As I write an hour before the close I cannot believe that we are nearly unchanged. This morning when I got to the floor around 630 am, we were pushing the overnight high of 1654. After a night of no volume, pushing the high at this hour was certainly bullish. It would be hard to say we broke out, but perhaps "crawled out" and worked our way to a high of 1657.8. The S&P futures were up about 7 as we broke 1654 to the upside in gold. I was looking for gold to tag along, but then the divergence began. As the S&P continued to rise, gold fell to below 1654. As we approached the stock market open, gold simply could not get above that 54 level. This was a bearish signal, as the pickup in volume (which is normal as we approach the stock market open and the GLD hedging volume comes in) was not enough to get us to the level we had just broken out from. Knowing that, and knowing there was support around 50 (from previous days' lows), a break below 50 was a great opportunity to sell. If you did, you got to watch gold run all the way down to 1635.2; I thought we might dip to the 30 area, where there was supposed to be some support, but this low held the rest of the day.
Following this sell-off, much to my surprise we rallied all the way back and even took at the morning high (made a new high of 1658.4). It is rare you'll see such a tremendous rally following a 20 dollar sell off intra-day. Still, the theory from the last post holds. We are hovering around 50 again. The S&Ps are up 25 handles. Why own gold? So I believe the thesis stands. The longer we hover here, and the more the S&Ps perform, the more bearish it gets for gold. We will have to break above 1660 and hold for that to change.
No comments:
Post a Comment