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Gold Drops Like a Lead Brick Wednesday

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Daily commodity spot: A breakdown of the day's seven most active commodity futures.

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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 Gold giveth, and gold taketh away…. Breakouts go unconfirmed all the time, but rarely so definitively as gold. Rather than confirm Wednesday's breakout with a second consecutive higher close Thursday, gold plunged, leaving no doubt that new highs aren't coming anytime soon.

Dollar Basket
Mar Contract DX; (UUP), (UDN)
Wednesday's new low did what Tuesday's low did not. Its reaction up probed above Monday's 78.70 high. A second consecutive higher close would confirm momentum has reversed up. Pullbacks meanwhile should hold 78.45 as support.

Eurodollar
Mar Contract EC; (FXE) Tuesday's recovery was not confirmed before Wednesday's plunge. A surge overnight did probe Friday's 1.3485 higher after Tuesday had filled the gap back to Friday's close. But its reaction down fell under both Monday Tuesday's lows. A second consecutive lower close under 1.3333 would confirm a new downleg underway.

Gold
Apr Contract GC; (GLD)
Big miss. Tuesday's gap up above 1780.00 and session-long rally to fresh highs at 1792.70 fulfilled the requirement noted at Monday's close for resuming the rally's potential. But failing to hold 1784.00 Wednesday and Fed Chairman Ben Bernanke backing away from QE3 plunged the market to 1704.50. Absent a second consecutive lower close Thursday, the next week or so could bounce back to 1765.00.

Silver
Mar Contract SI; (SLV)
Tuesday's test of the 36.70-37.35 area was likely to present difficult resistance. No kidding. Its reaction down Wednesday probed under 34.00. Closing above 34.50 maintains potential to test 36.00 before resuming the decline.

30-Year Treasury
Mar Contract US; (TLT)
Almost any dip under Tuesday's 143-21 low was credible for extending down to fill the gap back to Friday's 143-00 close. Wednesday's reaction down actually fell to 142-16 before bouncing to 143-15. But the balance of the session ranged much more narrowly around 143-00. If the drop does not resume without delay Thursday, then it should first test 143-12 or 143-18.

Crude Oil
Apr Contract CL; (USO)
Wednesday's probe under 105.50 did recover to close back above 106.50. This setup is expected to test the 111.00 target with less risk of price collapsing there. First things first. Thursday's pullbacks must hold 106.45 to maintain the recovery, and also close above Wednesday's high.

Natural Gas
Apr Contract NG; (UNG)
Wednesday's rally back up to 2.62 peaked a nickel short of signaling that buyers were gaining traction. That's still possible Thursday, but anything less is not a buy signal.

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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