@mirren
I've kicked back for a while to do some man maintenance and give time for this large-ish wave 4 consolidation on the US indicies to resolve. Of course the other front-of-mind riddle is the greenback. So no trading for me but carefully tracking core holds which include key goldies.
The US indicies? SPX chart below suggests wave 4 might be about done. The last swing low completed this week and a break above the trend line might usher in a large degree wave 5 to complete a higher degree wave 5 some years down the road. Beware, these wave 4 swings can be quite malicious so I'll be looking for rock-solid wave 5 confirmation if/when it happens. There's always 'sell in May and go away' that can foil plans.
The greenback? Adam Hamilton can be long-winded but his last 2 paras suffice. Dollar futures players have been the drum beat. Falling back to the $USD chart we have to witness a higher-high and a higher-low to confirm this dollar rally is a real bull. It currently sits at the 50-week MA and is overbought. I remain a dollar bear and 95 is the escape altitude for dollar bulls. I wait and watch.
There's gold metal and there's gold paper. This last week the metal went sideways in Oz Dollar terms and my paper goldies went for a run as smarties started to get set. If you look at a long-term monthly picture of the ASX gold index, the gold stocks index sits near the chart waistline and need to put on another 250 points before it gets heady.
I suspect further metal weakness might dampen the paper but a dollar sell down to the low 90s could strike up the band. Another wait n watch.
"The bottom line is gold’s recent weakness is the result of a rare major short squeeze in US Dollar Index futures. The resulting dollar rally spooked gold-futures speculators, who rushed to sell to avoid getting slaughtered by their extreme leverage. While that short-circuited gold’s spring rally, this anomaly won’t last. Gold-futures speculators and gold investors are far too bearish and under-allocated, with big room to buy.
The USDX short covering is likely running out of steam, which will clear the way for gold’s big seasonal spring rally to resume. All that delayed buying will likely be compressed into May, and drive gold back up near recent major-bull-breakout levels. Any dollar/gold reversals will force gold-futures specs to quickly buy to cover their ballooning shorts. The resulting rally will entice in long-side traders, then gold is off to the races."
Adam Hamilton, CPA
