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Has Gold Trapped Enough Shorts to Fuel Its Next Rally Leg?


The FOMC reaction has been fully retraced through Monday's low. Let's see if that matters.

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 extended down Monday relatively more aggressively than silver. And gold's extension down was essentially ignored by currencies. Its reaction up from testing last week's buy signals is obligatory. Extending higher Tuesday would be bullish.

Dollar Basket
Eerily narrow ranging Monday all but ignored volatility in precious metals and energies. There is no new signal.

Dec Contract EC; (NYSEARCA:FXE)
Narrow ranging Monday was no longer "ineffectual optimism" that had inhibited a sell-off Friday. The hesitation under 1.3580 without actually reversing down does suggest it will at least be tested. No sell-off before then would be credible.

Dec Contract GC; (NYSEARCA:GLD)
Overnight selling tested 1321.00 down to 1313.00, which were both off last week's buy signals. Just holding a test of 1321.00 suggests that sellers have been absorbed. Closing back above 1325.00 signals momentum is probably reversing up, although closing above 1330.50 Tuesday is needed to confirm.

Dec Contract SI; (NYSEARCA:SLV)
Monday's gap down immediately filled the 22.70 gap and had little difficulty recovering to probe positive territory. Closing positive Tuesday would signal that the drop had ended.

30-Year Treasury
Dec Contract US; (NYSEARCA:TLT)
Overnight weakness was recovered back into positive territory, but perhaps only as a flight-to-safety while stocks slid. Their recovery intraday didn't help, as 132-00 was still being tested through the afternoon.

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
The drop extended Monday and probed under its interim to suggest the recent slide from retesting 107.85 (basis Nov, 108.75 basis Oct) wasn't just noise within the range. There is no active signal.

Natural Gas
Having failed to rally yet from multiple tests of support, Monday's delay in extending higher was already bearish, but extending down to fresh lows testing 3.60 only confirmed. There is no active 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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