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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Mon Mar 12, 2007 1:22 am Post subject: Gold and Silver Analysis - The Precious Metals Cat has Nine |
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This is not the end of the bull market in metals and the blue moving average trend lines above should roughly hold. It's still reasonable, though, to expect some more short term weakness until the newfound volatility works to correct the recent overreaction.”
~ Gold and Silver Analysis - One Step Forward, Two Steps Back , March 04, 2007
Last week played out much as expected. Actually, it couldn't have been more perfect. The gap down and early weakness on Monday morning hit the 50-day simple moving averages described in the last update. The overnight move came as the USD/JPY tested support just above 115 and, as anticipated, bounced higher.
Members in the Trading the Charts chatroom knew to watch Monday morning's ISM Services data for a reversal catalyst, and, sure enough, that's exactly what we got in the weaker than expected number that was, nevertheless, better than recessionary. Bottoms are made of such as this.
TTC members were also tipped off before the release of the data to watch the inflationary implications of high unit labor cost extend the recovery in metals, which they did. Strong steel output further cemented the move as the yen gradually continued its decline against major currencies. Members saw TTC's proprietary trend cycle charts capture the reversal beautifully, like the one below.
http://www.marketoracle.co.uk/Article504.html
Last edited by Shahla on Wed Oct 03, 2007 3:27 am; edited 1 time in total |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Sun Mar 18, 2007 5:05 am Post subject: Gold and Silver Analysis - Lackluster, But Not Tarnished |
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Even if there is a retest of support in the next two weeks, vital signs indicate this cat still has plenty of lives.” ~ Precious Points: Nine Lives, March 11, 2007
Though the trading in metals looked pretty unenthusiastic by the end of the week despite higher than expected inflation readings, gold and silver lived up to our expectations and, at Wednesday's lows, landed on all four feet. Readers were directed last week to examine last June, Sept and January on the weekly charts to illustrate the expectation of “inevitable” attempts to retest the 50-day simple moving average at higher lows. Even without the trend charts and commentary available to members of TTC, readers of this weekly update could have reasonably sold early strength and bought near the lows.
http://www.marketoracle.co.uk/Article547.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Mon Mar 26, 2007 3:29 am Post subject: Gold and Silver Analysis - Have it Your Way |
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by Joe Nicholson (oroborean) - “I n the end, it's not always the facts that determine the market's reaction, but the context… The best advice for markets like these is to shut out the noise and trade the charts.”
~ Precious Points: Lackluster, But Not Tarnished
The gold chart below is an updated version of the one shown here last week. Clearly there's something to those channels, and it can only be interpreted as bullish that gold caught support at the centerline and moved higher last week.
Silver, while still in the bottom channel had plenty of room to run last week and it showed, with the white metal again outperforming sector as a whole. We had been focusing on the 50-day moving average on the weekly chart for support in the recent downturns, but a member in the forums last week pointed out that silver was moving to, and ultimately closed at, the 50-day mark on the daily chart.
http://www.marketoracle.co.uk/Article601.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Mon Apr 02, 2007 8:52 pm Post subject: Gold and Silver Analysis - All I Really Need to Know About t |
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Gold and Silver Analysis - All I Really Need to Know About the Economy I Learned in Kindergarten
“ Bernanke's policies, in fact, represent a paradigm shift away from a past where every boom was expected to, and had to be followed by a bust. The wording of Greenspan's now infamous "recession" comments indicate nothing more treacherous than adherence to this older, possibly even outmoded, economic philosophy .”
~ Precious Points: Lackluster, but not Tarnished , March 17, 2007
Imagine a teeter-totter. On one end is inflation, and on the other, risk of a recession. It remains to be seen which side will grow heavy first and force the Fed's hand.
Currently, inflation is “uncomfortable”, but not spiraling out of control. The outlook for the economy darkened recently, but we're not staring down the gaping maw of recession just yet either. The two opposing forces roughly in balance, Fed policy continues to be level, unchanged.
Increasingly, though, it seems that precious metals have gotten off this see-saw altogether. They're over on the swings, let's say, gaining momentum and seeming to fly higher and higher no matter what the other kids say.
Almost two decades ago, when Robert Fulghum penned the short essays that appear in his classic book of sentimental optimism, he probably didn't imagine that typically straight-laced analysts would similarly revert to childish oversimplification and use a character from a fairytale to describe a new strategic outlook on economies and markets. Or that the devolution would persist more than a decade and three presidential terms.
But here we are. Still.
Though he thankfully avoids using the term, Ben Bernanke made headlines last week when he essentially confirmed what you read here two weeks ago and politely disagreed with Alan Greenspan's fusty old boom/bust paradigm in favor of the perpetual, sustainable growth model that is the real policy directive behind what has come to be known as “Goldilocks”.
Stock markets didn't immediately share Bernanke's optimism, but then again, Goldilocks herself never seems to get it right on the first try, either. Too hot, too cold … in fact, stubborn persistence in the face of mounting odds against her is essentially the hallmark of the Goldilocks archetype. Or maybe it's naiveté.
For more than two weeks, this update has been awkwardly suggesting, and clumsily making the case, that despite the persistent trend which has seen the precious metals trade higher with stocks and inflation, a shift towards a weaker economy and, therefore, rate cuts, could still be bullish for metals. This week's trading saw the most tangible manifestations of this yet.
The reaction to Bernanke's testimony, if that is indeed what it was, signaled a certain lack of faith in his continually rosy outlook. Downward revisions in GDP forecasts, rising housing inventory, borderline manufacturing, slower corporate profits, and most worrisome of all, weak capital expenditures, all have many traders wondering how long the economy can hold on without some sort of accommodation from the Fed.
http://www.marketoracle.co.uk/Article668.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Tue Apr 17, 2007 8:00 pm Post subject: Gold, Metals and US Dollar Analysis : Got Discipline? |
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Joe Nicholson writes “Whether the Federal Reserve tightens incrementally to look tough on inflation for which it is almost entirely responsible, or whether it makes a small cut to support a busted housing market for which it is entirely responsible, precious metals are poised to be the long term beneficiaries of either policy choice.”
~ Precious Points: All I Really Need to Know About the Economy I Learned in Kindergarten , April 01, 2007
The last few updates essentially took the position that the short term fundamental outlook was muddled, but that, nonetheless, precious metals stood to benefit in any likely event. Despite the ebb and flow of rate cute expectations, gold and silver (and platinum, too!) indeed extended their rallies over the past two weeks on steady declines in the dollar and persistent inflation data. An 11.9% increase in M2 over the last six weeks probably hasn't hurt either.
http://www.marketoracle.co.uk/Article765.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Tue Apr 24, 2007 5:35 am Post subject: Gold, Metals and US Dollar Analysis : Sailing the Seas of Li |
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Gold, Metals and US Dollar Analysis : Sailing the Seas of Liquidity
Oroborean writes “A corrective dollar rally, as short-lived as it might be, could become a hurdle for metals going forward … When support finally kicks in, as it may have on Friday, there could be some correction and consolidation in metals. ”
~ Precious Points: Got Discipline? , April 14, 2007
Everywhere you turn, economists and commentators are talking up the benefit of the weak dollar – how it's good for exports, how it will boost the profit margins of multinational corporations. What you don't hear quite as much of is how it makes your cash savings worse less and less and how your wealth would be more than keeping pace with inflation if it was stored in metals.
Gold and silver have surged on a steep decline in the dollar index over recent weeks, but the last update warned that a relief rally might be due. In fact, the dollar did find an ounce of strength last week, causing the metals to briefly stumble. Core CPI was modest, but, even worse, this fed the lingering perception from two weeks ago that inflation in general is moderating. As a result, there was downward pressure on the long end of the yield curve, an overall decrease in TIPS spreads, and some recovery in the greenback.
But though traders might seize on the moment, the Federal Reserve is unlikely to have been soothed much by the single data set, especially considering the forces responsible for the mild inflation figures will probably dissipate by next month. What doesn't seen to be dissipating is the rate of increase in M2, expanding by an additional $18.7 billion last week alone.
Domestic liquidity is a concern for some, but the capital market is still showing no signs of a “credit crunch”, even though banks are restricting their home mortgage lending. The balance has been made up in business loans, which is apparent in the drop in corporate paper issuance. Corporate bonds have the requirement of being spent on business purposes, and last week's corporate paper data were consistent with the anemic capital expenditure recently lamented by economic optimists. Instead of investing in new production capacity, companies have preferred to spend their cash on stock buybacks and dividends, probably because they still see weakness for the economy in the short term. The important fact for metals, though, is that domestic liquidity remains intact.
http://www.marketoracle.co.uk/Article827.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Tue May 08, 2007 7:12 pm Post subject: Precious Points: The Ennui On the Way |
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Joe Nicholson writes : “Not until Thursdays' productivity report is there a significant chance of domestic economics driving a rally in metals… The path upward has been reopened for gold and silver to drift higher towards a retest of the recent highs, which will provide significant resistance. Just as many speculative traders go long, the threat is that a failure from the $700 area would either appear to be a double top or be labeled a corrective move up before a new impulsive wave down.” ~ Precious Points: Why Not Gold? , April 28, 2007
Expectations were uncertain going into the productivity report, but Thursday's numbers came in better than expected and provided the anticipated rally in metals, though not before a somewhat harrowing selloff through recent support. Unfortunately, despite the run over S&P 1500, Friday's anemic job growth and higher unemployment tempered optimism and left the overall outlook unclear and little changed for the week.
Little has changed and what has been changing does not bode particularly well for metals. With little exception, most of the inflation related data released over the last two weeks has been tame, and this has gone a long way towards putting something of a floor under the dollar and limiting investor interest in metals – particularly when there's large-cap tech stocks to buy and M&A on which to speculate. Though it's likely to start with a few real sleepers, next week starts a new round of inflation data with PCI and the latest on M2.
But with the next FOMC meeting now only days away, it's now impossible to keep Wednesday's statement out of the trading outlook. The Fed's recent statements have consistently come out in favor of gold and gold stocks, primarily because of an inflation-fighting bias, and there's finally starting to be reason to believe this next meeting will be different in outlook, if not immediate result. The last statement and the corresponding minutes revealed a growing willingness of the committee members to entertain the idea of cutting rates if the housing market continues to weaken, but nothing in the last two months has made it any more likely that they'll actually offer rate accommodations this year. The yield curve, in fact, has since signaled not only a slightly more optimistic view of the economy, but also decreasing inflation concerns. Realists, therefore, are not expecting any significant change in the Fed's language.
Last week, this update highlighted a very real change in the form of the Fed's fairly atypical reverse transactions, which actually drain money from the banking system. Since then, despite starting with a large repo on Monday, the week ended with a net reverse of $3.25 billion. Over the same period, the StreetTracks gold ETF, GLD, has seen near record redemptions, which could possibly be a related liquidity issue. More likely however, the redemptions reflect the growing realization that seasonality is beginning to turn against metals, and the chances of a stratospheric, parabolic rise like last year's is becoming less and less likely, at least in forward months.
http://www.marketoracle.co.uk/Article936.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Tue May 15, 2007 11:13 pm Post subject: Precious Points: Don't Fear the Repo |
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Joe Nicholson writes “Even if the Fed ignites a rally on Wednesday, as it has in recent months, profit-taking, instead of frenetic new buying, is still the most probable ultimate result.” ~Precious Points: The Ennui on the Way , May 6, 2007
After starting off the week with a bit of a haircut, metals traded in a tight range until Wednesday afternoon, when the Fed statement sparked a rally that was soundly sold off the next day. Stocks ultimately closed roughly flat for the week, but on top of a rally that seems to have inspired new hope for Monday. The question is whether or not to believe the hype.
Well, the last two updates stressed the Fed's open market activities ahead of their latest statement. For three weeks now, reverses have removed dollars from the money markets and, at least temporarily, propped up the dollar. Not surprisingly, Thursday's M2 report showed a decline in broad money. The Fed has to remove this money to compensate for decreasing demand and to maintain the federal funds rate.
Last week's reverses continued this trend, ending the week with a net reduction of $6.25 billion. Rather than suggesting the potential future of monetary policy, these transactions are essentially concurrent indicators suggesting a downturn in the economy. Certainly that's the suggestion of the latest economic data.
Because it's used in GDP calculations, the trade balance figure in particular raised some eyebrows. Consider also that Friday's PPI came in as expected and, even though the Fed didn't explicitly change their focus from inflation to slowing growth, the prerequisite conditions for a cut are beginning to materialize. The Fed's statements have kept the door open for a rate cut, but last week's refunding held bond yields higher and a resilient consumer kept the bond market from moving toward pricing in a cut – even as stock markets and mainstream analysts seemed to conclude rate cutting is inevitable.
Despite the conviction of some high-profile commentators, a rate cut is not a foregone conclusion. But, with the domestic economy clearly slowing, M2 on the decline, China taking steps to slow its own growth, and Europe and London set for further rate hikes, perhaps measured inflation will at least get back to comfortable levels. “Stagflation” is starting to be murmured again in some circles, but the recent trend has been toward less not more inflation. Still, the total picture is far from black and white. Friday's data suggested a new wave of price inflation could be on the way, though probably not in next week's numbers.
Nonetheless, history suggests that if the Fed is indeed gearing up for a cut this year, metals probably won't bottom until shortly thereafter, an outlook reflected in the chart below. The limit line above $720 is the point at which this pattern, and its anticipated decline to about $600, is negated.
http://www.marketoracle.co.uk/Article988.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Wed May 23, 2007 2:31 am Post subject: Precious Points: A Bounce is a Bounce |
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“A continuation of reverses (signaling continued weakness) would most likely continue to trigger liquidation of large gold positions and put downward pressure on metals… What gold needs to get its groove back is a rebound in the economy with an uptick in inflation.” ~Precious Points: Don't Fear the Repo , May 13, 2007
The Fed continued reducing the money supply this week by failing to place as many dollars through repos as were removed at maturity. Not surprisingly then, metals continued their downward slide through the early part of last week.
But, as expressed in the previous update, signs of a resilient economy began the recovery and, in fact, gold and silver put in short term bottoms on Thursday once investors digested optimistic statements by Chairman Bernanke and the drop in jobless claims. Rate cut odds receded, as priced by the Fed funds futures, and Friday's stronger than expected consumer sentiment sealed the deal, confirming what the trend cycle charts were already suggesting was a tradeable bounce at Thursday's close.
The 60min chart went positive (blue) during the first hour of trading Friday morning and closed just slightly above the blue, dotted moving average line, suggesting a continuation of the rally lies ahead. There's little news next data, economic or earnings, but traders should remain cautious and not assume a quick bounce is the start of a new uptrend.
Gold and silver rallied Friday despite a surge in the dollar against the Euro and the Yen, and in the face of a triple-pronged tightening effort in China . Metals could continue Friday's run if this rally in the dollar reverses and takes out new lows, but because it will probably be very difficult to stage a run to new highs in the face of a strengthening or even steady dollar, and the attractiveness of U.S. markets has been has seemed to put a floor in the dollar index. Platinum traded along the same general lines as gold and silver, and the chart from last week continues to suggest the likely target for this move.
Metals seemed to get a boost from stocks, perhaps because of hedging or allocation maintenance, Week in and week out, stocks have gone higher and higher on foreign investment and multinational profits, as the United States' accommodative money markets remain an appealing home for foreign capital, but for the most part, metals have not gone along for the ride.
http://www.marketoracle.co.uk/Article1049.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Tue May 29, 2007 5:54 am Post subject: |
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Oroborean writes: This week saw a full cycle in the 60-min gold trend cycle chart and, as warned, the move up did not see a dramatic increase in price. This, of course became it's own warning signal. Stocks and metals both saw a pullback on Thursday that had most major indices breaking through long-standing trendlines and the 60-min gold chart racing back towards the bottom.
“TTC's proprietary 60min trend chart is looking for this move to continue, but that doesn't necessarily require a dramatic change in price… stocks could be overextended and due for a pullback, and metals probably won't provide much cover… sometimes a bounce is just a bounce.” ~ Precious Points: A Bounce is a Bounce , May 20, 2007
But, for the third time in a row, a down week for metals ended with a modest rally that puts an optimistic spin on the week ahead. So far, each rally has given way to further selling in the subsequent trading sessions. Despite the intensity of the selling last week, metals did not retreat far enough to reach the important support levels outlined in the last update. Of course, this could mean there's more downside to come in the near future, but unless it materializes and those levels are truly tested, that resilience is positive.
Remember that about two months ago, on April 1, the chart below was posted publicly in this update. At the time the fundamental outlook for precious metals was excellent, but technical obstacles suggested an unfettered, parabolic run like the previous year's was unlikely. The red lines above $700 represented the target area for the then current move, the anticipated higher highs, and the area from which the direction of the next move would be decided.
http://www.marketoracle.co.uk/Article1108.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Mon Jun 04, 2007 5:07 am Post subject: Gold and Silver Analysis - Precious Points: Why This Rebound |
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Joe Nicholson writes : “With the market all but giving up on rate cut relief this week, the proliferation of leveraged buyouts and junk bond issuance, and the steady surge in bank loans and global liquidity, give every indication that real interest rates might be too low.” ~ Precious Points: No Lack of Support , May 27, 2007
Weeks ago this update said that what gold needs to get back its shine is a rebound in the U.S. economy. As you know, this is exactly what recent data has suggested, and the metals have acted accordingly. The focus for some time here has been on the Fed's open market activity, and specifically the “sloshing” repo funds. After breaking the streak of reverses two weeks ago with a modest $3 billion net addition, last week concluded with a net add of $6.75 billion. In a rate-targeting regime, this reflects perception of a stronger economy driving demand for more base money, and the overall liquidity is an ideal environment for appreciation of precious metal.
http://www.marketoracle.co.uk/Article1172.html |
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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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| Posted: Mon Jun 11, 2007 7:06 pm Post subject: Gold and Silver Analysis - Precious Points: Gold Don’t Go Ge |
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