Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Gold Bullish on US Fed Interest Rate Hike - 16th Dec 17
The LORAX Explains What Happened to Sheffield's Street Trees 2017 - 16th Dec 17
Bitcoin Trading Alert: Bitcoin Pauses – Will Appreciation Follow? - 16th Dec 17
SanDisk Ultra 128gb 100mbs Micro SD Card for Smartphone's Speed Test - 15th Dec 17
Inflation is Spiking Globally… Bond Bubble Bursts in 3… 2… - 15th Dec 17
Sheffield's 'Real' LORAX Defending the Trees From the Labour City Council Patrol Units - 15th Dec 17
Stock Market Decline Signals are Near - 15th Dec 17
Santa Is Putting Christmas On The Blockchain And Saving Billions - 14th Dec 17
The Unprotected, the Protected, the Vulnerably Protected Classes—Which Are You? - 14th Dec 17
Gold’s Upside Target - 14th Dec 17
Year-end US Interest Rate Hike Again Proves To Be Launchpad For Gold Price - 14th Dec 17
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17
Bitcoin Doesn’t Exist – Putting the Banks Out of Business - 9th Dec 17
China’s Struggle for Market Economy Status - 9th Dec 17
Is Gold Really Strong? - 9th Dec 17
Bitcoin Parabolic Mania - 8th Dec 17
SPX Make a 61.8% Retracement - 8th Dec 17
Gold, Stocks and Bonds - The 3 Amigos Update - 8th Dec 17
Gold Stocks Break, Gold to Follow - 8th Dec 17
4 Charts That Show How Trump Tax Cuts Will Trigger A Recession - 8th Dec 17
Precious Metals Breaking Down! 3 Amigos to Abort? 4 Horsemen to Ride? - 7th Dec 17
Bitcoin Just Smashed Through $12k… Wait, $13k… Now $14k… This Is Getting Ridiculous! - 7th Dec 17
Stock Market Tops Look Like This - 7th Dec 17
Crude Oil, Oil Stocks and Invalidation of Breakouts - 7th Dec 17
Bitcoin Doesn’t Exist – 2 - 7th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

Post Yellen = Market Confusion

Stock-Markets / Financial Markets 2016 Aug 28, 2016 - 12:45 PM GMT

By: Dan_Norcini

Stock-Markets

Yellen seems to me to be mastering the art of saying things so that everyone can come away hearing what they wanted to hear.

For those concerned about the Fed leaving interest rates too low for too long, she adopted a hawkish view on the economy, particularly when it comes to the payrolls. For those thinking that any Fed rate hike would send the Dollar soaring, pressuring Emerging Markets as well as equity markets both here domestically and elsewhere, she sounded the theme of interest rates remaining low for a long time. Thus, if the Fed were to hike sooner rather than later, no need to worry because it would not signal the beginning of a rapid series of rate hikes.


Initially, everyone seemed happy – Utility stocks moved higher but so did banking stocks/financials. By the end of the day, the utility sector had sold off and banks faded somewhat.Emerging Markets which initially were more than happy, then faded sharply before the closing bell rang.

The Dollar, which had initially moved higher moments after the speech, then reversed and sold off, managed to reverse its reversal and ended higher on the day.

So far the 94 level in the USDX seems pretty solid. Now we need to see if we are going to get more upside. The next level that offers some minor resistance is near 96 and then again at 96.50. Stronger resistance is up near 97.00-97.25.

The same sort of confusion that gripped most major markets was seen in the gold market which was all over the place yesterday ( Friday).

Look at this hourly chart of gold.. talk about whipsawing back and forth! You had a $25 range within the span of an hour before the market finally succumbed to the move higher in the US Dollar. Look at the volume spike – an awful lot of people got hurt going either direction on Friday.

On the daily chart, the market still remains locked within the broad trading range that has held it since last June.

Short term charts are bearish at this time however. The big test for gold will be whether or not it can hold down at the July lows near $1312-$1313.

The Heikin Ashi format is still in sell mode as well with this particular style chart showing a second close below the 50 day moving average.

The ADX line is falling indicating that range trade with the -DMI above the +DMI indicating that the bears have short term control within the context of a range bound market.

As far as this week’s COT chart goes, we had a bit of movement but nothing of serious note. HOwever, it needs to be kept in mind that the day after the Tuesday cutoff, gold plunged $20 and ended on a weak note to close out this week.

That hedge fund net long position still is looming over this market and if that bottom of the range near $1311-$1312 gives way, you will see some pretty heavy long liquidation by that group as the technicals are turning soft and they will not stick around for long if that continues.

Of more concern to me is that the Swap Dealers, the group of traders with the overall best record for nailing tops and/or bottoms in the gold market, are still very, very short and still not far off from their recent all-time high short position in the metal.

The HUI remains unable to climb back into the GAP region created on Wednesday this week. It is holding the 100 day so the bulls can take some consolation in that but you can see the significance of the level near 235 on the chart. If that gives way, gold and silver are both heading lower.

For the bulls to gain a further glimmer of hope in there, at the very least they need to close that GAP.

The gold ETF, GLD, is at least holding relatively steady as far as its reported gold holdings go.

Taking a brief look at Silver…. we are indeed seeing some long side liquidation by the hedge funds with that lopsided position of theirs finally succumbing to reality.

In all honesty, I have been expecting more long liquidation from that group than we are currently seeing.

Interesting however is that the hedge funds have added about 8000 new short positions since the middle of July. Only 6000 longs have been liquidated since peaking early this month. They may not be coming off of their longs all that much but there is some movement towards the short side in a small way.

Both charts have a heavy look to them at the moment. Last week’s low near 18.43 needs to hold or silver will more than likely fall to the 100 day moving average. That will be a big, big deal if that level gives way because that will usher in a wholesale round of hedge fund long liquidation. That level happens to be very close to psychological support at the $18.00 level.

Bulls need to take price back through $19.30 on the topside to shift the current negative chart pattern somewhat.

Lastly, a short note on the Emerging Markets.

I recently noted their strong performance but also noted that this ETF is basically a play on whether or not one thinks the Fed is going to raise rates. Within the last week Emerging Markets have weakened considerably so much so that the chart pattern is deteriorating in the short term. I am keeping a close eye on this particular ETF because a huge sum of money had been allocated to Emerging Markets since June. All of that money went into there because the odds that the Fed was going to move on rates was extremely low. That in turn kept the US dollar from advancing. If the Dollar starts to turn higher and if it looks like that is a trend we will see a significant amount of this hot money come out of this ETF and Emerging Markets in general.

The flip side to this particular ETF, “EEM”, is the inverse ETF, namely “EUM”.

This one just flashed a buy signal this week with the close above both the 10 day and 20 day moving averages constructive in the near term.

The reason for this is that the Fed Funds futures are showing a bit higher probability of a rate increase coming in September. Prior to Yellen’s speech, odds of a rate hike in September were 21%. After the speech the odds rose to 33%. Not much, but definitely higher. That is why the Emerging Markets weakened.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife