Stay Totally Professional On Gold Because, IMO, The Equities Market Was Jammed!
There is No Unified Economic Leadership or Federal Reserve Monetary Accommodation
Gold trading closes at 1:25 PM. The Federal Reserve announcement, which was gold positive, hit the market at slightly after 2:30 PM. At approximately 3:15 PM, the equity indexes were jammed higher.
A large equity short position has built up over the past week as the equity market moved under the recent Box Formation. The shorts ran for cover toward the close. There are unconfirmed short-term 9-minute Head and Shoulders formations in gold and across some of the leading gold shares. I would not act in front of confirmation.
I am convinced that we are in a major positive move in gold. It is clear that there is no Federal Reserve monetary stimulation based on the recent July figures. The entirety of the present program for overcoming incipient deflation is to bull the equity market higher and this effort although Titanic may yet fail.
Conclusion
Traders close out if the short term Head & Shoulders formation is close but consider coming back in at the very small downside objective. Investors do nothing. I will simply increase my option position if I get a TA signal either by a move above the small short term but yet unconfirmed Head & Shoulders on the 9 minute gold or at the downside objective when supported by TA considerations. I still believe gold is going to and then above $400.
Below is a news article from today's edition of the Voice of America about the Federal Reserve's decision to leave interest rates unchanged.
Federal Reserve Keeps Key Interest Rate at 45-Year Low
The U.S. Federal Reserve has decided to keep its key short-term interest rate at a 45-year low, amid mixed economic signals.
The Central Bank said Tuesday it expects to maintain the one percent rate for what it calls a "considerable period," citing the continued risk of deflation.
In a statement accompanying the action, the Federal Reserve said spending is firming, but labor indicators are mixed. It also says business pricing power and core consumer price increases remain stagnant.
It says the chances for economic growth over the next few quarters are "roughly equal" to the risk for weakness.
In June, the Federal Reserve cut the key interest rate to its current low. Federal Reserve Chairman Alan Greenspan has indicated over the past several months that the Central Bank is ready to maintain the low for as long as it takes to get the economy back on track.
Charts
I have written my thoughts on the following charts. Please be professional tomorrow and trade smart by not leading the market. Listen to what the market is telling you by adhering to disciplines that I have taught you without letting emotion enter into the picture.
No Head & Shoulders, be it straight up or reverse, is a formation unless the neckline is broken with decreasing volume. For Reverse Head & Shoulders, the volume must rise on the breakup and out above the neckline. Even if it is, these formations are quite short term in nature and therefore less meaningful.
Up until now, the ESF operatives have had their way with you and it's time to stop them dead in their tracks.
