"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, July 31, 2014

Broad Based Selling Sweeping Markets this AM

Not only are equities being pummeled this morning, the commodity sector is also seeing heavy selling pressure. There are some individual markets within the sector that are managing to shrug off some of the selling pressure, ( coffee for instance - that doesn't count anyway since that market was set up by aliens to trap earthlings prior to whisking them away into outer space)  but overall, the entire sector is dropping sharply lower.

The GSCI just notched a brand new 5 month low  this morning, especially with the energy sector dropping as it has. Even the high flying cattle market has been unable thus far to resist the selling.



Once again, the safe havens are back on as the US Dollar and the Japanese Yen are higher with bonds pulling into plus territory after collapsing a full point earlier in the session.

End of month book squaring is further muddying the waters today.

The low reading for initial unemployment claims has spooked gold bulls who are worried that the upcoming payrolls numbers are going to come in stronger than expected. The thinking is that the Fed's hand is going to be forced to raise interest rates sooner rather than later. That remains to be seen but with the sharp drop in equities, that sort of talk is a bit premature. It does however underscore just how sensitive the gold market is to any talk of higher interest rates. Higher rates will act as a headwind to gold, which throws off no yield.

The US Dollar has not yet been able to convincingly push past 81.60 basis the USDX. If it does, look for more selling across the gold market especially with commodity prices heading lower, especially crude oil and its products.

It is going to be interesting to see whether or not the equities experience one of those famous last hour recoveries today.

Gold has fallen back below the 45 day moving average and looks to be setting up a test of the support zone noted on the chart near the $1280 level.



Crude oil lost its chart support this morning but thus far has managed to find a floor above the $98/barrel level. There looks to be some better defined support near 97.60 - 97.50. the ADX is rising but does not yet indicate a trending move. That suggests the market will find some support sooner rather than later. If the secondary support level does give way however, crude could retrace towards 96. That would put it at the lowest level since early February.

35 comments:

  1. coffee commentaries have mentioned how the it's been a hedge fund favorite this year, thus the yankage.

    gold has a traders almanac buy date in late august, so keep the powder dry and if it loses the 1260 fib it's really weak.

    SPX could look for a 3 week kind of thing, a la last feb. correction. watching the bollinger bands will be interesting:
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p98501945785&a=154933325&listNum=61

    cheers!

    ReplyDelete
  2. Horrifying Worldwide destruction to shock investors. Unknown event is triggering an avalanche of selling. Black Swan to engulf the world in catastrophe. This is all going to end in tears for the west as gold and silver soar….. Holy smokes! It’s finally happening!!

    ReplyDelete
    Replies
    1. Matt;

      You forgot something my friend... "Gold and silver to sink along with it".

      Now it's accurate! :o)

      Delete
  3. One other point Dan would be that another 10 billion was shaved off QE yesterday, when QE1 and QE2 ended the stock markets went down each time, doubt this time is any different. QE is the markets it would seem.

    ReplyDelete
    Replies
    1. It does seem that the market is sensing the world without the IV directly injecting the morphine into the market veins come October. It will be interesting to see how Yellen responds if the markets do continue correcting and the deflationary environment continues. Will be some interesting on the job training for her... We know she would "like" to start bumping rates in 2015 but first thing first... pull the IV and see if the patient relapses.

      Delete
  4. Horrifying Worldwide Destruction is now occuring in real time in gold, currency, and commodity markets.

    In fact, the more trade and currency deals announced bypassing the U.S. Dollar, that disrupts things even further, such that investors flee to the safety of USDX, ergo creating a synthetic "shortage".

    And the gloom and doomers praying for a crash are now getting it. Unfortunately, gold is crashing even harder than the stock indexes, so they ended up rooting for their own self-destruction.

    I guarantee that this selloff will not last very long.

    Because at the rate commodity prices are imploding, Yellen and Draghi will panic very soon, and announce yet another "Do Whatever It Takes", to get the inflation rate back up to the targeted 2.5%.

    Because right now, the inflation rate is surely negative with such a rapid crash in energy and ag products.

    ReplyDelete
    Replies
    1. With the talking heads focusing attention on wage inflation from this mornings report they are sure to get political pressure to raise rates anyway.

      Delete
    2. Cattle, hogs, platinum, palladium, and of course stocks all taking on distinct southern accents today. Correction or inflection points? Only coffee up on my screen and why is a good question, but I am the last guy to ask since I have not been to Starbuck's in maybe 10 years or so, along with dancing with the stars and reality shows and so on, but again I have never been considered mainstream. The old saying about cash being trash may be the worst idea of all right now. Take care all.

      Delete
    3. 42 year veteran of the mkts Egon, says;;;;;;;;;;;;;;;;;;;;;

      Delete
  5. How many 42-year market veterans? Ten? That's 420 years of combined experience. Yet none of them have it right yet.

    - None warned of the gold, XAU, HUI and CRB Index correction starting in 2012.

    - None warned of the fastest, steepest, longest bull market run in airlines and retail stocks ever recorded.

    - None warned of 2.5% 10-year yield forever.

    - None warned that Peak Oil was a farce.

    - None warned that the U.S. Dollar would surge despite many countries attempting to rejigger around it for trade purposes.

    I'd say that if KWN scorecard was like a football game, they would be loosing 200-0 right now.

    Some of the "acclaimed experts" are so old they may never live long enough to see another bear market correction in stocks (20%+) or even $1,650 gold.

    ReplyDelete
    Replies
    1. you of all people don't get my sarcasm?

      Delete
  6. Mark good points other than peak oil. A limited resource is consumed by billions daily. Scarce is not farce. Only question is when, could be 300 yrs from now though

    ReplyDelete
  7. they can get 100 mpg cars built if they wanted to

    ReplyDelete
  8. they can make 100 mpg cars if they wanted to; come on; why do you think the oil and gas and rubber companies destroyed the rapid transit and trolley cars of the day in San Diego and Los Angeles 100 years ago??

    ReplyDelete
  9. This comment has been removed by the author.

    ReplyDelete
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    1. This comment has been removed by the author.

      Delete
  10. A Case Study in Charlatry

    Here is a link to a fairly typical GoldBug commentary: http://www.24hgold.com/english/news-gold-silver-gold-market--an-analysis-of-recent-geopolitical-economic-and-banking-events.aspx

    Nothing particularly exciting - typical hyperbole, selective interpretation of supposed facts, frequent errors and misstatements, wholesale regurgitation of favourable articles by other Gold commentators etc. So where's the problem? - just ignore it, right?

    Here's the curious thing - the author of this article runs a small outfit based on the Mediterranean island of Malta, and offers nominally segregated accounts to investors. However, for some strange reason, investors cannot call for physical redelivery of their Gold for the first 12 months, there is no external Audit, and no bar numbers are published. The firm is, of course, unregulated......

    Odd, no? Read on: the COO of the company is a lawyer, so that must be reassuring, right? Well, yes - if you believe that a previous career as Manager at a Gambling Affiliate network (also based in Malta) offers a sound basis for precious metals investment services.

    My point: it can sometimes be highly illuminating to look behind the curtain of some of these self-promoting high-profile commentators, and you will sometimes find that all that glisters (sic) might not necessarily always be Gold. Form your own opinion - but preferably based on a complete set of information

    Full details on this firm available at http://www.trustablegold.com/goldbroker/

    ReplyDelete
    Replies
    1. it is wise to have a % of your gold or silver for sure; but, and this is what makes me laugh, why would you want to put it into Switzerland, Hong Kong, or Singapore? Think about it for a minute. Myself, my safe in a place unkwnown make more sense, so thank you gold prompters and good bye.

      Delete
  11. Because I live in Singapore and Hong Kong

    Next question please

    ReplyDelete
  12. Correct URL for the charlatan expose: http://www.24hgold.com/english/news-gold-silver-gold-market--an-analysis-of-recent-geopolitical-economic-and-banking-events.aspx?contributor=Fabrice+Drouin-Ristori&article=5685002538H11690&redirect=False

    ReplyDelete
  13. Well...to write that I have a feeling (and indicators) telling about an imminent stall of SP500...just to be away the day it happens...frustrating :(
    Now the knife is already falling, and it's too late to call the plunge.
    The upwards support of the 2week candlechart channel I'm following is at 1900 this week.
    So, instead...I'll put a solid long order at this level, waiting for SP500 to gently land and bounce on 1900. Unless...? Let's see.
    Shame on you, SP500, you started the party without me after I've waited for you so long!

    ReplyDelete
  14. London copper eased on Friday after a rout on Wall Street over Argentinian default soured risk appetite and ahead of a deluge of economic indicators out later in the session, including an assessment of activity in China's vast manufacturing sector.
    Commodity Intraday Tips

    ReplyDelete
  15. Oh, Sod off Shikah - I was enjoying this thread, what with it being Friday & all, and then you tip up and trash it again. There's nothing for you here, love - please Far Cough and Cohen Gets Tuft

    ReplyDelete
    Replies
    1. she is a scumbucket Zhang and that is all

      Delete
  16. Steady on, Old Boy - I thought Dan was the Poet in Residence around these parts. Why hold yourself back? - tell it as you see it!

    ReplyDelete
  17. 5:30 numbers coming your way and it feels like they will be bearish!

    ReplyDelete
  18. and...hop, it did it again.
    Gold went to touch the 1277 fibonacci level and bounced upwards.
    1240 - 1277 - 1307 - 1337 - 1380 are the numbers I'm watching in this pinball game.

    ReplyDelete
  19. This comment has been removed by the author.

    ReplyDelete
    Replies
    1. official to whom?
      Not to me, as long as the strong upwards channel remains on the 2 weeks time scale. 1900 is the support to break. Anything else is noise inside a strong uptrend imho.

      Delete
    2. as for gold, support now = 1277 fibo, resistance = 1307 fibo on my charts. If broken, we have 1269 just below.
      Pinball between 1277 and 1307 likely.

      Delete
    3. Hubert, the gold is a Baltimore Chop and Slop; nothing more, nothing less; our attention should be on stks and corn and beans and MEATS

      Delete
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      Delete
  20. The 200 day on the S&P is 1858. That's my bogey. Until then, the trend remains UP. And as always, "the trend is your friend".

    Sometimes it really IS that simple.

    ReplyDelete
    Replies
    1. Agreed, Eric O; bears should come out of the woodwork this weekend with typical commentary; too quiet to be a top

      Delete
    2. after an over 5 year bull market the trend doesn't really matter...time for a pull back. ill buy the dip at 1900ish then find a level to short again.

      Delete

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