Morning Market Summary and Charts 01/25/12 #SPX #Gold

On January 04, 2012 I gave you this -

"FOMC Schedule - You all know that I love and preach following the Fed. This FOMC Meeting chart has been a wonderful tool for STB. I have used it combined with TA to make some pretty fine calls (if I may say) for some time now. At this moment it appears that a move to upper resistance (blue) at the FOMC meeting on Jan 24-25 would be a likely call and something traders should keep an eye on." Shanky's Technical Analysis and Market Commentary: Morning Post 01/04/12, SPX

FOMC Meeting Schedule - Of the 13 instances on this chart where markets have been rising into FOMC meetings going back to June of '11 where price is rising to the meeting only once has it failed.

Here is the same chart today with the only change having added the upper thin blue diagonal (which must admit did not thing was in the equation) and having moved the blue arrow up.

Is Gold About To Collapse?

Hey, goldbugs, I'm just looking at the charts. I still think gold will go over $5,000 so don't get your panties in a wad. Part of what I'm theorizing is that when the markets finally collapse all asset classes get crushed initially, then ALL the money begins to flow into physical gold and silver. Right now there is no doubt that gold is still overbought (technically) and could use a correction (the current 400 points is only a partial correction). Silver has been pummeled, so why can't gold play catch up? There are natural support levels set where China and Russia first started coming in as bigger players near 1,100 or so. Let's take a look.

First monthly (/yg) 10 years. $270 is where we start this venture. From the low to high of $1,927 that would leave the Fibonacci retracements as 38% 1284, 50% 1,095 and 62% 905. OK, let's eliminate that 905 from the discussion now, not gonna happen although that long term green support diagonal off the lows as ultimate support would make a tasty target wouldn't it (if it did that upper blue resistance diagonal would have to hold and it would hit in March of 2013 - even tastier if you like the global collapse to happen this year). Please note the MACD at extremes and about to bear cross. Also note the falling S Sto and RSI. These should not be taken lightly on a monthly chart.

Gold -

I thought I would do a quick post on gold since the charts are screaming at me.

OK - first I ma a HUGE believer in gold and that gold will eventually cross the $5000 barrier and more. I am also a believer that when the big crash happens and true capitulation occurs all asset classes sell off in a hurry. There will be no place to hide. At some point all the money turns and flows into physical gold and silver as total panic ensues. Then the explosion up occurs. Till then goldbugs may face some tough times.

Let's start with this from Stockcharts chartshhool - The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending triangles are bearish patterns that indicate distribution.

Weekend Post - Can We Figure Out Where Gold Is Headed?

I'd like to reference figuring out gold to figuring out a woman, but I might get crucified if I take that reference any farther (hey, us guys are just as bad I know). Bottom line is I don't think you can live without either of them these days. Up, down, sideways what the heck? Impending doom and gloom and where gold is going is about all anyone can talk about. Paper gold, physical gold and even the tungsten version, which one is right for me? Russia, China, they are all buying all they can get. The IMF is selling it? Whaaaat?

I'm gonna produce several charts that I feel are relevant, but in true blog form I can't do a full dissertation. I'll also avoid the conversation surrounding manipulation (although I fully believe in price manipulation) and conspiracy theories (tungsten). So lets get on with it. I have made the charts small for length purposes, but I have included direct links to the charts they are in for better viewing.

First I think you have to take the global economic forecast into the picture. It sucks and is going to get a lot worse. Plain and simple. We are being robbed by the banks and your government is allowing this to happen (no one can refute that). Massive deflation is coming and most likely some form of global default. Sounds great right?

So how does gold (red) correlate to the dollar (blue)? A 20 year chart should do the trick (I threw in SPX (Orange) for good measure). I believe the two larger wedges identify the long term trends that are still in tact and will be for many years to come.

Given those trends and the global economic disaster we are experiencing, most are forecasting that many  countries will try to deflate their currency as fast as humanly possible. What happens with the dollar may tell us where gold is eventually headed.This monthly chart says to me we are in a massive bear flag that is playing out before the big fall. It also says one of two things. 1) Either the dollar has completed an ABC here to resistance and a near 50% retracement of the last fall, or 2) it will continue to run to the upper blue TL or to the top of the pennant near 89 and then collapse. At this time I could go with either scenario.




So if the dollar continues to run, gold will....? Look at the first chart. The dollar has run recently and gold has not corrected. You could argue with gold having climbed from 258 to well over $1,000 it is slightly overbought. Yes, but this is gold and someone (????) who may have known a massive financial crisis was coming (????) just kept on buying the stuff up, up, up. So what is gold going to do? There are many scenarios from crashes to super booms above $5,000. My question becomes - Does the gold/USD correlation possibly end and a gold/SPX correlation begin? Again refer to thee first chart (and your imagination - sometimes that is necessary). Inverse to the dollar and direct to the SPX? Not that far fetched. That would be a worst case scenario for the gold bugs.

Looking at the $GOLD/$USD chart you can see the massive rising wedge that should be completed. Overbought is an understatement and room to fall is bountiful. Divergences exist. The need for a correction is overdue. Given the theme for massive global deflation to assist multiple nations from going bankrupt (here I apply my imagination again), I think the dollar is going to continue to rise as some sort of (tongue in cheek laughing) safe haven and then collapse with the rest of the world as most of the global economies default on the debt that they will never be able to afford.

Damn, Shanky? Well, that is what I think and common sense tells me this is how it will most likely play out. Big Sugar Daddy will come to the rescue initially and allow everyone to devalue to their dollars vs. the USD (you see, since we (and GS) really caused this mess we're gonna have to step up to the plate more than we already have). So USD initially go up to $89ish and then get crushed.


Here is a great link to a vid from Market Club that I liked - no, I really liked it - not kidding or it would not be here (If you liked that vid they have other market related vids - and another gold vid at this link here). Pretty subtle hugh? LOL. Hey, the charting stuff is pretty cool and easy to use - you should consider giving it a spin. And for the newbies that want to learn more about trading and market trends, try this link out. It is free. They don't think gold is going up from here either. They do some good time analysis that I do not normally cover that is well presented and worth a look. (OK - sales pitch is over, but let me know if you liked the vid in the comments)

So I am seeing a near term correction in gold, but not much. It is possible that the dollar and gold will lose their inverse relationship but not for long. With the IMF flooding the market, Russia and India have bought massive quantities near the $1015 level support should be bountiful. Gold possibly remains in a sideways to down corrective for a while. First as the market tanks for P3 the reaction will be to haul ass from everything, then the real panic buying begins. So how low does gold go before the meteoric rise? This Monthly chart of gold shows a nasty multi-year rising wedge (blue) with an even nastier wedge (red) causing a throw over of the top trendline (no - I do not think that is a breakout - it is a fakeout). The fibs and target for the red wedge are in the $961 to $909 are and the 20ma is at $953. That may sound like a lot, but the divergences (see pink boxes) in the indicators and the meteoric rise in price say it is due for a turn or at least a breather. The gold bugs need to be worried if a larger correction to the 38% fib of the whole move occurs or it corrects to the lower blue trendline near $820 (I don't think that is possible).

What do I think? It stays in the current ballpark with a $950 max floor at this time. The manipulators will not let it crash (unless they want to buy it cheaper).I think it struggles with the overall market (but not nearly as bad as the market) and when the dollar finally lets go and real panic sets in it will all be about GOLD BIATCH!

I hope you enjoyed this. Remember to check out the links to those vids and give me some feedback.

Have a great weekend.

Morning Post

Another day in paradise! Leave it to ZH to bring up the obvious and thank them for allowing us to be able to see the forest. In the post Citigroup: KIA'd I got the real understanding of what I believe is the beginning (or potential escalation) of financial terrorism. This is where the big boys play ball and it is a game that is not televised for the world to see. It is a rare glimpse into the war of global politics. What I came away with is the simple fact that CITI is one withdrawal away from doom. I won't comment any more now, but read the post and then digest the ramifications.

Isn't this volatility GREAT!

/ES 60m daily - Had to go daily for the most accurate presentation of the LT tendlines. The blues P2 (bull market rising wedge) has been violated. The green falling wedge formed over the past several days fell to the 1085 support and appears now to possibly want to reverse as RSI bounces off of the 50 line. I'm thinking the range will be between the upper red resistance line and the lower green support line thru the end of the year. Exciting!

SPX 30m - This time frame is just to emphasize the range bound market. Does it go to the top again here? I do not think so, but it could easily. The 60m SPX indicators have bottomed and are turning. The dailys are continuing their long walk down setting a massive divergence to price that should be like a uge storm cloud coming over the horizon. With the Daily RSI at 50 and the 60m bottoming, maybe it is time for some sort of a pop here.The dollar has some room to breathe and even though the correlation has gone away some, it has not totally left the building.

Gold daily - Is it close to bottoming? Following S Sto I would say there may be a shot at an entry point for a trade soon. The big question is will  this be a major or minor bottom and for those of you that want to get in need to make a decision? I personally think there is further downside, but do not want to miss any opportunity to get in in case I am wrong, so at this next low I will make a purchase (10% position) in GLD and will have to decide on the stop loss I am willing to bear (I am planning on holding LT, but am also willing to trade to get the best entry). As I have been discussing I will continue to DCA into gold on weakness.



Remember you can get all of my Stockcharts charts on a 20m delay at my link on the right. Use the drop down bx just above the chart's top RH corner.

GL out there today. It should be really exciting! (LOL)

Happy holidays.

Check Gold Out

60m /GC Gold Futures - Just an interesting spot. Based on the daily indicators just getting started breaking down, Looks like it will eventually get thru this support. 1050 to 1009 is the retracement zone for gold.

Now back that out to a daily chart and you can get a feel for the spike from 1000 to 1227. Notice the overbought indicators in conjunction with the price climb. Yellow box is the retracement zone and the yellow line is the .38% rtracement. There is an interesting intersection on 12/28 at 1092 of the .38% fib and the green trendline.

Now look at gold in a weekly chart. S Sto bear cross and that topping of RSI at 90 are something. Also pick up how the lower blue trendline runs thru the current retracement zone box (yellow) around 1032. The increase in volume should be looked at thru all three time frames in the charts. That is some massive sell volume today. Note: I really don't take gaps into account cause there are so many.