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

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

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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 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
Dec Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
Eerily narrow ranging Monday all but ignored volatility in precious metals and energies. There is no new signal.

Eurodollar
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.

Gold
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.

Silver
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
Oct Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
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.
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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