"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET



Thursday, September 12, 2013

Gold gets "Whack-A-Moled"

Some of you might remember that cheapie little kids game called "Whack A Mole" in which you get a plastic hammer in order to beat the crap out of the little mole that sticks its head up through the plastic opening in the slide. Well, that is what gold reminded me of today. All it took for the metal to get "whacked" down through support was a jobless claims number. Once that hit the wires it was all downhill for the metal. And yes, it is not helping matters none that the Syria situation has turned into "Peace in our Times" as far as traders are concerned.

I mentioned in yesterday's piece that gold could drop down into the next support level near $1330 - $1325 should its support level give way. That is where it is currently sitting and truthfully, it looks like bears are growling and wanting more. If the market cannot hold above $1320, it can easily drop down to test the psychologically important $1300 level. Bulls would not want to see gold lose its "13" handle as that would be devastating psychologically, especially during a time of the year in which we generally have pretty hefty physical offtake over in Asia ahead of the festival seasons.

We simply have to wait and see what kind of response we get to the various economic data releases that are hitting the wire in order to get a better feel as to whether or not gold is going to hold support or not. The only thing I believe I can clearly say is that the bears have regained the short-term momentum in this market.

The following chart notes the ADX indicator which I like to use to judge trend strength. Notice that the ADX line has been moving lower, indicative of a LACK OF TREND. It is now rising, albeit ever so slightly while the -DMI ( Negative Directional Indicator) is also rising and is trading above the + DMI ( Positive Directional Indicator - blue line).  That is very clear - the market is moving sideways to lower with bearish forces in control. I do not know how to spell it out any clearer.



The shorter term 10 day moving average has completed a downside cross of the 20 day moving average which is a negative signal. I will be the first to admit that moving averages can be useless during phases in which markets are choppy as they can generate signals which can get you whipsawed but the facts are that the hedge funds are still in love with the things and thus they cannot be ignored. The fact that the price has now dropped below all four of the moving averages noted on this chart will get the attention of their algos... My thinking is that hedge funds are in the process of rebuilding those recently lifted short positions - the ones they were covering for most of the last two months and what drove the price over $200 off the low. That is not what any bulls want to hear right now. Perhaps some news will hit the wires that demands no break or let up whatsoever in the Fed Bond Buying adventure but that is an unknown and we have to work with what we have at the current time.

The HUI fell completely apart today ( again).... it has major support near 220 - 217 which it had better hold or else....

Silver proved just how fickle it can be as it was blasted into the nether regions today. The 50 day moving average is about 50 cents or so below today's close ( $21.38).... one would expect it to encounter some buying near that level if nothing else from some short covering. If not, the charts indicate a drop into a former congestion zone from $20.25 - $19.75.

Even as I type these late afternoon comments, price for both of the metals is continuing to sink lower....the damage on the charts is significant once again with the bulls under the gun to hold the market here or face increased losses.



37 comments:

  1. Dan,
    Rarely have I seen your comments not point out that the jobs number was not accurate because it did not include two states due to a computer mistake. Also the four thousand contracts that went out in the middle of the night dropped twenty dollars in an instant.
    Gold looks horrible and paper gold still rules. Why if the Sprott's, Sinclair's and others talk about these shortages does paper still rule the price? It seems as if gold needs to catastrophe to move higher and who wants that. This former bull market which seemed fundamentally sound in theory is self destructing.

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    Replies
    1. Concord;

      I do not believe a single thing that comes out of our central planners as far as the economic data that they release. That being said, we have to gauge the market sentiment towards these useless pieces of information if we are too hopefully be able to profit.

      I agree with you - I do not know exactly what it will take to launch gold but whatever it is, is not going to be pleasant.

      Shortages mean nothing to me either unless the price action in the futures markets confirm it...if shortages are real, then traders would be all over the futures market to arb and make a killing that way.

      Incidentally, remember all that gold that JP Morgan was taking delivery of last month? so far this month they are the largest issuer... that means seller and it is for their house account... I will keep monitoring that to see where that leads...

      Delete
    2. Concord; Unfortunately Dan is right in that the government figures are worthless lies, but since the media has long ago been captured by the banksters, the explanations can be spun any which way but loose. As far as the PM promoters go, they know as much about future prices as you and I and Dan put together. Only Preditor1976 knows; steve in sparks

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    3. Ahh,,,survived the old "whack a mole" day. Now where do I put my money? Seems like the only way to make a buck is to go long stawks. Hilarious beat down at 3 AM then the jobs number less of course California and New York??? Let's see Market Watch ran an article stating "Deficit down 35% Improvement" or something like that. They stated that the deficit right now is but a mere $755 Billion with 60 days to go. Ok, we might come in say $900 Billion. Now if you add $17 Trillion and $900 Billion and start paying higher interest as the Bond Market collapses, then I believe we are now in a BANANANA Republic. You know when we cannot even come close to getting a balanced budget. If you throw in the SS, Medicare, and the new Obama care plans, heck, we were broke 10 years ago.

      On the other hand the AR-10 was picked up today. My it is a very handy defensive asset to have around. Since I am closer to being able to relocate, Wells might have another Short Sale on their hands. Have a great day all. I can smile because I did not lose another $ on the miners today. The problem I have is HOW DO I MAKE MONEY? Stawks..Gotta be Stawks..Tesla.
      JPM just announced Mike Neal on their board. He was leading Capital when it nearly cratered. Looks like he got a good parachute. Just wondering if America and it's giant finance portion are gone for good. Only the large institutions made it out and with a lot of taxpayer money. So sad.

      Delete
  2. ...i wonder where support would lie if 217 on HUI gives way...pretty strange that gold was about 150 bucks lower last time HUI was there, but i guess since its never been that low, then it would be psychological numbers.like 200 ...scary stuff....

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  3. I am neither intelligent enough nor have the full-time time to be a trader. But for fun, I have been trying to learn.

    Let me see. Today, because the moving averages have been crossed over to the downside and momentum indicators are downward, the hedgies will be piling into short positions driving the price ever southward. Why didn't the hedgies drive the price beyond the resistance where it died?

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    Replies
    1. I meant to say "upward". Why was the upward momentum arrested? Well, I get it, the downward momentum will be arrested when Asian physical buying becomes phenomenal. The upward momentum was arrested ... just because there was chart resistance where gold had often been sold in former rises.

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    2. This comment has been removed by the author.

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  4. Dan,
    gold got smashed already during asian trade (the usual huge block dumped with a market order to overwhelm the bids). ZH reported, that even circuit brakers stopped the GC contract from being traded for 20 seconds.

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    1. endzeit14;

      Yes, I did see that report... just more proof positive that hedge funds know nothing about finesse or strategy. They are clumsy, bumpkins of traders but they possess all the money so there is nothing we can do except to watch them destroy the smooth functioning of our financial markets.

      Delete
    2. Dan, this is the difference between you and conspiracy believers. you think this is HF, but they think it's triggered by BB.

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    3. chalice;

      thanks for the comments... the only problem for those guys is that the commitment of traders report indicates that throughout the entire downdraft of the previous months, the bullion banks have been buying and covering short positions.

      Delete
  5. http://www.silverdoctors.com/did-jp-morgan-just-tip-off-paas-that-gold-silver-are-about-to-explode-higher/

    Dan, what do you think about this news? You just reported that PAAS entered hedge. Now, they removed it! Any thoughts?

    Doesn't this look like the end game? It's said COMEX hasn't got any gold for a while. Now the price action forced miners to hedge, so COMEX can get fresh gold/silver. It will not default! Is my understanding right?

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  6. http://mobile.bloomberg.com/news/2013-09-12/comex-suspended-gold-trading-for-20-seconds-after-price-slump.html. Great post Dan. This short infomercial concludes with a telling admission of the meaning of liquidity and equilibrium, relatively speaking of course LOL.

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  7. Gold was falling well before the initial claims number came out. Its biggest tumble came at around 2:30 in the morning, some 6 hours before the claims data were released.

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  8. Unknown, well said. That's almost too much of a good thing. First come, first serviced - tip offs for the 'tape psychics'...

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  9. Hi Mr. Norcini, I remember playing "whack the mole" at the P.N.E. fair in Vancouver B.C. many years ago! You sure had to be fast to get them all, I guess that's what algos are for in current whack the mole game in the gold market lol.
    You touched on silver today, would love to see a chart on silver again!!!
    Also would you consider doing some chart work on bitcoin?
    It looks like it might be forming another longer term parabolic look again?? I recently heard on the radio that some bitcoin kiosks are opening up here in Canada soon.

    derry

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  10. Chalicewww- I guess they're getting tipsy. If only we had some tip readers among us, we'd be hedging the hedge hogs. Talk about tipping points.

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  11. can somebody tell me please what kind of chart pattern the "13" handle is exactly?
    I keep hearing this and "14" handle from Dan all the time and I tried to Google it but Google does not know it either.

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  12. Kris:

    The "13" handle is when gold drops below $1,400 per ounce (i.e. 1398, 1387, 1363). In other words, the price of gold begins with "13." A "14" handle is when gold is trading above $1,400 per ounce.

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  13. Kris, It's not a chart pattern. It just pertains to the price.
    So, a 14 handle means the price is 1400+. An 18 handle would be a price in the 1800's and so on. Or an S & P with a 16 handle is the price 1600 or above. OK?

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  14. This is becoming boring as mentioned last week the expected take down occurred. FED backed TBTFs using that money tree to panic shorts and go long on the Comex, must be trying to make some money for their Christmas stocking!

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  15. Hi guy..

    I think the bull raid almost ended for now so , i am building some long position from here.

    Cheer

    ReplyDelete
    Replies
    1. I would wait with that long position for a while. Gold just violated the very important 1350 support. It's not a good omen.
      I will not be surprised at all to see the June lows in a few weeks. And if we are there we might get even lower. who knows?

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    2. In fact if gold will get close to 1350 again I will start to build some short positions.
      1350 is a very strong resistance now therefore a relatively safe place to short (remember how difficult it was to take it out in August for the bulls) .
      It would take Syria escalating into a full blown war to conquer 1350 again.
      This is just my opinion though.
      By the way MACD is also indicating a downward move.

      Delete
  16. Hi Dan,

    Bit confused with this mixed info...

    Eric Sprott says "the central banks, through the raids on gold, the raid on GLD..."
    TraderDan says, the raid is by the short sellers, ie Hedgefunds. The hedge funds move the price.

    The question: so the culprits of these raids are the hedge funds who move the price as per your knowledge and thinking. If this being the case, why do we hear so much about these evil central bankers manipulating the gold market?

    *(sorry if you've already answered this question elsewhere before).

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    Replies
    1. the 1 dollar question is who is manipulating what?
      the gold pumpers like sprott and the other geniuses on KWN (respect to the exceptions!) are always blaming the central bankers for manipulation when gold moving downward yet never fail to add that very soon the manipulation will fail and gold will explode to the moon because physical shortage. etc.
      I don't know whether central bankers manipulating gold or not I know however for sure that there are a lot of gold pumpers out there who are making a lot of money by manipulating the herd into buying physical gold.
      I know it because I belonged to the brainwashed herd not long ago and I lost my shirt on it buying gold when it was close to the top.
      Now I tend to think that I never will see those prices again in my lifetime.
      I also believe what Dan is saying that the hedge funds move the prices instead of anything else.
      They don't care about the absolute price of gold and "the end game" bullshit theories, they only care about the direction of the move and making profit on it.
      If they can make profit by shorting gold to 800 dollar and lower than they will do so. Period.

      Delete
    2. Hi kris,

      The timing is important... Please never blame people when investment turn bad.

      This guy sprott or what you call them at KWN they are well respect people and they believed based on their research and knowledge that is base on their opinion ...

      Rule 1 in investment never insult other people if you chose to hear their opinion..
      Rule 2 always learn from past mistake and move forward.

      Cheer

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    3. Don't worry Preditor I blame myself hard enough for my naivety.
      Although I am not that naive anymore to recognize that when someone is calling for gold to explode to the moon at every low it makes there must be either another motive behind or an extreme level of arrogance.
      There is an old saying that when someone wants to convince you about how superb an investment opportunity is you have to be especially careful. Chances are they don't want you to make money. They want to take your money!
      Check out the background of the gold pumper/seller con artist called Mike Maloney and you will realize what I am talking about.
      Lot's of people like him became super rich in the last couple of years not by investing in gold but selling gold and building a hype around it.
      Sprott actually might not be a good example because he is not selling gold as far as I know. I can believe he just simply made the wrong call like Paulson did so far.
      I am talking about the ones who intentionally mislead the public for their own benefit.

      cheers

      Delete
    4. http://www.etftrends.com/2011/05/sprott-sells-over-30-million-of-silver-trust/

      Sprott is a perfect example. Anyone who thinks the timing of his sale of this much silver, was some kind of coincidence with the crash of PM prices, needs a shrink.

      Delete
  17. thank you for the explanation Robert and tom haan!
    I was looking for patterns in the chart resembling to 13 and 14. no wonder I did not find it :)

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  18. I hesitate to assign motive to people like Eric Sprott or the gang over at KWN but it should be apparent that they don't have a freaking clue as to what moves the paper gold markets. My humble advice is to save in physical gold (not the paper bullshit the traders are playing with). How is it possible to succeed trading in markets where price discovery is absent?

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  19. Gene; I ask myself that every morning; steve in sparks

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  20. Here's the Shocker:

    The gold bear market is now 24 months old in duration.

    The biggest stock market crash in modern history 5 years ago only lasted 15 months.

    The Nasdaq crash in 2000 lasted 17 months.

    Yet the gold pushers have been saying "Buy! Buy! Buy!" the entire time.

    Whose reputation is worse?

    Cramer?

    Or the myriad number of so-called "billionaire professionals" constantly pushing the gold case?

    ReplyDelete
  21. Mark; yep they say it is a 12year bull mkt blah blah blah, and I say we are now into a 3 year bear mkt. When they know, they don't say, when they don't know, you can hear them predict anything and everything from now and until the cows come home; they are valuable fading barometers; swb in sparks

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  22. http://superforcesignals.com/video/2013sept12goldmagline/2013sept12goldmagline.html
    Gold chart video under 4 mins- by Morris Hubbert mentions RSI, doji, Fibo, other signals- concludes by recommending physical gold in hand
    http://www.321gold.com/editorials/sfs/hubbartt091313.html Also GDX, silver and gold stocks mini-analysis

    ReplyDelete

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