Last week while things were very quiet I put up two posts that summarised my outlook on markets. If of interest that can be found at – https://hotcopper.com.au/posts/21570653/single https://hotcopper.com.au/posts/21586544/single
Yes, a bit long winded but......
However, despite everything being so quiet, markets have moved on quickly since then. It was a bottom in gold and it has rallied up to its first resistance and is once more correcting again. Silver is still lagging which is worrying me a bit.
Worth catching up on how the Commercials are placed in the gold market. On 4th December 2015 these “insiders” had a net short position of 2,911 which was an eleven year low. Gold moved up sharply after that. On 8th July, 2016 they had moved to a short position of 340,207 which was the high for this past year as well as the high for the gold price itself. As the gold market corrected, they have been covering their short positions and now sit at 120,967. This is a relatively bullish figure for this lot although it is unfortunately only a guide until such time as we see them clearly reverse their trend. However, it is still encouraging for the gold market that they have covered their short position to this extent.
New York stocks are having the correction I was looking for. Should have a bounce this week so than we can see how it looks but at this stage I am thinking it might be the last chance to get short.
US Dollar holds the key here as it has the potential to be forming an upslanting wedge with fairly negative connotations if it plays out. It tried to break down but rallied off the lows. If it just rallies slightly this week and then rolls over, we can be more confident that the US stock market correction could be a bit more severe than many people anticipate. Worth while keeping in mind that the US Dollar actually retraced only fractionally past its 61.8% of the long 2000 to 2008 bear market. Remember, it is usually all about currencies. China quietly changed the basket of currencies it uses over the break but I don’t understand how that will affect things.
As I mentioned in my earlier notes, so often important trend changes occur during these quiet holiday periods so it really is a time to be watching trading closely.
I pay a lot of attention to sentiment and this headline in the SMH for 2nd January 2017 caught my eye
“Hedge funds bet on commodity bounce”
However, it was part of the commentary that we need to keep in mind –
“The net-long position across 18 US-traded commodities contracted 3.9 per cent to 1.08 million futures and options in the week to December 27th according to US Commodity Futures Trading Commission figures published three days later. A year earlier, funds were net-short 21,081 contracts. (my highlighting).
And to end on a lighter note after my long post – many years ago when I was gainfully employed, one of the analysts used to write these very long reports on individual stocks. On one occasion, on about page 52, he put in a note that the first person that actually read the report to that point, could claim a case of wine. It was claimed – eventually.....and no I don’t have any cases of wine to give away. We drank it over Christmas!
(20min delay)