Gold (G) 12/14/17
Directional Opinion: We settled in a bear leg. Settlement above 12531 will start this in a bull leg. On a macro basis: We broke above a well-formed macro line in the week of 8/7 that came in at 12629. The break above here projects this upward $170 minimum, $489 (+) maximum—the maximum to be attained likely within 9-12 months. However, this has been on hold since we broke below the formation mentioned below. This line will come in at 12252 this week. A macro solid failure below it will warn of significant pressure in the weeks ahead. The solid trade below 12736-33 projects this downward $19 minimum, $97 (+) maximum based off a well-formed formation. We have seen $35 of this, but the last $6.1 of this has been while it is on hold because of the break above the steep bearish line mentioned below. If we violate solidly where the original breakdown line comes in at 12746, this will warn of solid short covering, and reestablish the macro bull call. On a short-term basis: We broke above the steep minor line at 12486-96 (-3 tics (30 cents) per/hour) Monday, which warned of short covering. We saw little follow-through at first, but finally short covered pretty hard off of where it came in Tuesday afternoon. I said in the Post Market Synopsis that this went out fairly strong on the day—we traded $13 higher so far, but are called $8.7 higher as of 5:19am. A maintained gap higher today will leave a short term bullish reversal below that will warn of decent short covering, likely for days; and you could assume a possible early reentry for the macro long.
Upside: I am writing this from the higher call. Get long on a gap higher or pullback afterward if the risk/reward is reasonable with a risk slightly below yesterday’s high in anticipation of the gap possibly holding for the day. Sell against 12670-81 on the way up for a decent smack down. Sell against 12717-18. If we break above here and back below, look for profit taking to come in. Sell against 12731-46 or approaching the stop above; get long above on a solid penetration and look for the short covering mentioned above and a resumption of the macro bull call. Get long above 12805. Sell against 12925; reverse above. If we break above here and back below, look for profit taking to come in. Sell against 12975-83. Sell against 13034. If we break above here and back below, look for profit taking to come in.
Downside: I am writing this from the higher call. Buy against 12544-33; reverse below. Buy against/into 12444-32 (a moderate suggestion). Buy against 12383. If we break below here and back above, look for short covering to come in. Get short below 12366-46. If we break below here and back above, look for short covering. Buy against 12295. Buy against 12252-47 for a major bounce; reverse below on a macro solid penetration and look for continued pressure to come in the weeks ahead. Buy against/into 12175-51 for a decent bounce.
13034* 12975-83 12945 12925* 12805* 12731-46* T 12718* 12670-81* 12628-32* GAP 12571-81* 12533-44* 12486 12432-44* 12383* 12366-46* GAP 12354 12295* 12252-47* T 12237 (-3 p/h) 12175-51**
ADR: 71.2
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