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Gold Must Now Absorb Shock of Thursday's Post-Close Tumble

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Thursday's post-close tumble under 1675.00 needed to hold 1662.00 to maintain any bounce potential.

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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: Nobody expects the… Spanish Inquisition! And nobody expects gold to tumble $70 in two days. Otherwise, it wouldn't have rallied high enough to be able to tumble so far, so quickly. Entering the new year in rally mode fulfilled the recent buy signal's objective, but the quick rejection is surprising, nonetheless.

Dollar Basket
Mar Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
The extended 80.55-80.75 target was probed early Friday to almost 81.00. The balance of the session ranged flat-to-lower, but never turned negative, so no sell signal is yet calculable.

Eurodollar
Mar Contract EC; (NYSEARCA:FXE)
The extended 1.3035 target was probed down to 1.3005, reversing intraday to close slightly positive above 1.3075. Not extending the decline immediately Monday would allow a corrective bounce up to 1.3180.

Gold
Feb Contract GC; (NYSEARCA:GLD)
Thursday's post-close tumble under 1675.00 needed to hold 1662.00 to maintain any bounce potential. The drop was otherwise vulnerable to extending down, but not necessarily sharply. The overnight to fresh lows at 1626.00 wasn't predicted. It is a shock to the system that will require being absorbed. Bounces should hold 1652.00-1657.00, and probing any higher would be considered a short-entry opportunity.

Silver
Mar Contract SI; (NYSEARCA:SLV)
Friday's new low testing 29.25 is a shock to the system that will need to be absorbed before a buy signal can form. There is meanwhile room for noise down to 29.00.

30-Year Treasury
Mar Contract US; (NYSEARCA:TLT)
Thursday's extended drop not only confirmed 143-30 being in-play, but also limited the extent of a corrective bounce. The target was met early Friday down to 143-17. A bounce up to 144-21 Friday afternoon has pretty much used up all available room before extending down to the next target area at 142-26/143-06

Crude Oil
Feb Contract CL; (NYSEARCA:USO)
Not having extended the rally Thursday, a deeper pullback became likely. Its 91.25 pullback limit was attacked down to 91.52. The recovery to close positive should not delay extending the rally to fresh highs.

Natural Gas
Jan Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
Strength on Friday's EAI release was subdued, still leaving no actionable parameters.

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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No positions in stocks mentioned.
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