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Weldon's Metal Monitor


Range expansion within a bullish breakout!


Wow, what a day to publish a piece on volatility, as the gold market has responded in-kind, by exploding for a $10 gain, recouping all its recent, sharp, losses - and then some.

In fact, gold could threaten the key upside pivot point we have long defined via the macro-chart perspective at $450 with an accompanying expansion in volatility.

Yet, still, our feet remain planted on the floor until the volatility considerations detailed in the chart evidenced below, reconcile.

To define the chart premise, we note that the top window contains the daily price of the nearby COMEX gold contract, followed below in succession by the 50-day historic volatility, then the longer-term 100-day gauge, and finally the longest-term 200-day measure.

First, we examine the decline in volatility that has defined the pancake flatness in price into the low set on June 5th of this year. At that point the Volatility measures were 'aligned' negatively, meaning that the 50-day measure had the lowest reading, and the 200-day reflected the highest reading of the three.

Thus, sequentially, the time line was symmetrically negative, in terms of defining range contraction and volatility shrinkage. Now, this dynamic is close to reversing back to 'positive'. For sure, more sensitive measures are flashing green, today.

But, we rely on the robustness of these 'canned' (not-fitted, or optimized) indicators to reflect the meat of the market, volatility wise.

Simply, a rise in the 100-day historic volatility measure thru, and above the 200-day would complete the reversion to positive 'sequential-symmetry', and suggest range expansion within a bullish breakout... to be confirmed, likely before volatility gets there, by an upside violation of the $450 level.

We stand ready to jump, looking for a slam-dunk opportunity.

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position in gold
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