$dxy completed a break-out then pull back pattern. now 76 could be a support. it might go to 76.8
The key line is at 77.69. Before we get there, I will still call it a correction, but rather an impulsive.
Friday, December 11, 2009
Review on USD
PGS of the flying pigs are in trouble. $ got boost.
$dxy completed a break-out then pull back pattern. now 76 could be a support. it might go to 76.8
The key line is at 77.69. Before we get there, I will still call it a correction, but rather an impulsive.
$dxy completed a break-out then pull back pattern. now 76 could be a support. it might go to 76.8
The key line is at 77.69. Before we get there, I will still call it a correction, but rather an impulsive.
Wednesday, December 9, 2009
Interesting Chart Comparison
On Nov 27, Gold opened at 1194, then moved up a little bit and recorded a new history high at 1197. Upon the Dubai news, Gold dived to 1138.4, then end up managed to close at 1179, leaving a shadow of more than 40 points. It is a strange pattern, 60 point candle with 20 point body and 40 point shadow. How is the market going to interpret the strange candle?
Reading:
1. The dip on 11/27 measured 61.8% of the rally started from 1100 level, then hit 1197.
2. Gold resumed rally and marked a new history high at 1227.5 4 days later on 12/2.
3. Crashed since 12/2.
Gold Chart:
With help from my Chinaman, I noted similar situation happened in Shanghai before.
1. SSEC started from the previous swing low at 3060 and peaked at 3450 on 7/29. Then on 7/29 after made a new high, the index dip to 3215, which is also 61.8%.
2. Rally resumed and marked a new high 4 trading days later to 3485 on 8/4.
3. SSEC made significant retracement since then to 2640, which is 50% of a larger pattern, and spent 3 months consolidation.
Guestimation:
Gold will follow SSEC to go down for the next 3 months, first struggle around 38% at 1105 then find support at 50% retracement at 1065 level.
Monday, December 7, 2009
Epic Rally Over
Friday, the U.S. Labor Department said nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October. In addition, the unemployment rate edged lower to 10% in November from 10.2%. Given the interest-rate implications, the jobs report was a boon for the dollar, with a stronger dollar weighing on commodities prices, including gold and oil, as well as commodities producers. Market got confused after the release, with the dollar and equity rose, followed by the stock pulled back a little bit. In recent months, whenever the positive economic data, the dollar will go down. It can be explained by carry trade: investors borrow U.S. dollars to buy stocks, commodities and other higher-risk assets; the dollar falls and the riskier asset price rises. Recently FED continues to keep low interest rates in the sign of economy recovery, for the reason of high unemployment rate. Therefore, the positive employment data naturally lead to an expectation of tighten monetary policy.
The current market sentiment is no longer standing on solid long side. Gold is in serious overbought condition for a while. A correction is due on the sharp rise of dollar.
The two main reasons that are supporting the surge of gold are questioned.
1. Rate. Expectations of long-term the dollar will continue to depreciate.
2. China. Senior officer of the People's Bank of China made a public statements to be alert the gold bubble.
However, the medium and long term, we do not believe that gold's bull market to an end. Even if the U.S. unemployment rate fell to 10.0%, figures are still very bad. Any tighten monetary policy and a stronger dollar will hurt the U.S. economic recovery. To protect against the weak U.S. dollar, the Chinese still need to buy more gold to diversify their foreign currency reserves. The key is timing and price. Fundamentals, the market still need to restore confidence in the following few trading days, gold prices will continue to rise later.
Technical analysis:
Daily: I believe 34 ema is the key supporting line, which is currently around 1135. If the rally is over, how deep can the retracement be? The start of this run can be identified as 957 in early Sept (refer to my previous chart).
From 957 to 1226, we see a fib support at 1125 area. I believe we have good support here.
Weekly: sma 4/9/30 are important, and they happen to be around 1150 1100 1000.
Monthly, if this month we closed below 1140, then it will look like top.
The current market sentiment is no longer standing on solid long side. Gold is in serious overbought condition for a while. A correction is due on the sharp rise of dollar.
The two main reasons that are supporting the surge of gold are questioned.
1. Rate. Expectations of long-term the dollar will continue to depreciate.
2. China. Senior officer of the People's Bank of China made a public statements to be alert the gold bubble.
However, the medium and long term, we do not believe that gold's bull market to an end. Even if the U.S. unemployment rate fell to 10.0%, figures are still very bad. Any tighten monetary policy and a stronger dollar will hurt the U.S. economic recovery. To protect against the weak U.S. dollar, the Chinese still need to buy more gold to diversify their foreign currency reserves. The key is timing and price. Fundamentals, the market still need to restore confidence in the following few trading days, gold prices will continue to rise later.
Technical analysis:
Daily: I believe 34 ema is the key supporting line, which is currently around 1135. If the rally is over, how deep can the retracement be? The start of this run can be identified as 957 in early Sept (refer to my previous chart).
From 957 to 1226, we see a fib support at 1125 area. I believe we have good support here.
Weekly: sma 4/9/30 are important, and they happen to be around 1150 1100 1000.
Monthly, if this month we closed below 1140, then it will look like top.
Monday, November 23, 2009
Gold? New high? Why you are surprised? 11/23/09
Gold?
New high? Why you are surprised?
People said this may be a manipulative move. Someone picks a low-volume time in the market to move the price to force people to buy in a panic. I am panic now. I am holding longs and I want to add more.
Usually gold and dollar have inverted correlation, simply because gold, as well as other commodities, is priced in dollars. But history also tells us if in financial and economic crisis, fundamental favors gold. It will move on all alone. This is the beauty of gold as compare to other commodities. Since this depression, investing structure has been changed a lot. People are now more in favor of physical investments. What will you favor? Gold the physical yellow metal or some derivatives from aig? In recent weeks, we see gold keeps on making fresh new highs even when dollars had meaningful bounce such as Friday.
Strong $? What a joke. You think Ben can defense $ by just talk some talk? It is just to provide some bargain power for Obama’s Asian visit. As long as interest rate stays low, there is no strong dollar nowhere. The fact is dx had been rejected couple times at 20ma. How strong it is?
All the reasons for long I pointed out are still there.
I want to add the China play. Well, nowadays I have not seen any research report not have China in it. This is how important the country is. All hard numbers indicating China has already got out of recession. I expect China to be the largest gold consumer in 2010.
Decrease of the use of hedge is another driver. Since 2001, gold miners have decreased hedging for about 90 million ounce. In q3, gold hedge dropped to 11.5 m. In theory, the reduction of hedge helps the gold spot price.
Now the chart reading:
Weekly and monthly charts are very strong. On daily chart, we still have HH HL. The possible H&S is gone. BB is expanding. Target remains at 1200.
However I expect some small bounce of dx recently, thus gold may range another 2 weeks or so. Overall since 1100, a lot of speculators jump onto the boat. They may take profit at any time. Also for Xgiving long weekend, a lot of funds will reduce their positions. I will hedge my longs.
Today's range could be 1154-1168.I will add long below 1155 with stop at 1146 and short high with stop at 1169.
New high? Why you are surprised?
People said this may be a manipulative move. Someone picks a low-volume time in the market to move the price to force people to buy in a panic. I am panic now. I am holding longs and I want to add more.
Usually gold and dollar have inverted correlation, simply because gold, as well as other commodities, is priced in dollars. But history also tells us if in financial and economic crisis, fundamental favors gold. It will move on all alone. This is the beauty of gold as compare to other commodities. Since this depression, investing structure has been changed a lot. People are now more in favor of physical investments. What will you favor? Gold the physical yellow metal or some derivatives from aig? In recent weeks, we see gold keeps on making fresh new highs even when dollars had meaningful bounce such as Friday.
Strong $? What a joke. You think Ben can defense $ by just talk some talk? It is just to provide some bargain power for Obama’s Asian visit. As long as interest rate stays low, there is no strong dollar nowhere. The fact is dx had been rejected couple times at 20ma. How strong it is?
All the reasons for long I pointed out are still there.
I want to add the China play. Well, nowadays I have not seen any research report not have China in it. This is how important the country is. All hard numbers indicating China has already got out of recession. I expect China to be the largest gold consumer in 2010.
Decrease of the use of hedge is another driver. Since 2001, gold miners have decreased hedging for about 90 million ounce. In q3, gold hedge dropped to 11.5 m. In theory, the reduction of hedge helps the gold spot price.
Now the chart reading:
Weekly and monthly charts are very strong. On daily chart, we still have HH HL. The possible H&S is gone. BB is expanding. Target remains at 1200.
However I expect some small bounce of dx recently, thus gold may range another 2 weeks or so. Overall since 1100, a lot of speculators jump onto the boat. They may take profit at any time. Also for Xgiving long weekend, a lot of funds will reduce their positions. I will hedge my longs.
Today's range could be 1154-1168.I will add long below 1155 with stop at 1146 and short high with stop at 1169.
Sunday, November 22, 2009
Scary Prediction
Usually I don’t give a shit about predictions. As a typical DTer, I never pay attention to people’s long term prediction until today, until my boy Frank showed me a chart.
This is a chart in Chinese and was posted on a popular Chinese website. Frank first saw the chart in early July but he's pretty sure the chart was first posted in late March or early April since one of his co-workers saw the chart at that time and laughed loud at it.
I don’t have any comments on the chart. It is astonishingly accurate. I know tons of economists, traders, money managers and all kinds of pros. So far I believe this guy beats everybody everything. Maybe he is the God himself.
Another shocking thing. Frank showed me a post this id wrote on the same website dated 7/15/09. Among couple thousands of Chinese characters I found the 2nd to the last sentence (thank god) contains something I can recognize: 3, dow, 10000. My boy said the sentence reads "in 3 months Dow will go back to 10K". When Dow come back to 10k? 10/14/09!
I feel so scared.
Well forgot to mention, he made 2 conclusions in his 7/15 post. Conclusion 1 is Dow 10K in 3 months. Conclusion 2 is within at least 2 years, don’t sell at any pull back, buy dip instead.
Thursday, November 19, 2009
Quick update on gold
Since my weekly target of 1150 had been reached, I think it is necessary to check the market again.
14 trading days in Nov. 11 up with 8 historical highs. This is the transcript of Gold. (Per stockcharts, today is the 3rd black day. Actually today COMEX recorded slight gain for gold.)
Today, mixed econ data pushed $, and beat gold down to 1129. but gold still managed to close above 1140.
Considering Friday, and possible uncertainty over the weekend, I will trade the range of 1130-1150, and I will hold a small long position over the weekend by sell couple puts.
Again I still think we will see 1200 this year, and very likely early Dec.
14 trading days in Nov. 11 up with 8 historical highs. This is the transcript of Gold. (Per stockcharts, today is the 3rd black day. Actually today COMEX recorded slight gain for gold.)
Today, mixed econ data pushed $, and beat gold down to 1129. but gold still managed to close above 1140.
Considering Friday, and possible uncertainty over the weekend, I will trade the range of 1130-1150, and I will hold a small long position over the weekend by sell couple puts.
Again I still think we will see 1200 this year, and very likely early Dec.
Monday, November 16, 2009
Gold Reading
Gold is enjoying one of its best November, up 6.3% for 1st half of month; adds trend likely to continue. Below are some reasons that I can think of:
1. Seasonality
Per Barclays, "Approximately mid-Nov to early Dec is a strong seasonal time for gold with an impressive track record over the past three decades."
2. Liquidity and inflation
Central banks around the world won't easily be able to exit the vast amount of liquidity they've pumped into their respective economies w/o any price. Here is the catch: "Inflation remains a real concern." That should mean continued support for gold, often used as an inflation and dollar hedge and more broadly seen as an alternative currency. As investors flee the $, they are moving into higher yielding currencies, hard assets like gold and other commodities as well as equities.
3. Risk preference
Bernanke's assessment of the economy of today reinforced a view that the Fed will likely keep US interest rates at ultra-low levels for an extended period. Despite weak US consumer confidence data, risky assets such as equities and commodities have rallied. Liquidity seems to have drowned the market's fears. The lower dollar and rising risk appetite also boosted other precious metals. Although gold put in strong gains, silver, platinum and palladium, which are more heavily used in industry than gold, advanced more in % on the weaker greenback combined with economic and automotive news.
4. India / China effect.
India bot 200 tons of gold at $1045. Now the world is eyeballing at China. Currently China has only about 1050 tons of gold, or $37b, or <2% of the reserve. The question is should they buy it at this high level? This is another test that the Chinese gov needs to face now.
5. USD: I am expecting a new low THIS WEEK. I think 74.8 cannot hold.
6. Chart reading
macd strong with expanding histogram, break upper bol, sto overbought but no big deal
This week's target 1150 with support 1128. I will buy dip at 1113.
1. Seasonality
Per Barclays, "Approximately mid-Nov to early Dec is a strong seasonal time for gold with an impressive track record over the past three decades."
2. Liquidity and inflation
Central banks around the world won't easily be able to exit the vast amount of liquidity they've pumped into their respective economies w/o any price. Here is the catch: "Inflation remains a real concern." That should mean continued support for gold, often used as an inflation and dollar hedge and more broadly seen as an alternative currency. As investors flee the $, they are moving into higher yielding currencies, hard assets like gold and other commodities as well as equities.
3. Risk preference
Bernanke's assessment of the economy of today reinforced a view that the Fed will likely keep US interest rates at ultra-low levels for an extended period. Despite weak US consumer confidence data, risky assets such as equities and commodities have rallied. Liquidity seems to have drowned the market's fears. The lower dollar and rising risk appetite also boosted other precious metals. Although gold put in strong gains, silver, platinum and palladium, which are more heavily used in industry than gold, advanced more in % on the weaker greenback combined with economic and automotive news.
4. India / China effect.
India bot 200 tons of gold at $1045. Now the world is eyeballing at China. Currently China has only about 1050 tons of gold, or $37b, or <2% of the reserve. The question is should they buy it at this high level? This is another test that the Chinese gov needs to face now.
5. USD: I am expecting a new low THIS WEEK. I think 74.8 cannot hold.
6. Chart reading
macd strong with expanding histogram, break upper bol, sto overbought but no big deal
This week's target 1150 with support 1128. I will buy dip at 1113.
Reading of DOW
Using the same methodology for the previous 9675 LIS (showed as the white line), now I calculated the upper limit to be 11245, with an efficient range of 10863-11115.
***This is just a big picture view.
***This is just a big picture view.
Subscribe to:
Posts (Atom)