I have been very interested in the following the posts and the ensuing comments:
* GLD symmetry by Grant
* What Would Turn Me Bullish On Gold by Alex
* Jock’s ensuing perspective on gold’s potential break out possibilities.
Now, a week or so later, where are we? Have these recent developments altered out level of bullish or bearishness on gold as well as the general markets?
Today the weight of the SP500 index falling out of its wedge has turned the VIX back up, causing fear to re-gain a slight grip. What about the short and long term implications for the dollar which broke down from it’s triangle and proceeded to slice through support?
If these new short term trends extend into intermediate and long term courses, does it increase the likely hood of new lows on the SP500? What about the contrarian slant to all of this? It seems like the majority think it is a foregone conclusion that we will put in a higher low, just as it was last week when all of the “experts” were saying with conviction that the SP500 would “at least” continue up to the 200 DMA.
Then there is the FED. Have they orchestrated this? Id love to read some lively discussion regarding all of these seamlessly integrated elements of the market we are in today.
Thank you,
Stephen M.
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Stephen,
ReplyDeleteLooks like gold has moved higher, but I have it short-term overbought. Since it didn't move down through the symmetrical triangle, I'm looking to buy it when it pulls back to the rising 20 EMA. The SPX is rolling over and heading down. I'm looking for it find support around a major Fib level about 750-800. If it doesn't then must likely we go test the lows.
I am still bearish on GOLD.
ReplyDeleteFrom a technical perspective, the MACD remains negative on the monthly and weekly time frame whereas prices are above the EMA26 and EMA13.
From a statistical perspective, my system links tightly GOLD, the FOREX and industrial metals. The MACD of the pair USD/CAD is drawing a daily bullish divergence and bearish daily divergence for the AUD/USD. This means that both of these commodity currencies are about to lose again their value against the dollar. Moreover, the weekly Force index of DBB (ETF base metals) just drew a bearish divergence. Therefore, we should have players flying to safety (USD) so the market could go down again, at least on the short term. Note that the US index is drawing a bearish daily divergence as well.
Therefore, according to historical correlation, if USD goes up, GOLD goes down. However, as I pointed it out in one of my answers, as of may 1st, the correlation between GOLD and USD is + 0.42 for 2009 and started to be negative again in April with -0.15.
From a fundamental perspective, the majority of analysts agree on a bullish trend of gold. It depends on how fast and high the inflation comes back, the ability of the government to withdraw money from markets and the appetite of China, India and Muslim countries for this commodity. For now, the FMI should sell them its own reserve of gold and inflation should not go back soon considering a sluggish economy. Therefore, I’m not sure that pressure on gold will be high for 2009.
I’m not an economist and so my opinion is based on my very fresh self-training as a trader.
Have a nice day.