Why Gold's Rally to $1299.70 Today May End Ugly Tomorrow

Vince Lanci's picture

Pray for Rain?

  • Gold has profit taking above
  • There is a gap  below that 'needs to be tested' for increased likelihood of a sustainable rally.
  • Short term the market is overbought, and Friday's buyers  are  out of the money already

via Soren K Group posted originally on Marketslant.com

Ideally, over the next 3-5 days: we wanted to see Gold fill the Comex gap underneath, and in the process shaking out some weak longs and luring some shorts to pile in. First touching the $1285 area, close with a positive settlement on a lower day. Then we could see a nice  orderly rally out of a bull flag. But so far that is not the case. Instead we have more buying at the top end of a range that has earmarkings of Friday's behavior.

The sellers right here are commercials and large funds taking profits. And the sellers' stops to buy back are much higher (if they exist at all), than the stop-losses placed underneath from this headline-chasing momentum fund buying. Can we continue  higher despite our "perfect" scenario. Sure. Guys like Ray Dalio are showing no signs of back-tracking on their "risk-off" stances. But we are not buying here. We want the hot money to short Gold, not get long. And guys like Dalio are longer term traders with deeper pockets and more apt to tell us they've changed their risk-off and sold their Gold after the fact.

George Gero describes Gold nicely without judgment before the open:

Today gold is steady ahead of  summit of bankers including Chair Yellen, ECB Draghi and many more all of which may keep market watchers with one eye on headlines. Keep the other eye on open interest, more new longs.. Gold over 508,734 as we mentioned Friday on cnbc, copper 329335, silver 191783,and gold options on futures 1,144,348, all these indicate asset allocations returning to metals again. Stocks iffy and more political, geo political headlines await as we look for more 1300 area to come.

Gold is higher today, and that for us is unhealthy. It is the increase in OI that worries us. It is the momentum funds looking for more $1300 and buying based on headlines of:

 $1300 GOLD YAYYYYY! BUY IT NOW  BECAUSE YOU WONT GET A CHANCE TO EVER AGAIN that scare us. Friday's rally brought new longs. Activity and info confirmed for us asset allocators bidding, but momentum funds chasing the price.

And based on that day's close, some of them finished out of the money. If we do not close higher today, they may bail given their gnat-like tolerance in metals. Traders with a 6 month horizon may find themselves annoyed by the funds with a 6 minute horizon right here, right now.

We fear the supernova spike/reversal right here and feel the market is much more likely to extend higher on a more sustainable basis if it consolidates a bit here and takes out some weak longs. We prefer the market establish a base here. Higher now without closing above Friday's high means the likelihood of  a significant sell off in 3 days increases. That fear would ratchet up  MORE if we took out Friday's  high today but closed lower than the day's VWAP 

via Vince Lanci:

The question is, do you want a $10 rally today, or a $35 rally over the next 3 weeks?  Its a matter of perspective and time frame. But less upside volatility now means more upside later. Better someone sell it in the hole this week than momentum funds trample each other getting in today.

The caveat as Michael Moor noted to us today is 'Longs should not want to trade below $1282.90 intraday.'

This is consistent with our Bull flag hopes. A break below that would almost certainly negate a flag formation and thus bullish sentiment.

Gold for December delivery is trading $1297.00 as we write  this, up $5.40 on the day

SPOT GOLD 1 MINUTE CHART

?

Real time interactive charts HERE

There is a gap on Comex charts between $1286.20 and $1283.50. The smackdown was expected on first penetration of $1300. The market may linger between the gap and recent highs  for 3 to 5 days creating a bull flag base for a higher push. Our opinion is that unless Gold penetrates $1314 rallies should be sold to book profits during this time. 

Alternatively, shorting rallies this week might be a good intraday play to capture swings as the market gyrates  between the gap and new high. Separately, and not necessarily at odds with our analysis, Michael Moor would prefer the gap be tested sooner rather than later in his summary below

We can see bitcoin profits being taken while hot money is buying Gold with that same manic ajax-snorting expectation of profits. And we do not like  it. 

As long as the market is between $1284 and $1306, we see rallies as a sale, and selloffs as a buy for the next 3 days. Sell it now if  you are booking profits. Then hope it breaks $1314 and buy back in.-  Soren K.

Moor Analytics

emphasis ours- Soren K.

Analysis written by Michael Moor 

Gold (Z) 8/18/17

On a macro basis:   The maintained gap higher on 7/18 left a medium term bullish reversal intact below that warned of higher trade for days.  We have seen $67.8 of this so far from (Q) into (Z) with a roughly $7 spread differential.  The solid penetration above 12417-21 warned of solid short covering in the days/weeks ahead, with a good likelihood of a run back up toward 12980 (+).  We have seen $63.8 of this so far, taking out 12980 on 8/11.

On a shorter-term basis:   The maintained gap higher yesterday left the short term bullish reversal warned about below, which warned of decent higher trade. We have seen $11.5 of this before backing off the high.  Decent intra-day trade below 12829 will negate this definitively.  Although this has not been negated, I warned to be out of longs for the time being if we broke back below the 12978-88 and 12954-60 areas, below which I would look for decent profit taking to come in—we have seen $6.3 of this so far.  If we leave a maintained gap lower intact above on Monday, this will leave a short term bearish reversal intact that will warn of decent lower trade, likely for days.  Decent trade below 12801 (+ 1 tic (10 cents) per/hour starting at 6:00pm Sunday) will project this downward $28 minimum, $34 (+) maximum based off a ‘well formed’ formation; but if we break below here decently and back above decently, look for decent short covering to come in.—likely back toward 12980 (+).   

All inquiries for Moor Analytic's Professional research in the Gold and Energy markets please use contact info below

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Moe Howard's picture

The key factor is missing from every chart here - what price TPTB want gold to be at.

silverer's picture

Somebody needs to tell Vince it's safer to buy gold at its highs then Tesla at its highs.

Golden Phoenix's picture

Gold is up $5 in a day and people are jizzing all over themselves.

silverer's picture

Short it after the nuclear war starts too, right?

IronShield's picture

This is really scary, I just sold everything I've bought since 2000. Thanks for saving me.

 

Ah hahahahahahahahaha... 

Roth-a-feller's picture

.

 

Let it dip so I can buy more !  

 

 

.  

 

 

Hail Spode's picture

Does this mean they are asking for HELP in driving the gold price down? Before they just sold a few billion in naked shorts all at once. Now they are bothering to put out stuff like this. If they are trying to trick people into helping them do what they did without help before it could be a sign of their weakness.

illuminatus's picture

They'll get help from the devil when they are in hell begging to die, and the devil will help them suffer forever.

ReturnOfDaMac's picture

Rats, how can this be?  My GS is down.  bummer.

Czar of Defenestration's picture

:
:
"Sell it at $1,284" but then "buy back in at $1,314."

Am I missing something, or does this guy have his head up his A$$?

DON'T ANSWER THAT.

kenny500c's picture

I will answer anyways, he does. No mention of the dollar, looks to break below 93 on the dollar index.

The Fed's Ghost's picture

Dollar plays a role but so does manipulation around 1300.

www.realgoldira.com

kenny500c's picture

Agreed, but let's say the price of gasoline was manipulated downwards, would you complain?

Just buy more physical at a gift price.

 

sixbilliondollarman's picture

Trading Comex/CME over a decade and Spot fx metals nearly as long all I can say is this...the manipulation of the metals markets in general is so great it eclipses in length and depth anything one can imagine. Therefore to waste one minute on technical analysis is definitely a waste of time.  Fundamental power pushing can drive the market harde currently (and i favor technicals over news aNY day). I was and am a technical kind of guy but, having my head handed to me taught me to avoid any reasonable analysis in metals and watch big fundamental drivers until a FAIR and honest precious metals market is finally created. The paper markets are a waste of time and dangerous after 2009 especially from the long side. You can read all the tech you like just remember the short and rich demon behind the curtain.

illuminatus's picture

 " We prefer the market establish a base here"

What I would prefer here and anywhere else, is free market economics, but that will probably never happen, at least not as long as there are central banks, and centralized power in general.

Conax's picture

If a buttcoin can be priced at $4000+, gold can be $1300.

The only reason it isn't is the BIS parking its ass on its face.

AR15AU's picture

its called inverted head and shoulders... so blow me vince

dark fiber's picture

I like it how this guy is trying to analyze a market where anybody can dump a couple of years of production of something they don't have, to those who don't really want it, and don't have the money to pay for it anyway, all within less than a minute, and can keep doing this several times a day WITH NO FUCKING QUESTIONS ASKED EVAR. 

Gold price chart my ass.

ReturnOfDaMac's picture

Amen DF!  "I like it how this guy is trying to analyze a market" -- market, ha! ha! ha! ha! ha!    Hilarious, a "market", ha, ha, ha, rofl!!

AR15AU's picture

another one of the "rising gold price is bad for gold" bullshit artists

Albertarocks's picture

Not to change the subject, but has anyone seen my pants?

GUS100CORRINA's picture

Who makes this stuff up???? Must be somebody who is SHORT GOLD!!!!!

1. Gold has profit taking above

2. There is a gap  below that 'needs to be tested' for increased likelihood of a sustainable rally.

3. Short term the market is overbought, and Friday's buyers  are  out of the money already

IF YOU ARE CONCERNED, JUST BUY DGLD FOR A QUICK POP!!!

Albertarocks's picture

I'm not sure who makes it up.  Have you seen my pants anywhere?

TahoeBilly2012's picture

Metals are wound up in many (1) (2)'s and (i) (ii)'s. Someone light a match. This guy makes my head hurt.

Albertarocks's picture

Yup... about an hour before the close today it started to look to me like they were going to refuse to let gold close over $1300 during regular hours.  But that would set up the potential for a massive burst upwards overnight so that we see a gap higher when the markets open in US & Canada tomorrow.  I'm thinking that is a real possibility.  If that were to happen, I'll bet that gap 'never' gets filled.  We'll know soon enough.  I hear ya... I'm so loaded up on good miners that my head is starting to hurt as well.  But I'm not levered so I can wait the bastards out.  Best of luck with whatever you're holding.

[Edit:  oops... I tried to tap your comment "up" but I tapped my own.  I'm such a dink.]

TahoeBilly2012's picture

This guy is basically saying "when it comes down to it, I don't have a clue what will happen, but let's sell gold here because, well, I am a pussy...". in a very convoluted way.

Erek's picture

Vince. You need to go outside and look at the eclipse without eye protection.

After you burn two holes through to the back of your head you may see things a little clearer.