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Gold Fulfilled Bounce Targets Overnight


Don't forget the Humphrey-Hawkins rule: Reactions on day one are often reversed on day two.

The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: Gold fulfilled my bounce targets overnight. Tuesday's reaction up on Bernanke's testimony may prove to be only noise. Don't forget the Humphrey-Hawkins rule: Reactions on day one are often reversed on day two.

Dollar Basket
Monday's attack on 82.05 was duplicated Tuesday, and still held. A pullback to test 81.40 is likely.

Mar Contract EC; (NYSEARCA:FXE)
The overnight low touched the 1.3020 target and bounced. Filling the gap back to Monday's close resolved down under the morning's lows, but held above the overnight lows. While there may be room for an interim bounce to 1.3140, the drop is likely to extend to 1.2955 and then potentially much lower.

Apr Contract GC; (NYSEARCA:GLD)
Monday's post-close test of the 1596.50-1601.00 target's lower-end was followed overnight by a test of its upper-end. Reacting down to 1584.00 support proved quite vulnerable to Bernanke's testimony, triggering a surge to fresh highs testing 1620.00. Having tested 1618.00 intraday, not closing above it suggests that Tuesday's buying was an isolated incident, and gained no traction for its efforts. But being a fresh high, no sell signal is indicated. The pattern can back-and-fill to test 1596.50-1601.00 before signaling that momentum is reversing down.

Mar Contract SI; (NYSEARCA:SLV)
Tuesday morning's initial reaction down was recovered back above Monday's high to attack 29.50, still targeting 29.85.

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
Monday's post-close test of the 145-03/145-06 target area extended higher overnight to test its next resistance at 146-06. That apparently discounted all of Tuesday morning's influence, as it held its retest intraday. Gapping down back into or under 145-03/145-06 would suggest that Tuesday was an isolated incident, and that momentum was reversing down fast.

Crude Oil
Apr Contract CL; (NYSEARCA:USO)
Trading remained subdued and ranging narrowly around 93.00. The utter lack of volatility, let alone lack of trending, while gold and bonds soar on Bernanke's reaffirmations, suggests that QE is having no economic impact.

Natural Gas
Monday's gap up extended higher overnight to test 3.45, retracing back down to 3.40. A pullback to 3.36 would be optimal before the rally were to resume.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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