This afternoon, Eric King of King World News interviewed me to get my thoughts on the day's market action. You can read that interview in its entirety by clicking on the link below.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/6_Norcini_-_Gold_%26_Silver_Smashed_as_Bullion_Banks_Cover_Shorts.html
Tuesday, March 6, 2012
HUI down but bounces from support
Once again the HUI has managed to attract significant buying down at the lows signifying that the same buyers who have been busy accumulating gold shares for the better part of the last year are still apparently willing to add to their holdings on these dips lower in price. As long as this index closes the week ABOVE that lower red line, we remain within a range trade.
Has the S&P 500 topped out for now?
The S&P 500 wiped out three week' worth of gains in today's session plunging through several support levels on the price chart. On the way higher, the level near 1350 had been serving as selling resistance and held the rally in check until it finally managed to break through that level three weeks ago. Today, the former resistance level, now turned support, failed to hold the decline in check.
I have set the chart in a KAGI Format as it is a better style in which to locate various chart resistance and support levels in my opinion. You can see the significance of 1350 rather easily as well as 1362 - 1365.
When using this chart format to analyze a market in an uptrend, the RED LINES, which indicate sellers are dominating, should hold WITHIN THE LENGTH OF THE BLACK LINES. The latter refer to periods when the bulls are in command. Notice since December of last year, this has been the case. One can clearly see the impact that EXPECTED LIQUIDITY supplies from the Central Banks has had on this market since that time period.
This looks like the first REAL CHINK in the armor of the bulls in some time. If they are able to immediatey halt the decline and take price back through 1350, they will have dodged a bullet and will be able to talk up today's selloff as just another reaction in an ongoing bullish trend. If not, the odds will favor a deeper decline with a drop down towards the 50 day moving average near 1320 should the next layer of support near 1342 - 1340 fail to stop the bleeding. Were this last level to give way on a closing basis, the red line would drop below the last BLACK LINE and signal additional selling should be expected.
Let's see whether or not the market has factored in a worse case scenario regarding Greece and a China slowdown or whether there is yet another shoe to drop. The verdict is therefore still out but one thing is certain - the onus is on the bulls to perform right away.
I have set the chart in a KAGI Format as it is a better style in which to locate various chart resistance and support levels in my opinion. You can see the significance of 1350 rather easily as well as 1362 - 1365.
When using this chart format to analyze a market in an uptrend, the RED LINES, which indicate sellers are dominating, should hold WITHIN THE LENGTH OF THE BLACK LINES. The latter refer to periods when the bulls are in command. Notice since December of last year, this has been the case. One can clearly see the impact that EXPECTED LIQUIDITY supplies from the Central Banks has had on this market since that time period.
This looks like the first REAL CHINK in the armor of the bulls in some time. If they are able to immediatey halt the decline and take price back through 1350, they will have dodged a bullet and will be able to talk up today's selloff as just another reaction in an ongoing bullish trend. If not, the odds will favor a deeper decline with a drop down towards the 50 day moving average near 1320 should the next layer of support near 1342 - 1340 fail to stop the bleeding. Were this last level to give way on a closing basis, the red line would drop below the last BLACK LINE and signal additional selling should be expected.
Let's see whether or not the market has factored in a worse case scenario regarding Greece and a China slowdown or whether there is yet another shoe to drop. The verdict is therefore still out but one thing is certain - the onus is on the bulls to perform right away.
Huge Exodus out of RISK TRADES in Today's session
Hedge funds algorithm's are going beserk on the sell side today with the result that most of the commodity futures markets are getting slammed lower. There are very few exceptions to the selling with Soybeans, Cocoa and Natural Gas are the few commodities holding up.
The metals are getting hit particularly hard with both silver and gold violating downside support levels on the charts. As can be expected, gold is holding much better than silver in a risk aversion environment.
Once again the catalyst for all of this is the situation involving the Greek debt bailout plan. Markets are worried that things are not going as the central planners were hoping.
The metals are getting hit particularly hard with both silver and gold violating downside support levels on the charts. As can be expected, gold is holding much better than silver in a risk aversion environment.
Once again the catalyst for all of this is the situation involving the Greek debt bailout plan. Markets are worried that things are not going as the central planners were hoping.
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