We just had the spectacle of one of the better Gold Traders on the planet getting “smoked” on a market call. Gartman had a ‘buy gold’ call on Fast Money a couple of days back. The next day the market headed down, hard. Looking at the Up / Down volume ranges lately, it’s pretty clear that was a BIG down day
We have a pretty big volume spike on the down day, weak volume on the up days.
The down hard came just a tiny bit below the ‘last high’ so we have “failure to advance to the upside” and even if only slightly lower, a “lower high”. All very not good.
The moving averages are weaving ( they do that at tops and bottoms, so a ‘topping weave’, but it can happen in a ‘pause’ for things like ‘waiting for The Fed to announce’…) and price has pulled away from the upper Bollinger Band. A worry.
ROC Rate Of Change has gone negative (below the center line).
Williams%R is below the midline indicating “be out” and amount of time “below the midline” has been picking up with the ‘above the line’ has been lessening (trend weakening).
All in all, Gold is looking rather weak and likely to “roll down”. Add that both The Bernake and the EU Central Bank have said they are going to keep stocks rising (via easy money) and The Fed claimed inflation is low (near 2%) and The Bernake said he would take action if it did get out of hand (no, it doesn’t matter if YOU believe that, it matters if all the OTHER market participants believe it…) All those things argue for a “Risk On” world, and that is a ‘be out of gold’ trade.
Silver looks even worse in that it tried to get through that prior high and failed. “Failure to advance” to the upside. Indicators similar to GLD.
(Silver chart here: at BigChart.com )
Also we have the infrastructure charts here:
However, those Swiss Francs are looking nice. It looks like the Swiss Central Bank intervention is over and it’s back to a nice rise vs other currencies.
Also worth noting, FXC the Canadian Dollar is looking like it’s started up too
There is a herd of Central Bank meetings next week that will likely cause all sorts of things to move.
Tueday has Australia then on Wednesday we have Brazil followed on Thursday with the EU, UK, New Zealand, Canada and Indonesia.
This means currency trades will be volatile then. The Euro looks like it is having a ‘bottoming weave’, but that is likely just a pause while we wait for the ECB to tell us what their money will be worth next Thursday.
Also I heard on the news that Spain continues to have very high unemployment with the EU overall at about 10.7% (Germany doing well, though, with the lowest in a few decades, though why is unclear). Ireland having the greatest emigration since the 19th century and still high unemployment, despite Very Large Austerity measures. Folks will not be happy with that.
This is looking in some ways a lot like it was about the time of the last large Irish Emigrations. I hope it doesn’t get that bad or that cold…
So, for now, it’s looking to me like the “Safe Haven” trade will be into $US, $Canadian, Swiss Francs. I’d watch the $Australian for a pullback just a bit (maybe $1.05-1.06 ) so would not ‘run to it’ before that point. If it hits $1.10 I’d bail out of it on too much rise too fast. As the $Australian tends to trade with stocks, a stock sell off would likely have the $Aus falling a bit too. But it also looks like the Precious Metals are not going to be a safe haven for a while. (Yes, this is paradoxical as the metal weakness is attributed to ‘risk on’ news from The Fed, and I’m seeing a weak “risk off” pattern in the US smaller caps… It’s not always a clean world ;-)
At any rate, be aware of what currency you are in, what your Central Banker is doing (and others) , and plan what your “safe haven” is, be it a currency or a metal.
For me, for now, it’s USD, Swiss Francs, and maybe some Canadian. Aussie on an appropriate move. As oil is looking toppy (but it’s a bit volatile to say for sure) the “oil currencies” of Mexican Peso, Russian Ruble, and Brazilian Real may have some pressure on them.
Sigh. Will we ever be out of the ‘duck and cover mode’? (Or, “when will governments stop stampeding markets for ‘stability’…”)
Sidebar on Greece: Moodies just down rated Greek Debt to “C” – High Likelihood of default.
So Spain is in rough trouble with crushing unemployment especially among the youth, Ireland is emigrating (again), Greece is “high likelihood of default”, and Italy is planning their strategy…
So tell me again how well this “Central Planning of the EU Unelected Commissars” is working?