Sunday Musings

It’s a rainy Sunday in Los Angeles and I spent a bit of time parsing my usual suspects. Let’s start with gold, which is in an interesting configuration after shaking out a few more longs in the past few weeks and then attempting to establish a floor in the middle of nowhere.

I have painted a box around what’s obviously a sideways range formation. I think that old NLSL at 1673.2 will be an important inflection point before the 100-day SMA, which should form a jumping board higher if breached. If we remain in this range then we may still visit our target area at 1580.

My P&F chart seems to agree as it has retained its bearish price objective at 1580 as well. Note the diagonal formation i have highlighted, one which if breached would most likely lead us to this target quickly. So if you are bearish the 1620 mark is of importance to you.

However, despite all that I think silver will be the one leading gold – either higher or lower. Let me show you why – and I have a lot more to share across the board. Please step into my cozy lair:

As you can see our second favorite precious metal is tickling its 100-day SMA right now and a push above (and maybe a retest) would shift the dynamics on the shiny metals side from down back to up.

The P&F is still looking bearish so far, and technically speaking there are two reasons why silver should go down and one why it may just hold. On the bearish side we had a high pole reversal recently and after a little bounce at support dropped lower thus painting a double bottom breakdown. We however halted right at a diagonal support line which I have highlighted a little to make it clearer. So that means the bulls are stepping in and a push above the 100-day SMA on the time based chart should be watched carefully as it may lead to a medium term trend change. Either way I think it will lead gold as there is a bit more technical info here.

The Dollar is now back at its 100-day SMA – not much more to say or to see here. If it holds then we may see further range based hopping about here – if it doesn’t then we’re going back to 78. I don’t see anything really bullish on the Dollar side as long as the forces at work are doing everything possible to destroy our collective purchasing power. Note that this happening across the board, not just on the Dollar side – so seeing the Dollar go sideways does not mean it’s holding value, it’s just losing equally with other currencies and measures out there. Maybe I should have you subs send me gold coins in the future – I prefer old Roman Brutus coins but I think PayPal is a bit easier 😉

Copper stuck in sideways range hell and our inflection points are 3.7 and 3.95.

Our more long term P&F is showing us somewhat of a symmetrical triangle or wedge formation. IT’s looking bullish and our bullish PO remains intact with 5.4 – hard to believe but I never underestimate my P&F charts.

That symmetrical triangle is rather pronounced on our long term price chart – this one covers the past three years. It will most definitely be interesting to see which way this one resolves and based on where we are this should occur in the next month or so.

Crude – also stuck in sideways hell central, inflection points are at 104 and at 109.

Here’s my medium term P&F which remains, as you probably can guess from filling up at the pump, solidly bullish. We now have a double top breakout and our preliminary bullish PO of 115 remains intact. Not much else to be said until we either breach higher or revert back to that support line.

A quick peek at momentum: This my updated CPCE chart. I had a bit of an epiphany looking at it today which I wanted to share. What seems to be happening in the past three years is a slow range based drop toward about 0.48 at which point it’s usually time to abandon the long term long side. What has happened thus far is either a quick reversal or a few months of sideways bear churning tape followed by a quick reset and shaking out of retail traders. Then the game resets and we start working our way down again – which means of course a methodic step up pattern on the equities side.

As you can see we are currently ranging between 0.52 and 0.54 and I don’t expect anything exciting for the bears until we push higher and get the CPCE near 0.48.

Before I let you go here’s the 1-hr ES futures chart which now paints us back above the 100-hour SMA, which is bullish. This chart is about an hour old but nothing much has changed since then. I would be long here with a stop below 1396 – pretty simple setup.

Cheers,