Please click on the following link to listen in to my regular weekly radio interview with Eric King on the KWN Weekly Metals Wrap.
http://tinyurl.com/84fdpwh
Saturday, March 10, 2012
Friday, March 9, 2012
Gold Charts and some comments
Extreme volatility was the name of the game (ONCE AGAIN) in the gold market in today's session as it was reacting to all manner of crosscurrents.
First there was the payrolls or "jobs" report which took the market lower only to be met with news of the rating agency Fitch's downgrade of Greece to "restricted default" which seem to send the shorts into quite a frenzy in their efforts to cover and get out. Their buying took the market up off the lows bringing it back to unchanged on the session at which point fresh money came into the market keeping the price in the plus column for the remainder of trading. The result was that gold ended the day higher by nearly $13.
What is more significant is that the bulls were able to close out the week on a positive note after what amounted to a horrendous start to the week. Not only that, but price managed to recapture the psychologically significant "17" handle once again. All in all, a very good performance for the metal.
Take a look at the following chart and you can see that gold bounced precisely from the level it needed to on the technical chart, namely the $1680 level. Price spiked down through this level earlier in the week but the selling seemed to dry up, or at the very least was met with strong buying which appears to have been more of the case.
I would not be the least bit suprised to learn in next week's Commitment of Traders report that a rather sizeable block of bullion bank short positions were lifted this week. Now those traders will no doubt be selling back into this latest rally once again so we will need to see what we get early next week in Monday and Tuesday's price action to surmise the extent of their activity in the gold market Wednesday through Friday of this week.
The level near $1720 is the next resistance region on the chart. That is what stands between gold and another test of $1740. The latter zone is what held the price in check on the way higher earlier this month so before this market can hope to get another shot at $1750 or higher, the bulls will have to dispatch with that.
So far the downside support in gold seems to be very solid. Very active buying was seen at this week's lows. Should gold return to near this region next week for any reason, we will have to watch to see whether the same buyers become active once again. As long as they do, the market will hold. The longer it does so, the more the odds favor another period of sideways trade rather than any steeper selloffs or a more extended period of price weakness.
I should point out here the massive rally in the Dollar that took place today sent it on a close through the 80 level basis the USDX. It is pretty difficult to argue with the price chart which looks very strong right now. If the Dollar can continue to push through the resistance level shown, it stands a very good chance of making another run back towards 82 where it should encounter a decent test of its strength. A push past 82 that can be sustained for more than one session, will be very noteworthy.
Technicians will note that it managed to stay above the 50 day moving average; a bullish sign.
By the way, something that should not go unnoticed in today's session is the fact that with the Dollar up over 1%, gold was higher. What that means is that it moved higher in terms of the most if not all of the major world currencies. Euro gold pushed back above the 1300 level notching solid gains on the day as did Yen gold as well. This kind of strength in the gold market is indicative of a lack of confidence in paper currencies nearly worldwide. And why shouldn't there be any confidence when Central Bankers are all beating each other to death in terms of seeing who can keep interest rates lower than the next guy.
Even Brazil has had to join in this "debauch thy currency" movement with many of the opinion that the Chinese are preparing for the same with theirs.
The HUI managed to once again close out the week ABOVE the 500 level after trading down below it earlier in the week. Apparently the same buyers in the gold shares who have been doing so for the last year and a half, are still accumulating various gold shares on these bouts of weakness. The gold shares, while attracting good buying down here, have not been able however to extend their recent rallies. They are acting as if they are still looking for a catalyst but one thing is becoming more clear - those who are buying them are very strong hands.
It would take a weekly close below that support line shown to indicate that this band of powerful buyers has had a change of sentiment.
First there was the payrolls or "jobs" report which took the market lower only to be met with news of the rating agency Fitch's downgrade of Greece to "restricted default" which seem to send the shorts into quite a frenzy in their efforts to cover and get out. Their buying took the market up off the lows bringing it back to unchanged on the session at which point fresh money came into the market keeping the price in the plus column for the remainder of trading. The result was that gold ended the day higher by nearly $13.
What is more significant is that the bulls were able to close out the week on a positive note after what amounted to a horrendous start to the week. Not only that, but price managed to recapture the psychologically significant "17" handle once again. All in all, a very good performance for the metal.
Take a look at the following chart and you can see that gold bounced precisely from the level it needed to on the technical chart, namely the $1680 level. Price spiked down through this level earlier in the week but the selling seemed to dry up, or at the very least was met with strong buying which appears to have been more of the case.
I would not be the least bit suprised to learn in next week's Commitment of Traders report that a rather sizeable block of bullion bank short positions were lifted this week. Now those traders will no doubt be selling back into this latest rally once again so we will need to see what we get early next week in Monday and Tuesday's price action to surmise the extent of their activity in the gold market Wednesday through Friday of this week.
The level near $1720 is the next resistance region on the chart. That is what stands between gold and another test of $1740. The latter zone is what held the price in check on the way higher earlier this month so before this market can hope to get another shot at $1750 or higher, the bulls will have to dispatch with that.
So far the downside support in gold seems to be very solid. Very active buying was seen at this week's lows. Should gold return to near this region next week for any reason, we will have to watch to see whether the same buyers become active once again. As long as they do, the market will hold. The longer it does so, the more the odds favor another period of sideways trade rather than any steeper selloffs or a more extended period of price weakness.
I should point out here the massive rally in the Dollar that took place today sent it on a close through the 80 level basis the USDX. It is pretty difficult to argue with the price chart which looks very strong right now. If the Dollar can continue to push through the resistance level shown, it stands a very good chance of making another run back towards 82 where it should encounter a decent test of its strength. A push past 82 that can be sustained for more than one session, will be very noteworthy.
Technicians will note that it managed to stay above the 50 day moving average; a bullish sign.
By the way, something that should not go unnoticed in today's session is the fact that with the Dollar up over 1%, gold was higher. What that means is that it moved higher in terms of the most if not all of the major world currencies. Euro gold pushed back above the 1300 level notching solid gains on the day as did Yen gold as well. This kind of strength in the gold market is indicative of a lack of confidence in paper currencies nearly worldwide. And why shouldn't there be any confidence when Central Bankers are all beating each other to death in terms of seeing who can keep interest rates lower than the next guy.
Even Brazil has had to join in this "debauch thy currency" movement with many of the opinion that the Chinese are preparing for the same with theirs.
The HUI managed to once again close out the week ABOVE the 500 level after trading down below it earlier in the week. Apparently the same buyers in the gold shares who have been doing so for the last year and a half, are still accumulating various gold shares on these bouts of weakness. The gold shares, while attracting good buying down here, have not been able however to extend their recent rallies. They are acting as if they are still looking for a catalyst but one thing is becoming more clear - those who are buying them are very strong hands.
It would take a weekly close below that support line shown to indicate that this band of powerful buyers has had a change of sentiment.
Tuesday, March 6, 2012
Trader Dan on King World News
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
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/6_Norcini_-_Gold_%26_Silver_Smashed_as_Bullion_Banks_Cover_Shorts.html
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.
Monday, March 5, 2012
Silver clinging to Support at $34
Risk off trades were in vogue today after news came out that China reported that expected growth in their economy would be slowing a bit. That was all that was needed to bring out the sellers in both the equity and commodity markets.
Silver fell below pyschological round number support at $34 but then recovered, only barely, by the end of the trading day. It is clinging to support above this level as I write this.
There is a band of stronger support as one drops down towards $33 which will be tested unless the market can keep its footing above $34.
It is still trying to repair the technical damage inflicted from last Wednesday's bear raid which forced an outside reversal pattern on the daily chart. Thus far this selling that we are seeing seems to be drying up as it does move below $34 but any further negative global economic news will see that selling reappear once again.
Gold dropped below $1700 at one point but value buying took it back above this level. Just as with silver, it is going to have some work to do in order to repair the technical damage it suffered last Wednesday. Chart painting is more effective in these modern markets because very few fundamentally based traders are still around anymore. Alan Jackson had a terrific hit song entitled, "GONE COUNTRY" which contains a line that says: " the whole world's gone country". Well, the whole world has gone technical analysis when it comes to trading. Therefore chart painting has to be respected for the technical signals its gives off. Value based traders can still take advantage of this but they need to be careful.
There seems to be a bit of a tug of war between those who are reading the recent US ECONOMIC DATA as encouraging and those who are looking at a recession in the Euro Zone coupled with slowing Chinese growth prospects eventually spilling over into the US. We will see which side wins out in this battle - the bonds were even conflicted today - first rising on the slowing growth news and then sinking lower to close the day as the equity market recovered from its worst levels of the session.
Not too much definitive to say therefore until we get a clearer picture.
Silver fell below pyschological round number support at $34 but then recovered, only barely, by the end of the trading day. It is clinging to support above this level as I write this.
There is a band of stronger support as one drops down towards $33 which will be tested unless the market can keep its footing above $34.
It is still trying to repair the technical damage inflicted from last Wednesday's bear raid which forced an outside reversal pattern on the daily chart. Thus far this selling that we are seeing seems to be drying up as it does move below $34 but any further negative global economic news will see that selling reappear once again.
Gold dropped below $1700 at one point but value buying took it back above this level. Just as with silver, it is going to have some work to do in order to repair the technical damage it suffered last Wednesday. Chart painting is more effective in these modern markets because very few fundamentally based traders are still around anymore. Alan Jackson had a terrific hit song entitled, "GONE COUNTRY" which contains a line that says: " the whole world's gone country". Well, the whole world has gone technical analysis when it comes to trading. Therefore chart painting has to be respected for the technical signals its gives off. Value based traders can still take advantage of this but they need to be careful.
There seems to be a bit of a tug of war between those who are reading the recent US ECONOMIC DATA as encouraging and those who are looking at a recession in the Euro Zone coupled with slowing Chinese growth prospects eventually spilling over into the US. We will see which side wins out in this battle - the bonds were even conflicted today - first rising on the slowing growth news and then sinking lower to close the day as the equity market recovered from its worst levels of the session.
Not too much definitive to say therefore until we get a clearer picture.
Sunday, March 4, 2012
US Dollar compared to Comex Gold Chart
The chart I am presenting is due to a special request from a reader that I put one together. It is an interesting method of seeing in visual form the steady decline in the value of the US Dollar against Gold.
A careful inspection of the chart will reveal that there are certain periods during which the price of gold has moved higher while at the same time the US Dollar index was moving higher. It is during those intervals when the gold price has risen strongly when priced in terms of the various major world currencies that comprise the USDX.
The following chart is a picture of America's decline. As much as it deeply saddens me to say it, the US Dollar chart looks absymal.
A careful inspection of the chart will reveal that there are certain periods during which the price of gold has moved higher while at the same time the US Dollar index was moving higher. It is during those intervals when the gold price has risen strongly when priced in terms of the various major world currencies that comprise the USDX.
The following chart is a picture of America's decline. As much as it deeply saddens me to say it, the US Dollar chart looks absymal.
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