First off an update on the website. It looks like we are getting close. Unfortunately the subscription plugin is no longer an active company and we can’t obtain a re-install so we are in the process of transferring all the active files into a new subscription plugin. This is just going to take a little time, and from what I understand the new system once we go active will create new passwords for everyone. So be sure to check your email once the premium site comes back online for your temporary password. If you don’t see it check your spam folders.
As soon as the website is active I will post a notice here on the blog and the nightly reports will return to the premium site.
I’m going to start off today by saying that nothing happened in the Ukraine this weekend that the market didn’t already know was coming. The market has known all along there was never going to be a war. It’s known all along what the vote would be this weekend and that Crimea would elect to secede to Russia. All of that was priced in by the close Friday.
I would argue that the only thing that has changed is that the Fed needs the market rising when they deliver the next FOMC statement Wednesday afternoon, and I think they will do everything in their power to make sure that happens. The question is will they succeed? Based on the close today I would have to slide the odds in the Fed’s favor.
The Nasdaq however has not regained that 4290 support zone. Until it does I’m not going to increase position size in the stock portfolio.
On a purely technical basis gold has formed a bearish engulfing candle today. It also closed below the Sept. FOMC top. Ignoring everything else the charts are saying that manipulation zone has been successfully defended … at least for today.
If we were dealing with freely traded markets then I would say gold is just preparing to dip down into a half cycle low. No big deal. But as we all know there are no freely traded markets anymore, and this has to some extent become a business of trying to second guess when and where the next manipulation is going to occur. We anticipated the stock market manipulation correctly, now we have to look into our crystal ball and try to decide where the metals are going to be driven next. Will it be towards the moon, or over a cliff?
I think this all started as just a knee jerk reaction to the Fed’s manufactured rally in the stock market. Gold was holding up rather well for most of the morning and had even climbed back above $1380 at one point. However it wasn’t long before the now familiar dump triggered a sell off and before it was over gold had dropped over $30 from top to bottom.
I don’t expect there is going to be a lot of buying pressure between now and the FOMC statement on Wednesday afternoon so the potential is there for another middle of the night or premarket attack. If it happens in this pre FOMC environment there is risk that a well timed manipulation event could drive gold back down into the consolidation zone below $1350. It took a lot of time and effort for buyers to break out above that resistance zone, a move back below that level could be demoralizing for the bulls and we could see the buying pressure dry up completely.
The miners have already dropped back down into the consolidation zone and on heavy volume. I was really expecting buyers to show up at $27, when they didn’t it triggered even more concern.
This is a dangerous time right here. Gold could be just one manipulation away from breaking the daily and intermediate cycle. Until I have some idea how this is going to play out I’m happy to lock up most of our profits and be satisfied for now.
Actually I’m seriously considering taking the rest of our profits and just sitting on the sidelines until the next ICL in May or June. It’s not critical we catch every last penny of this intermediate cycle, we’ve already made good money.
The big money is going to come during the next intermediate cycle anyway, so I’m very tempted to just lock up our metals portfolio and go on vacation for the next two months (at least in the metals portfolio).
I’ll probably make a decision tomorrow based on if gold follows through to the downside.
Another concern is that oil continues to drop into it’s intermediate bottom (ICL). As it does it’s dragging most of the commodity sector down with it, and this may include gold if today is any indication. A normal ICL for oil is 50-70 days. Today was day 45 with potentially 5-25 days yet before a bottom.
We’ve had a pretty good start to the year so far. It may be time to take a much deserved break and wait for a better setup with less downside risk and more upside reward. I’m confident we will get that for sure at the next ICL, so I’m not extremely motivated to try to catch every last penny now that gold isn’t behaving perfectly.
Basically once gold gets past 10 weeks into an intermediate rally, and intermediate term overbought, I need it to behave perfectly to keep me on board. Today gold misbehaved, and lost some of the romance. Anymore of that and I’m going to want a divorce…at least for a month or two.
Second daily commentary.
The build up of commercial shorts on COT tells me this round of rally is over.
We still don’t have an extreme Blees rating so I’m not terribly concerned about the COT, but I am concerned about the intermediate overbought conditions, impending ICL in the dollar, and potential failed breakout so I’m content to take profits and maybe let the rest pass me by and wait for the monster opportunity in May or June.
The problem is the rally in the last two weeks was purely the result of geo-political tension. Such factor is not supposed to last and once it’s gone all that un-earned surge would wash away.
Certainly the last week was icing on the cake but something else drove the gold rally for the first 2 months. I think we got a final bear market bottom. But that doesn’t mean they won’t continue to jerk gold around whenever they see an opportunity.
In COT report, the driving factor behind the rally was mostly hedge fund closing their shorts. Does that mean their next move will be aggressive loading the longs. I doubt it. As long as equity market still goes higher there’s no motivation for them to long gold. That plus the high net short position by the SWAP players makes me nervous about how much leg this rally still has. I would not add any long at this level and have been on trail stop mode since 1340.
I’ve pretty much resigned myself that at most I will only ride anymore of this rally with the current downsized position. We were planning on reducing at $1425 anyway and we got to within $35 of that this morning. That’s probably close enough.
In the AP I’m probably going to lock up my metals tomorrow and just hibernate until May where I will hit it very hard once I think the yearly cycle low has bottomed.
Gary , Could one make a case for a bubble faze in stocks to continue ? S&P chart looks like we had a powerful rally off the bottom just like you said it would make , last week it was a mini correction due to some geo-politics and to reset sentiment . What do you think ?
This could end up being just a severe half cycle low. That being said I don’t believe for a second the rally today right in front of the next FOMC meeting is natural.
” …I need it to behave perfectly to keep me on board. Today gold misbehaved, and lost some of the romance. Anymore of that and I’m going to want a divorce…at least for a month or two.”
I hope you aren’t channeling your past married life. (By the way, I’ve divorced and re-married gold more times than I care to recall!)
Gary never gets married to any trade . He has wisdom to see changes and make a right decision on a dime . That’s a strength that most of us don’t have . One of the reasons i follow him . Latest example is calling the bottom stocks in real time in early february .
I wish I had sold this morning. We are already down to 1359. And it is 6:30 in Los Angeles. It could get ugly tonight. Gold never lets you relax fully.
Looks like they’re hitting gold in China tonight.
Why does the Fed need the stock market rising when they deliver the announcement? Hasn’t it already been rising almost non-stop since the fall of 2012? If they really want it to keep going higher, wouldn’t it be better if they let it go down (at least a little bit) before the announcement and then squeeze the shorts out immediately after they announce, rather than scare all the shorts out all out now?
I covered my reasoning for why I think they would prefer the market rising into the next taper. Feel free to disagree.
gold was just out of its BB and needs a bit of a pullback. I bet we see the 1380 regained after it meets with its 20 ma
I’m just a lucky visitor and not a member, but I agree w/you. On March 13th, just 3 candles ago, Gary posted that we were on day 9 of an 18-28 day cycle. I think that this breakout is still valid, as long as we stay above the breakout candle on March 12th, at 1350. And 1350 is where the 20d EMA will be in a day or 2, looks like.
What about buying a little of DUST (5% of capital), or shorting gold (let’s say 1 mini contract), if gold goes below 1350, aiming at 1222, 1180 or even 1030?
Is the 1350 level where we should take the above mentioned position?
Posted this on the premium site yesterday :
TraderT March 17, 2014 at 8:56 am
Your comment is awaiting moderation.
sitting on hands.
So it does not seem to be working. There are no further comments after mine as of now.
Gary, could this be stretched 2nd DCL and then 3rd DC would be shorter?
Just posted a morning report.
I’m in moderation but did post