While we watched the SuperBowl last night we were also watching the Gold market for signs that the buying we believed was looming in the $1330 area did not chicken out. In previous posts we had gone from saying that $1330 was important technically, on a volatility basis, and because we had good reason to believe that there was buying in that area.
WE also handicapped that a move to $1400 was on the table if that pent up demand went "to market". It has not as of yet. The flip side of that bullish scenario was what would happen if that $1330 area of bid got filled. And this was a cause of great worry given the close on Friday.
Further, Gold had not been reacting as strongly to weakness in the greenback as it had been in weeks before. So we were concerned that a Sunday night open could be very bad for Gold, especially if the USD was stronger and equities were weaker on the Asian open. We said as much in our last post. So we watched.
We watched the Dollar open relatively firmly at 5:30 Eastern time. We watched Gold open slightly weaker at 6PM. Stocks were lower globally. We saw Gold test the lows made on Friday and were very afraid. But we saw something else. Our Volatility system did not say there was momentum in this opening last night. But we watched and worried none the less.
Last night also gave us the chance to test some tech we'd been working with. An instant replay system combined with a new screen capture software podcasters and Youtube gamers use. Here is the result. An hourly chart that you can watch an instant replay of late Friday's activity through this morning's ending at 7 AM. We hope you enjoy watching this as much as we did. It is our goal to add value to readers of our posts. And this certainly does from a review perspective.
Gold 60 Minute Chart Instant Replay - from Friday before the close to this morning
h/t Vince Lanci more about this software and proper credits next post. It wasn't free.
$1330 Holds For Now
Is Gold out of the woods yet? Of course not. But we did say, 'Watch how Gold reacts if the stock market is rescued by the Fed.' That has yet to happen. But if last night's behavior is any indication and stocks do drop again; a Fed intervention just might make those bids in the $1330 area go to market.
The key for now is: Does Gold maintain this strength in the face of a world beginning to sell stocks and bonds on the back of a Fed attempting to "Normalize" its balance sheet. We will just have to watch the tape to see.
The caveat as always is Gold could get hammered by the "invisible hand" for misbehaving and daring to tell the truth about our economy. Just because it can be.
Numbers to Watch Today
Here are some numbers to watch today courtesy of Moor Analytics
- Upside: Sell against 13392 (+.5 of a tic (5 cents) per/hour starting at 8:20am) or approaching a decent stop above; get long above on a decent penetration and look for decent short covering to come in. Sell against 13535-43. Get long above 13560-61. If we break above 13640-54, or even just above 13640, and back below-- look for profit taking to come in. Sell against/into 13742-75. Sell against 13847 (+1 tic per/hour starting at 8:20am) line; get long above the line on a decent penetration and look for $42 (+) to the upside. If we break above here decently and back below decently, look for decent profit taking to come in.
- Downside: If we break below 13152 and back above, look for short covering. Buy against/into 13089-71; reverse below. If we break below here, or even just below 13089, and back above—look for short covering to come in.
This is not advice. It is what Moor's algo system is noting on a risk reward basis. It is intended as a guide only.
Our own Trading Menu remains:
- -flat here pending news items
- -sell into strength between $1400 and $1425
- -flat /short under $1330
- - bearish on a weekly close under $1330 (Buy 6 month $1200 puts for a lottery ticket)
- - buy first time down in the $1300 area with a tight stop.
- - short under $1300 looking to capture $25 in 3 days
- - get out of the way under $1275 and wait for a new low that is not confirmed by other indicators.
Finally, remember that it is the normalization process the stock market is fearing now and how the Fed monetary policy manages the deluge of bond issuance coming. Well, that bond issuance is already happening.
To Wit:
As pointed out by @FGMR , here is why markets dropped this week. The Fed sold just $22B of $4.4 Trillion "assets" it bought over the last 9 years. It's largest one week sale since this experiment began with QE1/TARP. Watching "paint dry" Yellen told us.. pic.twitter.com/5bGK9gqMhK
— Roy Sebag (@roysebag) February 3, 2018
Good Luck and be strong above $1330
cover pic courtesy of finviz.com
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