New Trend for Gold?

[shrenickshah]

I suspect that many of the gold bulls have been premature in their market entry....a significant potential downward correction is a distinct possibility

I do agree but having seen the correlation between oil, energy and dollar i can see the bulls coming back in picture for moment...EUR/ USD touching 1.2900 had got the EUR bulls back in action pushing the price towards the major resistance...If the previous high in EUR/USD are taken out..It will be no time 640 is next target..Oil after falling to 69.90 on friday and jumping back to 72.30$ is definately throwing signs of bulls..

Shrk

 

[The Baptist]

Chart

I have posted a new chart.

The extremes of the low of July 24 were not taken out, although the candle bodies of the recent downswing were a touch lower than the previous low.

This allows for an 'imperfect patern' as a possibility, but a cautious reception to todays strength is still advisable, I continue to have my original buy stops at the $657- 658 level, which will require susbtantial further proof of strength. The downleg has been extended and while still in the 601 plus range still swung slightly lower than expected.

I would still advise potential 'shorters' to await the break out of $601 to the downside, as the prevalence of the pattern still may take hold.

 

[gugaplex]

Another good selling opp for gold. I'm guessing this short-term up-swing will peter-out like the others.

 

[gugaplex]

Sub $600's for gold soon. The metal will likely trade near $600 for a couple weeks, then make a big move down. Where she stops, nobody knows.

I do know this, there are far better places for your capital. I suggest trimming your portfolio allocation in gold to just under 10% (or zilch for short-term).

Take the funds and buy under-valued tech stocks. You will thank me later........

 

[gugaplex]

Yet another good selling opp....

 

[vish]

Gugaplex - I assume you'll be shorting this rally..

Lets see where that takes you.

 

[miketang]

Gugaplex - I assume you'll be shorting this rally..

Lets see where that takes you.

My very thoughts... but puzzled about why the $:gold inverse correlation's broken down. just short term transient factors?

 

[gugaplex]

I'm not short gold. I was short gold in the past and made a decent return. I enjoy the debate with the gold bulls, and trying to talk some reason into them. If gold goes to $700 again, it will be all the more reason to sell. Gold is one of the worst places for long-term money, if you want to make a trade, then take the gamble...

 

[TWI]

Don't really know where it is going but I have been making a good return in this market this year with a long only strat. I will continue with this long only . Just have to make sure you go with the flow and get out quickly when tide turns. Gold is very similar to trading FX right now. There is also a lot of similarity between Gold and Copper charts. I play Copper from long side also. Good start to month in both. Last month was pretty horrible. anybody who did well in August deserves some respect.

 

[gugaplex]

Twalker,

You seem to be in gold at the right time, and out when the clouds start darkening. There is a strong possibility that if gold sputters from these levels, the down-ward move will be swift. At this moment for gold, the risk/reward does not pay-off. The marginal gains are not worth the possible large decline in prices.

Looking at the charts, gold is running the risk of a head and shoulders top.

Good Luck...

 

[The Baptist]

Twalker,

You seem to be in gold at the right time, and out when the clouds start darkening. There is a strong possibility that if gold sputters from these levels, the down-ward move will be swift. At this moment for gold, the risk/reward does not pay-off. The marginal gains are not worth the possible large decline in prices.

Looking at the charts, gold is running the risk of a head and shoulders top.

Good Luck...

One of your best posts, Well done.

I agree with a few things in there. I especially like phrases such as 'risk reward' and 'looking at the charts'.

If Gold breaks the relative lows that have been supported 3 times it could fall a fair way. It is in essence on a 'ledge' as Joe Ross might use as a term. For this reason if you are bullishly disposed the risk is high to be in the market at these levels, as Guguplex implied, and I think he is right.

For Bulls I would advocate the use of buy stops at levels above the relative highs. This means you only come in if the successive lower highs are exceeded, it is possible that we are near a relative high again now, which is still lower than the primary previous highs, and therefore negative by implication.

A short trade would be to sell a reasonable gap below the ledge $609 - $610 (CASH) that has been support so far . While there is a window/gap in the original 'step up to the ledge' which can be supportive, if it is broken through, it could fall far.

So if fundamentally 'agnostic' both trades could be placed and the market will take you where it will. I certainly feel it is going to do something, at some point, and would be surprised if it just became long term becalmed at these levels.

Which is why this market is proving fascinating at the moment.

Part of which being I am not entirely decided on my own view any more.

 

[gugaplex]

This could be the start of a big decline. Get your portfolio positioned accordingly....

 

[Hook Shot]

Right now I don't have any Gold positions but reading some of the "nonsense" in other parts of cyberspace - falling Gold is good for investors. I would love to buy it with a 5 handle. Technically, Bill McLaren seems to have called this one right saying it needed to rally beyond 4d to give us a chance - rally lasted 4d and sold off hard. A break of thr recent lows targets the spot mid summer lows around 540 potentially - as we have a 4th attempt at support.

Cheap Gold medium term is welcome - the fireworks are yet to come IMO.

Hook Shot

 

[gugaplex]

Another day of schlacking. Get ready for the BIG drop folks. I agree with Hook Shot that we will likely fall to $540, after that is anyone's guess...

 

[gugaplex]

Have you seen the CRB Index lately? Now at a 52-week low of 313, down from a high of 365. PPI and CPI will be very tame during the coming months, allowing the FED to continue their pause. Economy will continue to grow (according to latest FED report), and rates will be low. Yet another Goldi-Locks economy for the rest of the decade with housing continuing its bull-run. Take a gander at LEND, trades at Book Value and has a PEG Ratio of 0.55. Another good pick is DRCT, set for break-out and trades at 1.10 x's book...

CRB Index:
http://www.bloomberg.com/markets/commodities/cfutures .html

 

[Hook Shot]

Not so fast Guga - Hook Shot thinks we might be surprised by inflation based on the gradual rise in yields recently..... and the comments of some contrarians I follow. Those guys indicate this "Fed's done" talk could be premature - in any case the consensus thinks that way so I'm wary. As for Lend and Drct they look interesting as dead cat plays maybe more - so thanks for that.

Hook Shot

 

[gugaplex]

Hook, you are well-informed on the inflation front. However, with most commodities falling of late, the general readings for inflation will likely be moderate and cause the FED to continue its pause going forward.

The general markets are set for big bounces as the picture starts to clear for a growing global economy with moderate inflation.

Gold may increase a tad from current levels (doubtfully), but other economically-sensitive assets are a far better investment over the next few years.

U.S. tech stocks will perform well as the dollar strengthens, therefore providing further gains for foreign investors...

 

[Hook Shot]

Cheers Guga - better get my buying boots on. Back to Gold missed the Goldi-Locks pun earlier I like it!
All the Best
Hook Shot

 

[gugaplex]

Here we go, fasten your safety belts. The decline is resuming...

Look for support at $540.

 

[Hook Shot]

Have you got a buy order around 540ish Guga - roughly 12m ago was the $450 breakout! 450, 540 do I detect at 90 thing going on ? - technicians like 90 I hear! Even the high was roughly divisible by 90.

Hook Shot