"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



Monday, July 14, 2014

Today's comments

One just knew they were coming. By "they" I mean the usual hysterical screams about "massive amounts of paper gold dumped" in mere seconds, etc. Funny how none of these perennial hype-sters ( my word) said a single word about the massive surge in price back on June 19th of this year. That was the day that gold managed to soar $50 at one point before settling up some $47 on the session. Yep - "SOMEONE JUST SWALLOWED millions of ounces" is what the headline could have stated that day but you see, gold must always rise so when it gets slammed lower, it must by necessity be the work of nefarious forces. Let it accelerate higher in a mad short squeeze and that is just dandy as that is what "it should be doing if the world was fair". Sigh... it will never end.

Again, for the umpteenth time, welcome to the world of futures trading where wild swings in price are the new norm. Whether it is the bean market, the cattle market, the hog market, the coffee market ( just pick your market) enormous spikes in price, enormous collapses in price, are becoming more and more frequent. Computerized buying and selling programs have essentially taken over from thinking human beings. There is no thinking - there is just reacting and since these automatons react to the last change in price, they all tend to be on the same side at the same time. The result is enormous air pockets both over and under the market as they all rush to the exits at once or they all crowd in to gorge themselves simultaneously.


Gold could not extend past last week's high just above the $1340 level confirming that resistance. It fell all the way to the support zone noted on the chart and has thus far held above psychological round number support at $1300. There are still enough geopolitical fears around ( and some financial fears about Portugal ) that it looks as if support will hold from dip buying coming in but bears are flexing their muscles and are growling. Failure to hold $1300 sets up at test of the $1280 region.

The recent push high above 1340 was not confirmed by the momentum based indicator shown. It failed to set a new high and actually moved lower setting up the divergence which was confirmed by today's action. Bulls will now have to take out last week's high if they are going to attract more recruits to their cause and spook some of the new shorts that came in today. Some have expressed the concern that the recent surge in fresh long positions by large specs was too much, too fast.

By the way, I have not heard any news yet whether or not India has lifted that tariff on imported gold. Do any of you readers know anything about this? Some of the bullishness in gold was related to the assumption that the recently elected government was going to repeal that tariff. If that expected repeal is delayed, some of the premium in gold that might have been due to that will be wrung out for now.

It will be interesting to see if we get any updated numbers out of GLD today. Gold tonnage made it over 800 tons last week, the first time since April that we have seen it above 800. Currently, the reported tonnage is about 2 tons larger than the start of the year with the gold price approximately $100 higher.

Copper traders are awaiting data out of China this week ( Wednesday) detailing Q2 GDP growth. The metal should take its cue from that number. Looks like there is some light profit taking in there today ahead of the release. Sharp weakness in silver is also weighing somewhat on copper today.

Crude oil continues exhibiting weakness as traders are concerned over increasing supplies from Libya. Brent is losing ground faster than WTI for now as global demand is expected to drop. Traders have noted that thus far Iraqi oil supplies do not seem to be impacted by that region's troubles.

WTI is holding above $100/barrel which is more of a psychological chart support level than anything. Technical support appears near $99 and extends to $98.75. If crude is unable to hold that region, losses could accelerate further. Maybe we consumers will see some further relief at the gas pump. I do not know about you, but I was enjoying the lower gasoline prices back at the beginning of this year.


Unleaded has rallied nearly $0.55/gallon since January but finally fell back below $3.00 at the wholesale level last week. Price has descended to the 38.2% Fibonacci retracement level of the entire rally off the November low. If it does not hold here, which it looks like it is trying to do, it should test the May low near $2.87.

I am noting that the XLE is showing some strength today ignoring the weakness in crude. That deserves some further attention.

I am not even going to bother commenting on the currencies today as they are going nowhere. No one really seems to know what to do with them at the moment as the Central Banks are all involved with speeches and the various economic data coming out from several countries seems to be conflicted. There is no clear trend.

After a sharp pop off the session lows last Friday, cattle are moving lower early in the session. Lower cash prices paid in cattle country last week have sparked concerns among traders that beef demand is going to weaken heading into the hotter months of the year.


Price found support at the 50% Fibonacci retracement level from the rally off the May low. Today's session low is just above the 38.2% retracement level from the rally using the April low. If Friday's low were to give way, cattle could lose another 200 points. This market has been in a spectacular bull for some time now and such attitudes do not subside that easily. Bulls do not yet seem ready to give up on the complex. The key will be whether or not beef demand is going to be impacted by these high prices. Restaurants and export buyers are still shell-shocked but they may fear being able to move the stuff at current prices. If they pull back from the market, it is likely that cash cattle prices will follow. The jury remains out and might continue to do so until much later in this week when cash trade finally commences.

This afternoon we will get the updated USDA conditions report for the crops. As of now traders are expecting to see continued good numbers. That report last Friday really shocked the market so any improvement in the numbers will add more bearish fuel to the fire. Right now there remains no damaging heat/dryness in any of the forecasts that I have seen. Some were buying beans today off the spike from the session lows Friday and there was some chatter about the weather turning hot and dry in August but that talk pops up every year whenever we get a move higher in the beans. It looks to me like this is just a consolidation coming off a  big move lower. End users of beans are certainly not going to be in a big hurry to book needs at the moment.

today we say goodbye to July grain futures for this year. There is never any way of knowing what might take place in those expiring contracts. I have seen them do all manner of things before they take their last breath. I was originally expecting some big commercial firms to orchestrate a squeeze but the recent USDA reports undercut any notion of that as the carryover stocks are no longer the concern they once were.

I will try to get some thing else up later on today especially after going through the conditions reports.

26 comments:

  1. http://online.wsj.com/articles/india-government-budget-disappoints-gold-traders-with-import-tax-1404987502

    New govt in India does not change/relax gold import restrictions per WSJ

    ReplyDelete
    Replies
    1. Wolf;

      Thanks for that update my friend... much appreciated....

      Delete
    2. More important is the RBI announcement of a gold swap, which should provide supply into the local Indian market and reduce the need for imports, which is no good for price, see my post for more details http://www.goldchat.blogspot.com.au/2014/07/no-indian-gold-import-policy-change.html

      Perth Mint is not seeing much demand for kilobars and when I get a promo email from Kitco for our Kangaroo coins for $32.99 above spot, that is not a good sign of a fundamentally strong demand either wholesale or retail.

      GLD adds are a puzzle in this picture

      Delete
  2. Good letter Dan; Corn is toast and beans may have one more rally into Aug but it will be short and quick. People have no idea of how proficient American farmers are and HOW many acres are not planted because they can not more free money from Sam

    ReplyDelete
  3. It has begun...maybe?
    http://etfdailynews.com/2014/07/01/opportunity-of-a-lifetime-with-gold-miners/

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  5. 14 Jul 14, 13:36

    From Bo July 13: "because there was a cycle inversion in early May, the Top was pushed into mid-July. " Now that Gold has made a June/July top as of July 10, 2014, next expect a Drop into a Summer Final Low and 'Buy of a Lifetime Opportunity!'" July 13_2014 Polny Gold 2020 Forecast_Sneak Peek.pdf"

    Hey dan why worry. Drop into august and then 2000 gold before year end. Bo knows!

    ReplyDelete
    Replies
    1. Jasper;

      Because the sun unexpectedly rose in the East today, my previous predictions , which were right on and extremely accurate, have been moved back somewhat. You see, I got the top just right. I only got the timing wrong. So please make sure you renew your overpriced subscription so that I can continue to make a fool out of myself while separating more dupes from their hard-earned money".
      That should be the disclaimer which should be posted at the top of his newsletter.

      Delete
    2. These incompetent fraudulent hacks should be in jail.

      Delete
  6. Jasper, if Mark's boy Bo was 4 feet away with a bass fiddle, he could not hit either you or me in the ass.

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  7. This comment has been removed by the author.

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    1. There's no shortage of blogosphere barkers out there today talking out of both sides of their mouths claiming they "saw it coming" when most of them have continually kept on talking about how and why metals are going higher...much higher...and soon!
      The vaults are (almost) empty is the usual pitch line.

      After awhile the whole spiel starts to sound like some two-bit corny infomercial on TV that tries to pump folks with the same tired, misleading B.S. message or product.
      If they saw or knew it was coming then why not wait until the "evil banker cabal" manipulation actually happens and go long afterwards or buy puts and short the metals in anticipation of the smackdown they are so sure will happen?

      At this point (due to hindsight, experience, objectivity and sheer distance of time from the blogosphere 'bug swamps) the more I look at some of the typical and stale knee jerk excuses or explanations of certain market movements the more I realize how absurd and transparently phony (in a laughable way) that whole mindset is by and large.

      I never fully bought into any of it but admittedly I did mull some of it around and tolerate or ignore the parts I thought were extreme examples of others unbalanced thoughts or fears.

      Looking around some of the message boards these days it seems pretty quiet out there except for the more angry/antagonistic troll crowd who never lack energy or venom to espouse on polictics, religion, race in an extremely crude or crazy manner.

      I'm glad I no longer allow myself to mingle among the extreme negativity or craziness out there where the only one's left on those boards are mostly the one's who enjoy that type of atmosphere or excel at providing the trollish antagonism themselves.

      Those folks are more or less cut from the same cloth and they're cannibalizing each other in an extreme negative feedback loop that stifles civil conversations to flourish.

      Thanks Dan for providing a relatively quiet/sane place to occassionally post from and to read the thoughts of other folks who aren't openly angry, drunk (sometimes?) or ego-maniacs with a service to shill.

      Delete
  8. On the cash cattle price.
    Talking heads noteing a "retail funk" cited in earnings commentary. If this is more than excuse making it may herald a real demand drop for expensive beef and pork.

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  9. Seems to me XLE has ignored whatever happens to crude and just followed wherever SPX goes.

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    Replies
    1. This was my observation too. The question is is it a lift from being listed as a stock or because the market feels crude is going higher.

      Whereas miners move in unison with bullion almost to the tee.

      Delete
  10. Just follow the commercial traders. They are the manipulators Up and Down!!

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  11. This is getting fun; now Embry and Casey, 2 of the oldest pm bulls are in a skunk pissing match. Joke.

    ReplyDelete
  12. Gold dropped 2.2% against a rally of over 8.5% from $1240. I would wait before you all pop the Champagne because you are all clearly masters of the universe.

    ReplyDelete
  13. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/14_James_Turk_-_Bank_Shorts_Orchestrating_Gold_%26_Silver_Smash.html

    This is BIG! Penelope Cruz is going long on Silver! I am all in now!

    ReplyDelete
    Replies
    1. Really really really hope your kidding.

      Delete
  14. Excellent well-rounded report Dan. Thanks!

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  15. good report - thinking you are right on https://www.youtube.com/watch?v=X_jQ4xWwKvU

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  16. Dan- Thanks for the great reports today. Never a dull moment in these markets. The big drop in PMs came as a bit of a surprise today. Lower oil and cattle prices WOULD be a warm welcome... especially to those who may enjoy driving large engine vehicles that don't get that great of gas mileage and to those who enjoy a good cut of beef! Currencies are flailing everywhere - is "untradeable" a word?

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  17. 1337 failed, so next Fibo support lebel is 1307, should be at lest a short-term support. If it fails, 1277 again...

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    Replies
    1. Edit : I'm talking about gold, of course :)

      Delete
  18. Zhang, just curious, but why do pm bulls get so uptight, agitated, and sometimes hysterical when bears criticize ideas presented by certain un-named websites?

    ReplyDelete

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