Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Charts courtesy of Jack ChanTrump's Missile Strike on Syria and Gold

Commodities / Gold and Silver 2017 Apr 12, 2017 - 10:19 AM GMT

By: The_Gold_Report

Commodities

Technical analyst Clive Maund charts gold's movements following the U.S. missile attack on a Syrian airbase. In Britain in the old days there was a saying, which was "Buy on a strike." It had nothing to do with economics and everything to do with psychology. When a general strike by workers was declared, stock prices would have fallen up to the point at which the strike started, when the economic outlook would have been at its worst, but well before the strike ended they would actually start rising again, as investors perceived an eventual resolution of the problems. Thus, savvy investors who bought when things looked at their worst would have made the best of the situation.


The same thing works in reverse when gold and silver look like they are going to rise due to a ramp up in geopolitical tensions. Thus, on Friday, we had any number of market commentators and "green" investors declaring a breakout by gold and silver due to the apparently increased danger of conflict between Russia and the U.S. after Trump lobbed about 50 cruise missiles at a Syrian airbase. Trump had three main reasons for initiating this strike. One is that he appears to have been genuinely outraged at the chemical attack having seen film of the victims of it, and wanted to hit back at those he saw as the perpetrators. The second is that it couldn't do any harm to his flagging ratings in the polls, and was likely to boost them, and the third was that loosing off 50 Tomahawks at $1–$2 million a pop is a good way of replenishing order books, and doubtless won him some powerful friends at Raytheon.

Since the cruise missile attack on the Syrian airbase may be a "one-off" and tensions are likely to ease going forward, any positive impact on gold and silver prices is likely to fade fast, and in fact it already started to before trading was done Friday, as we will now see on the charts. So it could be said that what we talking about here is a "sell on a strike" situation, selling the precious metals sector on a missile strike rather than buying the broad market on a labor strike as in Britain in the distant past.

On gold's 6-month chart we can see that it did actually break out in the early trade yesterday, above a line of resistance and its 200-day moving average, but it couldn't hold it—the breakout failed leaving behind a bearish "shooting star" candlestick on the chart, which occurred on the second highest volume this year.

On the 1-year chart it looks like gold is forming an intermediate top here, as it is rounding over beneath a resistance level, and close to its flat / falling 200-day moving average, with moving averages still in bearish alignment, and upside momentum weak.

The COT picture for gold has deteriorated too in recent weeks, with Commercial short and Large Spec long positions increasing, although they are still in middling ground, and thus do not give much guidance one way or the other, unlike silver's, which are flat out bearish, and thus have negative implications for gold too.

A big reason Friday morning for excitement amongst goldbugs was gold stocks seemingly breaking out upside from their recent tight trading range, but as we can see on the latest 6-month chart for GDX (VanEck Vectors Gold Miners ETF), volume on this move was weak and it couldn't hold it and the gains were completely lost by the end of the day. This action is regarded as bearish. After our successful foray into GLD Puts late in February, which we sold for a triple as gold turned up again, we will be looking at another such option trade on the site shortly.

Not long ago it looked like a Head-and-Shoulders top might be completing in the dollar and the dip to the 99 area on the dollar index is what drove the modest rally in gold in late March, but it has since bounced back from this key support and it is now looking like the Head-and-Shoulders top may be aborting, an outcome suggested as likely by the now very bearish COT structure in silver. Looking at the latest 6-month chart for the dollar index, we see that key resistance levels for it to overcome in order to negate the H&S top are the red downtrend line, and then more importantly the quite strong zone of resistance in the 102 area. If it succeeds in breaking above these levels, it will have 110 in its sights.

The basic rationale of gold and silver bugs for their bullishness on the Precious Metals is that the overstretched fiat money system is set to collapse, and when this happens, gold and silver, as "real money," will take center stage. While this may be true the trick is in the timing, because the Masters of this system, who are its principal beneficiaries, clearly will much prefer to continue living lives of opulence and privilege, rather than have their heads adorning the railings of public buildings, as could happen if the system implodes and the mob go on the rampage when their "bread and circuses" life comes to a sudden stop, and are thus strongly motivated to "keep the wheels spinning" for as long as possible, and that could be considerably longer than many think.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund


© 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

6 Critical Money Making Rules