“Just as soon as I can get my donkey back into gold!”
Well, it’s nice to know the Chuckleheads in Asia are back from vacation, cuz quite frankly nobody knows what to do in New York later in the day without their guidance. “Hey, gold’s up 5 days in a row [including the Sunday session], it’s just got to be a sell”! And then they all got their noses out of joint when stocks started to tank, and so it brings me always back to what I’ve consistently told you about the traders in Asia; “when Asia sells, at some point New York rallies, and when Asia buys, look for New York to take it away and then usually some more”! And with that, I was looking for a rally right out of the proverbial gate today.
Let’s hope today’s action in gold portends larger HVALUES & daily ranges in scope going forward; outside of yesterday, the last 3 out of 4 days has been very good. Not really a very good signal day from the long side; only one signal to get long and that’s the one I took. All the other breaks on this rally up did not have my requisite engulfing or reversal signals. On the top side, there were some short term sell signals, but as I have stated repeatedly, you open yourself up to spikes higher that can be vicious, and so the best course of action is not to try and pick tops to sell.
Range & HVALUE plays in gold are tough; you simply cannot buy the rally and/or sell the break to initiate a position. You have to wait for the corrections and subsequent signals. You buy or sell “breakouts” from resistance or support, and you are asking for heartache. First trade today and you’d think I must have missed something, cuz it wasn’t a very big correction, but there was a small “hammer” bottom at the turn. Directly below the trade.
There was a very small “hammer” around 12:50 server time, back when gold was much lower and the stock market was about 40 minutes from the open, but only in hindsight would have this been a good trade; the hammer is only about 15 cents in scope, not exactly a screaming buy signal when things are quiet.
Today’s gold rally is a direct function of the sizeable stock market selloff; going into the close, we’ll see if further weakness translates into more gold buying … any late day rally in the SP500 could spell some nasty liquidation in gold for the day, as longs hit the exits. We’ll see what happens.
I traded low volume today, simply because there were no clear signals from a more normal, deeper correction; the most this stuff corrected was about $2, and it was when I did the trade. And while I would have liked to see a more corrective process unfold, plenty of times gold doesn’t give us this luxury; it just goes straight to wherever it feels like and leaves everybody standing on the platform at the station.
With the stock market suddenly discovering gravity, I’m pleasantly pleased gold acted as well as it did today; there actually seemed to me to be some trade flow. We had that first $3 jump through stops, and that really turned out to be the only disruptive flow of the day. Let’s hope it stays like this.
Here in very early afternoon trade in New York, what we’re seeing in gold is a classic short squeeze, and every time somebody tries to offer it down, somebody steps up and immediately bids it higher; I have no idea how far it can go or how long it will last, but what I know is that if you are short you are losing money and are very nervous, and if long getting ready to hit the sell button at the first hint of a selloff. Wouldn’t want to be short up here, and being long is no bed of roses either, especially close to the high around the 1246 area. Best bet is a quick selloff and further rally into the New York close at 4 P.M. Tomorrow is going to be really, really interesting, and I’m wondering right now if Asia is going to be bidding this stuff up tonight.
Two key items I want to focus on before I finish for the day; 1) volatility [yesterday notwithstanding] seems to be picking up in gold, and the trade, at least today and hopefully going forward, has a more normal flow to it and isn’t as “herky jerky” as in weeks past, and 2) on some normal corrections, once I get a lead on the trade, I’ll be hanging on longer for bigger gains via the signals. Today, as it so happened, wasn’t that great for signals as I mentioned before … only one really and it’s the one trade I did do … all in all, I expected more from the day, but it is what it is and if I’m going to only get one signal, hopefully it’s on a correction that then goes somewhere; usually most of the time there are a whole lot more than one signal, but all we can do is take what it gives us and move forward. As a positive, although it’s not nearly as much as I would have liked to make, the one signal we got today put me up money immediately, and I didn’t have to put up with the BS Forex dealer games either, so from that standpoint I’ll take today as partial victory. Like I said yesterday, the algorithm signals for gold work exceptionally well … you just have to show patience and wait for them and not get caught up in buying rallies or selling breaks … that’s what I did today … that’s what I’ll be doing tomorrow.
Oh, how I can’t wait for tomorrow … this is gonna be interesting.
PAMM/MAM spreadsheet directly below.
Beach beckons … I’m outta here … until tomorrow.
Have a great day everybody!
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