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Trapped Shorts of Gold, Crude Oil Fuel Big Week-Ending Rallies

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The pattern makes even more volatility likely Monday, despite the US holiday.

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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's redundant pullback Thursday offered Friday's most attractive setup. That didn't prevent a fresh low in reaction to Ben Bernanke's comments. But its reaction screamed higher. The pattern makes even more volatility likely Monday, despite the US holiday.

Dollar Basket
Sep Contract DX; (UUP), (UDN)
Despite gapped down sharply and probing fresh lows dwn to 80.96 Friday, The session closed while still testing the 81.20-81.25 prior lows. A lower low will be extra-vulnerable to recovering.

Eurodollar
Sep Contract EC; (FXE)
The pullback had not completed down to 1.2425 before Friday's Bernanke bounce probed fresh highs up to 1.2640. The past week's 1.2575-1.250 prior highs were still being probed at the close, preventing buyers from gaining traction. The next higher high will be extra-vulnerable to failure.

Gold
Dec Contract GC; (GLD)
Thursday's extra test of 1656.50 support did not recover enough to actually reverse momentum up. Friday's fresh low down to 1647.10 on Bernanke reacted up sharply to fresh highs at 1691.80. Now pullbacks must hold any test of 1673.00 to maintain the rally next targeting 1700.00 and 1744.00.

Silver
Sep Contract SI; (SLV)
Friday's gap up was retraced only deep enough to fill the gap back to Thursday's close, before recovering back through 31.00. Pullbacks must now hold any test of 31.00 to keep 33.00 in play.

30-Year Treasury
Sep Contract US; (TLT)
Friday's dip only briefly tested the 149-08 pullback limit before recovering to fresh highs at 150-12. This extra push higher makes 150-26 likely to be tested before the next significant pullback can begin.

Crude Oil
Oct Contract CL; (USO)
Friday needed to prove quickly that its recent weakness had ended. Gapping up more than $2 to test 96.50 qualified. And despite a deep retracement back under 95.00 on Bernanke, fresh highs came within a dime of 97.00. The new upleg is in-play so long as 96.15 now holds tests as support.

Natural Gas
Oct Contract NG; (UNG), (UNL)
Like Thursday's close while testing the 2.72-2.74 buy signal, Friday's close was still testing the 2.78-2.82 buy signal. The minimum objective remains 2.90. But its recovery could extend up to 3.08.

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.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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