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darkhorse
Registered: Feb 2002
Posts: 3473 |
03-20-12 02:16 PM
Gold and silver look absolutely terrible (unless you are short). Aussie still setting up as a potentially huge trade (short) if global growth fears stick.
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Specterx
Registered: Dec 2007
Posts: 1128 |
03-20-12 02:58 PM
Quote from darkhorse:
Gold and silver look absolutely terrible (unless you are short). Aussie still setting up as a potentially huge trade (short) if global growth fears stick.
? Gold's current price action is at best a clear bull flag with bullish implications, at worst a sideways triangle with no clear directional bias. Coming on the heels of the bull run we've had and until the price actually breaks down decisively, I consider the price action bullish in the medium to long term, sideways/neutral (bullish consolidation) on all shorter TFs.
In this connection people do remain quite ready to call tops on PMs, which is something I like to see ;)
Silver's main problem is that 'air pocket' down to about 18 which has usually tended to get backfilled, but then we've spent a year building support around 27, it already corrected nearly 50% from the highs and again looks more sideways to me than anything.
I like the AUD trade but if you're characterizing the backdrop as "global growth fears"... well I don't really see any such fears anywhere at the moment. Even Europe's recession is "shallower than expected." Which of course means it could be the best time to get on the short bus.
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darkhorse
Registered: Feb 2002
Posts: 3473 |
03-20-12 03:43 PM
Quote from Specterx:
? Gold's current price action is at best a clear bull flag with bullish implications, at worst a sideways triangle with no clear directional bias. Coming on the heels of the bull run we've had and until the price actually breaks down decisively, I consider the price action bullish in the medium to long term, sideways/neutral (bullish consolidation) on all shorter TFs.
In this connection people do remain quite ready to call tops on PMs, which is something I like to see ;)
Silver's main problem is that 'air pocket' down to about 18 which has usually tended to get backfilled, but then we've spent a year building support around 27, it already corrected nearly 50% from the highs and again looks more sideways to me than anything.
I like the AUD trade but if you're characterizing the backdrop as "global growth fears"... well I don't really see any such fears anywhere at the moment. Even Europe's recession is "shallower than expected." Which of course means it could be the best time to get on the short bus.
Always amuses how different chart interpretations can be based on one's underlying fundamental bias.
When it comes to price action, I like the blind taste test: Imagine viewing the charts with no knowlege of what the symbol is. From that perspective, the daily chart of gold is clearly intermediate bearish -- the weekly chart neutral to dubious at best (imho obviously).
Not calling a top here so much as stating that gold has just sucked in comparison to its billing. It has acted more as a speculative football than a true 'hedge' of any kind, and is prone to getting washed out in risk off declines. As for inflation hedge properties, CB stealth inflation seems to be pumping up Facebook shares more than PMs.
Re, Aussie, global slowdown etc, the news flow out of China has been continuously bearish in respect to real estate concerns, hard landing probabilities, etc. General view taking hold that global growth slowdown (ex-US) could start becoming a real problem in 2H12. And today BHP Billiton fueled the fire with warnings of ore demand slowdown in China.
http://www.telegraph.co.uk/finance/...-late-2012.html
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ralph00
Registered: May 2004
Posts: 2276 |
03-20-12 04:10 PM
BHP didn't warn of a slowdown, just a reduction in growth. Iron ore demand quintupled in China in the last 10 years. BHP sees 2020 demand not a lot higher than demand today.
When the entire planet (including every miner in Oz) assumes 10% Chinese growth in perpetuity, this would be a disaster. $50B in planned Aussie mining projects all of a sudden becomes uneconomic.
http://www.bhpbilliton.com/home/inv...MConference.pdf
Page #7.
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darkhorse
Registered: Feb 2002
Posts: 3473 |
03-20-12 04:21 PM
Quote from ralph00:
BHP didn't warn of a slowdown, just a reduction in growth. Iron ore demand quintupled in China in the last 10 years. BHP sees 2020 demand not a lot higher than demand today.
When the entire planet (including every miner in Oz) assumes 10% Chinese growth in perpetuity, this would be a disaster. $50B in planned Aussie mining projects all of a sudden becomes uneconomic.
http://www.bhpbilliton.com/home/inv...MConference.pdf
Page #7.
True, may have been overly hasty in my sentiment shift summary. thx for clarification -- though you can see the effective interpretation in trading action today, gap down openings in the big base metal miners already in downtrends (BHP, VALE, RIO)
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Specterx
Registered: Dec 2007
Posts: 1128 |
03-20-12 05:39 PM
Quote from darkhorse:
Always amuses how different chart interpretations can be based on one's underlying fundamental bias.
When it comes to price action, I like the blind taste test: Imagine viewing the charts with no knowlege of what the symbol is. From that perspective, the daily chart of gold is clearly intermediate bearish -- the weekly chart neutral to dubious at best (imho obviously).
Not calling a top here so much as stating that gold has just sucked in comparison to its billing. It has acted more as a speculative football than a true 'hedge' of any kind, and is prone to getting washed out in risk off declines. As for inflation hedge properties, CB stealth inflation seems to be pumping up Facebook shares more than PMs.
Using daily charts of gold and starting the chart any time between last July and about Feb 1st, it's IMO about as neutral as you can get. After the spike high last fall we've been bouncing between 1550 and 1800 and are presently in the exact middle of that range. GLD has a slight downward bias compared to spot but even here I'd be starting to cut my shorts around 155, if I were short from that 170 area. Add back in if the triangle breaks but it hasn't yet.
In my view your interpretation makes the same error that's common (almost universal in fact) when people analyze gold's performance in 2008-9. They expect gold to both go up in absolute terms and outperform stocks over every observable time period, to rise continuously at a 45-degree angle without any significant price declines. Instead consider full cycle performance: the SPX is presently 4.6% above its July 1 level, shortly before the big swoon in the fall, while gold is up 10.8%. SPX is also up 4.6% from last February, when the previous CB-induced bull-grind phase ended, while gold is up 22%. Far from getting 'washed out' in declines, gold spiked 27% in two months last summer while SPX fell 18% (would it be healthier from a trend perspective if this extreme spike wasn't followed by a consolidation/backfill?). Since the beginning of 2012 gold isn't even lagging SPX by that much (+9.8% vs. +7.3% as of yday close). Taking gold's exact high and SPX' exact low from last fall, gold has since fallen significantly less (-12.5%) than SPX has risen (+27.5%).
One can try to cite a few months of underperformance (not even necessarily absolute losses, gold was lower in October and December than at present) when the reality is an asset class that's consistently outperformed over any meaningful investment timescale, commonly outperforms over short 'trading' timescales, is up double-digits YoY while SPX has barely advanced etc. etc. The key to gold is to observe how it moves in relationship to stocks from turning point to turning point or over the full cycle, to know what to expect and whether it's a good time to buy.
In my view the time to be afraid will be when gold really does start going up day after day, week after week, just accelerating to the moon.
All that said I agree that GLD (specifically, not spot) gave a potentially valid technical short setup back in March which, if taken, suggests one should still be holding short, I am not adding to my gold position here, and certainly must be on alert for any change in gold's 'personality'.
Re, Aussie, global slowdown etc, the news flow out of China has been continuously bearish in respect to real estate concerns, hard landing probabilities, etc. General view taking hold that global growth slowdown (ex-US) could start becoming a real problem in 2H12. And today BHP Billiton fueled the fire with warnings of ore demand slowdown in China.
http://www.telegraph.co.uk/finance/...-late-2012.html
Interesting if this kind of stuff is starting to come to the fore, no matter how many times you go through the sentiment cycle it's always a tiny bit surprising when the market does indeed find yet another thing to be afraid of.
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