The Good News: We feel Gold has $250 upside next time up to $1360.. more on that in a future post entitled: Unicorns, not just for Cryptos"
The Bad: We may have to touch $1200 before that happens
The Realistic:
Gold is in a bear leg and won't have a chance of being out of it until we get above $1307 on a spot basis. Traders who wish to be long should keep that in mind if that area is approached for profit taking first time tested.
(disclosure, we were stopped out of our long Silver position on Friday in the first live application of a new Slow-Algo system being developed to play counter short term robots)
This is unrelated to the much shorter term Vol-Algo system in use for years in our own accounts and spot on in Gold of late and used to swing- trade around our core bias.
Gold opened lower last night triggering a short lived but painful momentum alert for a slide that took it down to $1288.86 basis spot in the first 2 hours of trading. good news: too early to elaborate yet, but the market has $250 of upside Next time above $1360 we feel.
Very notable is the absence of early morning selling in bulk often attributed to a "fat-finger" by the more conspiratorial of us.
It has worked it's way back up to $1294 over the rest of the evening and we may get a respite from further sell-offs today based on the double bottom left on the hourly. But the bias is still lower even if the market is short term oversold.
We have traversed the full bollinger band spectrum on the daily chart. Implications of which are a pause from the deluge for a couple days; at least until the upper hand makes a turn lower and catches up with the market.
The lack of solid pauses on the way down are actually encouraging should an event trigger a rally, as there should be little to stop gold from hitting a slippery slope higher up until $1307. A breach above that would give some more boost.
It is possible that major longs are out and now we are seeing a market bullied by algorithms and short players pressing their bets. They usually win until they run into physical demand. THat could take us to $1260 and then to the much vaunted (but to us very poorly formed) breakout "wedge" line on the monthly chart. So buckle up and dollar hedgers keep your powder dry for a possible short lived opportunity to add.
We think the de-dollarization short trade is overloaded and a potentially strong backlash is coming. More on that later.
We have been following closely this petrodollar punishment as it relates to macro effects of the emerging China/Russia/ ME triad. But as a trade, it might be overbaked now. And that won't help Dollar denominated assets in price.
Good luck
Tax, travel and health all on the agenda in Washington this week, Merkel both wins and loses the German election, and markets remain unmoved by it all.
Tax plan
President Donald Trump and Republican leaders are expected to release a tax plan this week that would slash the corporate tax rate to 20 percent from 35 percent, and cut the top individual rate to 35 percent. Nevertheless, Trump, speaking to reporters on Sunday, said he hoped the corporate rate is “going to be 15 percent.”
Travel and healthcare
GOP Senators were still making changes to their proposed health-care bill Sunday in a last-ditch attempt to win over holdouts on the plan to repeal Obamacare. The president does not seem to be very optimistic, telling reporters that he is focused on tax cuts. Trump’s other signature policy – the travel ban – got an update over the weekend, with North Korea and Venezuelaadded to the list of countries blacklisted. As has become the norm with the president’s travel restrictions, the latest moves will be met with numerous legal challenges.
Angela’s clashes
Angela Merkel’s Democratic Union-led bloc is meeting in Berlin today to assess the fallout from an election that they have seemingly both won and lost. With the SPD, the party that came second in the vote, saying they will not enter coalition talks with Merkel, the chancellor has the difficult task of trying to form a government with the business-friendly FDP and the Greens. This so-called “Jamaica coalition” could take months to put together, with another election the only likely outcome should talks fail.
Markets remain quiet
The MSCI Asia Pacific Index retreated 0.5 percent, while Japan’s Topix index added 0.5 percent. In Europe, equites started out continuing their recent zen-like trend. The Stoxx 600 Index was 0.1 percent higher at 5:50 a.m. Eastern Time as markets showed a muted reaction to the German election. S&P 500 futures slipped less than 0.1 percent and 10-year Treasury yields were at 2.236 percent.
Verbal intervention
A busy week for central-bank watchers kicks off at 9 a.m. when European Central Bank President Mario Draghi addresses lawmakers in Brussels. Fed Chair Janet Yellen speaks in Cleveland tomorrow, while Governor Mark Carney addresses a Bank of England conference Thursday to mark 20 years of independence, which will also be attended by Fed Vice Chair Stanley Fischer. There are 15 speeches from FOMC members scheduled for this week, so it will be a busy one for monetary-policy watchers.
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