Trader Dan

This is not your Daddy’s Bond Market

Having been trading the bonds for many years, the recent volatility has really caught my eye. The extent of the price swings in this market has been nothing short of breathtaking.

Whenever you see a market make swings of this magnitude, know that someone is in serious trouble.

Take a look at this short term price chart and imagine the carnage being inflicted on some traders as they swing back and forth from such huge extremes.

Do you see those big volume spikes? Someone got obliterated!

Try to imagine that you are a risk manager for a large banking or mortgage interest and are attempting to institute some sort of hedges! How in the world do you even read a market that is doing this sort of thing? I can tell you that hedgers and speculators both have been run over in this market the last couple of days.

This is what I am referring to when I caution traders out there. These markets can clean you out faster than a package of Ex-Lax if you let down your guard. Either trade smaller or stay on the sidelines but do not try to play the hero right now. It is just too dangerous!

Making predictions, postulating this or prophesying that, in dogmatic terms is very foolish and speaks more to hubris than it does to sound judgment. What I do know is that the entirety of the markets is very unsettled right now with the VIX having rising sharply and with the currency markets having been thrown into turmoil. Until the currency markets calm down, be careful.

By the way, crude oil is managing to hold above $80 for now and the XLE is up today. Maybe crude has gone down enough? I don’t know but am monitoring it very closely.

GDXJ is rolling over…here’s a link to the 60 min chart

Levels of support to take out…Good Luck!

 

http://stockcharts.com/h-sc/ui?s=GDXJ&p=60&yr=0&mn=6&dy=0&id=p30398218903&listNum=1&a=360980876

YEN HITTING RESISTANCE…

YEN DAILY

$HUI

One potential”path”to early November “backtest”:

sc sc (1)

HUi 60minutes

HUI is going up a percent and down a percent in a matter of minutes.

HUI 10:15:14

cycles

My cycle studies which I have posted on this site do not go back that far (so who knows) – we could have a low sooner than I would expect (remote possibility).

If not we have some months or a year or two before the up begins.

As a long term trading strategy which is all  I do now – I am buying on these bigger dips small amounts.

Just my opinion.

aurum

GDXJ

GDXJ

OI OI OIL

oil

Is the J following the Dow of Following Gold ?

May be fixing to turn down again ?

gdxj

devil

LOL ..From Stormpilgrim at the Chartology Forum

Even God lost money in gold

On October 13, 2014

http://www.foxnews.com/world/2014/10/13/canadian-evangelist-loses-millions-followers-money-in-failed-mining-venture/?intcmp=latestnews

If your pastor suggests investing in his mining company, be sure your tires are smoking when you peel out of the church parking lot.

HUI

No significant change in the Oct 11, 11:01 chart with this action today. Upper resistance holding.

Interesting read on etf’s

http://www.etf.com/sections/blog/23502-untangling-the-monster-gold-miner-trade.html?fullart=1&start=3

http://kiddynamitesworld.com/leveraged-etf-trading-flow-case-study-gold-miners-gdx-nugt-dust/

Makes me think the entire sector has been turned into an etf, constantly being ground lower and lower.xau is trading at 300$ gold levels.

From TT

Hmm

 

http://www.traders-talk.com/mb2/index.php?showtopic=156658

HUI Weekly

Pretty Obvious where we are going

hui

Maybe we will have a Black Monday in all SMs and we get this over with already

Gotta be a Bounce at HUI 150 Right ??

Unfortunately this would really screw the Canadians ..as we are closed Monday

Breakout or Fakeout?

HUI 10:10:14

Is it a breakout being backtested or a fakeout about to motor south? Methinks, fakeout. but wthfk?

Wow…this week the markets were Looney Tunes

BUT IN THE END ( WATCH TILL THE END !)

Hmm..no postes here at Goldtent Today…here’s one…and its a doozy

SPX

thats all

Trader Dan

Goldbugs Hate Him

Precious Metals Market Watchers Love Him

……………………..

King Dollar has not been Dethroned Just Yet

Trying to get a read on these markets during the times that the Fed is either announcing policy changes or releasing minutes can be incredibly difficult. The sheer ferocity of the moves in price can confound even the most astute and dedicated chart watchers.

It would appear at this point ( don’t hold your breath however as who knows what will happen in the next hour much less the next day in these markets anymore) that the Dollar found eager buyers at the key breakout level near 85.00 on the USDX chart.

Note that the Dollar fell back to that former resistance level which is now serving as downside support and that support did hold. That it did so, in spite of the Fed’s concerns over its strength, is rather telling. It shows that the fundamentals supporting the Dollar are just too strong right now, Fed protestations notwithstanding.

it all comes back down to interest rate differentials. Traders are of the view that economic data releases that are forthcoming are going to show continued improvement ( albeit gradual) and that compared to other major currency regions, that strength is noteworthy.

Look at the Euro for Pete’s sake – it is down over 55 points as I type this with forex guys wasting no time in selling into its rally.

When it comes to gold – just like yesterday when we had to give respect to the big rally in the mining shares, so today we must give respect to the fact that the miners are sinking once more. The HUI is off over 4% with the junior-laden GDXJ getting pummeled once more as it is off more than 5.5% as I type up these comments.
Also, as one of our regular posters noted ( we are all watching that now) the big gold ETF, GLD, actually LOST gold yesterday – almost 5.5 tons to be precise. Apparently those in that vehicle used the big rally yesterday to get out. The ETF is now down 36.14 tons since the beginning of the year. For those who are bullish on gold, that is not an encouraging sign. One wants to see the reported holdings climbing on rallies, not shrinking.

I am noticing that silver is having trouble holding its gains above the key chart resistance level near $17.50. It managed to push past that level earlier in the session ( failing to make it as far as more formidable overhead resistance near $18.00) but has since fallen back. Copper is continuing to hold above $3.00 which is helping silver but with the Goldman Sachs Commodity Index continuing to swoon, one has to be skeptical about the extent of any upward moves in these metals continuing much further.

The bulls will have to prove their mettle ( a little play on words here).

Here is the most recent GSCI.

The index is one point above a 27 month low. If it drops more than a point, it will be at levels last seen FOUR YEARS ago!

Crude oil and the products continue to weaken – I noted that yesterday this sector failed to respond to the big sell off in the Dollar – that was a sign that the fundamentals are just too poor which makes me even more concerned about deflationary pressures. Crude has dropped $22.50 / barrel in 3 1/2 months time. That is why I keep telling those who are stuck on inflation that they need to check their ideology at the door and look at the chart. It is going down, not up.

Personally, as a consumer, I LOVE it.

Depending on the outcome of the USDA report tomorrow, we might just get a break of that 27 month low level. Heck, if crude keeps falling today it might do that today! (NOTE – Before I could finish typing this post the GSCI just fell BELOW that 27 month low – it hit a FRESH FOUR YEAR LOW TODAY).

Again, at the risk of beating a dead horse, this is the reason that I remain skeptical about any SUSTAINED moves higher in both gold and silver. What we witnessed on Monday of this week and yesterday were what happens when the Dollar weakens. My viewpoint is that the Dollar has been and will remain the key for many of our commodity markets.

The sheer magnitude of these leveraged carry trades overwhelms anything fundamentally driven for a time but if the general trend is one of lower commodity prices due to slowing global growth, it is hard to see how a few words from the Fed can significantly alter that trend WITHOUT some sort of action. Remember – Central Bankers are very good at moving their currencies by talking them down or talking them up, but IF the movement is AGAINST the primary trend, which is driven by fundamentals, the countertrend move will not have any staying power. It takes a shift in the fundamentals and that means a shift in policies.

Hmm

looked at this yesterday and thought it might break out.

sc

ssec at highs of the week crb backtesting dt bo on the weekly etc

who knows but could it be commods leading into a real market top in the late spring?

ssec is the anomaly right now, watch it for clues I think? the one incidentally all thought would fall apart first?

WHIPSAW CITY

Swings

I believe these violent swings up-and-down points to a schizophrenic, unreal economy fuelled by trash paper money from the spoiled baby Fed. Trying to trade it is like trying to love a mad person. Good luck.

Grin…re GDX volume

This is from Bikko at the Chartology Forum

as you say fwiw

GDX-Reversal-1008141

JDST

Backtest complete (in one day!)

sc

Gold wkly

looks pretty emcouraging, largest volume I know of on the indexes and etf’s fwiw and the biggest white candle I have seen in yrs

who knows?

gold

114m in gdx is quite something

http://ceo.ca/2014/10/08/is-that-the-bottom/

GDX DAILY UPDATE…

GDX daily

Trader Dan

FOMC Minutes Chasing Gold Bears out

Take a look at the 30 minute chart of gold. Note the huge volume spike coming on the heels of the FOMC minutes.

It is quite evident that the Fed is chasing the gold bears out of the gold market. I have maintained for some time now and am on record as stating that I believed and still believe that the Fed might actually come around to the point where they would welcome a higher gold price. Not a soaring gold price mind you, but one that is firmer.

Why is that? Simple – because the Fed, and this Fed in particular, is terrified of deflation. They really do believe that they can control inflation but that they are powerless to stop deflation. Their weapon of choice to fight deflation has been QE but that has not worked or perhaps a bit more kindly, has proven to have been ineffective at generating an inflation rate of 2% or more.

This is why I have continued to take exception to those who see every single move lower in the gold price as part of a sinister plan on the part of the monetary authorities to discredit it. Let’s just ask a simple question and think about this:

What would have happened to gold had the Fed said that it was pleased to see the stronger Dollar and not concerned at all about a disinflationary wave moving around the global and threatening to swamp the global economy? Answer – gold would have been obliterated and the Dollar would have soared.

Question? Did the Fed say this? Answer- No, they did not. They said the exact opposite. And what happened? Answer – gold shot higher. Is it not obvious to any open-minded person that if the Fed were currently at war with gold, that they would not clearly understand in advance what a set of minutes such as were released today would do to the gold price? Of course they do. They are not stupid people. They can read price charts and see trends as good as the rest of us technicians.

The facts are that the Fed WANTS INFLATION and right now it cannot seem to get it. A falling gold price threatens to send that signal very clearly. So does a soaring Dollar.

What to do therefore? Why just talk down the Dollar. That is what they are trying to do with this latest release of their minutes. Will it work? I doubt it; mainly because by comparison, even if the Fed is not in a hurry to raise rates, the US economy looks great compared to Eurozone and Japan.

Also, the Fed’s policy stance on interest rates is HEAVILY DATA DEPENDENT. What this means is that as we move forward in time, each successive batch of economic news about the US economy is going to be closely scrutinized to see whether or not it will be of sufficient strength to force the hand of the Fed on the interest rate front.

What happens if we get another jobs report that the market (rightly or wrongly) interprets as very strong? Just remember what happened last Friday to the Dollar when that jobs data hit and came in higher than most in the market were anticipating. The Dollar shot vertical and gold dropped vertical.

The more things change, the more they seem to remain the same, at least as far as these goofy markets are concerned any more. Once again we are right back to where we always seem to end up and that is to watching economic data and playing a guessing game with our illustrious Federal Reserve official of: “Will they or Will they Not” raise interest rates.

Sigh! Is this anyway to run an economy … my oh my has this nation declined.

Here is a chart of the gold market ( short term 30 minute). Note the scare given the gold bears by the Fed. Also note that we have a temporary bottom on this chart near $1205 and a temporary top near and extending from $1220-$1225. Those are the parameters that we are now dealing with as traders.

Upside breach of the resistance sets up gold for a pop towards $1240. Downside breach sets it up for a test of $1200 and then lower once more. Buyers have clearly been at work today near $1205 but sellers appear to be trying to make a stand near $1220.

Short term indicators are positive.

Also, the huge rally in the gold shares CANNOT be ignored. Gold bears be careful right now.

depends

Did you guys just see that spike in NUGT?

Matrix – Yen

The Yen began to rally in early October.  The stock market had begun to turn down before that.  So to my mind the Yen is following and this makes sense if as the stock market longs began to sell they also were unwinding some Yen carry trade.  This makes the Yen a follower though not a leader.  As far as gold is concerned it is a question of whether the carry trade was used to short gold or whether when the longs sold they also closed gold shorts as a part of that trade.

I feel from looking particularly at the a/d chart and some ma’s that it is too soon to write the stock market off and consequently to write off the carry trade.

Just continuing our Yen discussion.

aurum

nyse vol osc

This is a spreadsheet chart that calculates the difference between 2 ema moving averages of nyse volume creating an oscillator.  I have posted it when it first broke the neutral gold line on the downside – which I said is a warning.  Then when it rose above but did not reach anywhere near the red line I posted the chart with a failure interpretation.  When we reached the oversold green line which did offer some support I posted we would get a bounce but it would fail – I was wrong there as it failed quickly and was the not the bounce I anticipated.  The oscillator became even more oversold which is a huge negative indication.  We should have a more significant bounce but still we haven’t been this low in the oscillator for a long time.

aurum

Vol Osc