior Mining index, the GDXJ standpoint, there’s a Fibonacci level located at approximately 56.80.

Looking at the big picture, the short squeeze in bonds looks like it’s getting underway in earnest.    

There was just one more downward thrust that was not able to penetrate the TLT, 156.75 lows from the week of October 19th

The overnight move higher in bonds was a serious hit to the shorts. It’s now time to see if this move feeds on itself … higher.

These dynamics, the dollar, gold, interest rates, the four-standard-deviation-short in bonds are all operating simultaneously.

We’re sitting in the background and quietly observing everything. 

The choice at this point (not advice, not a recommendation) is to sneak into a significant short position on the Junior Miner index, GDXJ (via JDST).

We’ll see how it works out.  Obviously GLD and the 179.43 high, is being watched closely.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold Top?

Gold has made at least three attempts to post a new weekly (GLD) high.

Now, price action is fading.

Penetrating last week’s high of 179.43, would put GLD on track to continue on to the 181.50 – area.

At this juncture, we’re at 178.84, after three attempts to penetrate that 179.43 level.  Those attempts topped out at 179.04, 179.10, 179.18 and then 179.18 (again), when looking at the 15-minute chart.

That last attempt could not push higher.  We may be finished and pivoting lower.

From the Junior Miners, GDXJ standpoint (chart above), we have what looks like a gap-fill; along with establishing a down-trend and possible trading channel.

It’s never obvious until it’s over.

At this juncture (11:41 a.m. EST) JDST, the 2X Inverse Fund is hovering around 10.60 – 10.64, just above its lows for the session.

Once again, taking all factors into account; the position of GLD, not making a new weekly high, GDXJ filling the gap and then appearing to stall, a potential trend-line and channel; all ties up to be a low risk area (not a recommendation, not advice), the danger point.

Once caveat is GDXJ is not at any well established Fibonacci retracement level.  Price action could grind itself higher into the 56.60 area, no matter what gold (GLD) is doing.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Before The Open

As expected from the November 1st, update, gold pre-market shows a gap-higher open.   Trading is around 178.80 – 179.00 which is a little above the resistance area shown in the original chart.

After the first hour of trading, the plan is to provide an update to see if there’s still a possibility of a reversal at this juncture (not advice, not a recommendation).

Correspondingly, the mining sectors, GDX, GDXJ are up in pre-market with inverse DUST and JDST, down. 

However, the big hitter, NEM is right at a 50% retrace off the lows of October 28th.  This is a possible area to stall and potentially resume a downward (or sideways) trend.

Other market actions that may have significant impact on silver/gold, are the four-standard deviation in the bonds to the short side.

As Steven Van Metre indicates, none of us reading this (in our lifetimes) are likely to ever see a set-up like this again.  It’s an historic extreme.

Bonds are down in pre-market along with the dollar … using UUP as the proxy.

The dollar has bottomed and is now in position to rally; completely opposite the established consensus.

At least twice now, Van Metre has mentioned Wyckoff in his updates.  He appears to be well aware of the significance.

In other markets, a position was opened in nat-gas, UNG at the last session.  That position was closed in the pre-market session with a slight ding of -1.2% to the managed account.

Even with record cold hitting large portions of the country, nat-gas can’t seem to get going to the upside.  Now, with its current action there may be a probability of lower prices (or stagnant action) going into winter.

We are leaving nat-gas alone for now and focusing on the historic bond set up and the potential effects when it all unravels.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold: Short Term Forecast

Gold (GLD) may rise slightly into the election … then pivot down.

If gold and silver are the safe havens, why have they not moved higher as the overall market has declined?

Years ago, literally decades ago, Robert Prechter proposed ‘it’s all the same market’.  Meaning, everything is connected and nothing moves independent.

Sufficient evidence has been proposed on this site, that potential exists for deflation first, then inflation.

Continuing on with Prechter, he states that any significant directional move (major reversal) won’t happen until nearly every market participant is on the wrong side of the trade.

It’s easy to see who is on the (potential) wrong side of the trade for gold and silver.  Just one glance at YouTube reveals hoards, buying into the hyperinflation argument.

Sometimes the hoard is correct … but not very often.

Getting back to gold and GLD.  An expandable version of the chart is here.

Price action penetrated minor support and generated a Wyckoff spring condition.

This past Friday’s action opened gap-higher and declined to test the support level.

The expectation is for higher action into the election. 

How price behaves at the trend-lines shown (if and when contact is made) will indicate whether or not it’s in position to reverse lower or head higher to the 180 – 181, area.

Price action itself decides the next likely course.

Should there be a reversal, there are numerous ways to position (not a recommendation, not advice) for a decline.  Inverse funds DUST, JDST, and ZSL are just a few vehicles available.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

What’s wrong with this picture?

The good part about danger point areas is, price action does not need to go far to confirm or negate the trade.

We’re at that point now with precious metals and more specifically, the junior mining sector, GDXJ.

A brief search for YouTube “gold higher”, turns up the list below. 

The amount of bullish biased videos is easy to find.  Everybody’s doing it.

Gold To Explode

Embrace The Dip

Growing Debt, Gold higher

Ray Dalio, Gold Price Up

Expect $2,500 Gold Price

Peter Grandich, 100% In On Mining Stocks

Silver Price Will See Explosion

Silver, Time To Buy is Now

How High Will Silver Go?

$36 Silver By End Of 2020

Who wants to hear that a favorite investment or market is heading lower?  

Getting to the chart of GDXJ and what’s wrong; it’s obvious.  

There’s a huge non-confirmation.  

The gold tracking fund, GLD is back at or near all time highs and yet GDXJ (the junior sector), is down -58.8%.

There is no way to paint this in a positive light.  Down nearly 60% is massive. 

One way to look at it is, the junior sector does not believe gold (and silver) prices can be sustained at current levels.

Or, if they are sustained, there must be something else at work that would prevent them form obtaining a substantial profit.

Either way, the last report on the sector stepped through the current price action.  We’re at the danger point for GDXJ.

A move higher in the coming week will put a dent in (or negate) the bearish scenario and a move lower will help to confirm.

Stay tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.