Daily Spot

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Today’s Highlight A second consecutive lower close Wednesday in the Euro would confirm the top has formed and momentum has reversed down.

Dollar Basket Dec Contract (DX, ETF: (UUP, UDN))
Three of the sessions prior to Tuesday had gapped up, but none extended higher. The intervening session had gapped down, but also did not extend down. Tuesday’s gap up finally did extend higher into the afternoon. A second consecutive higher close Wednesday would confirm a bottom has formed and momentum has reversed up.

Eurodollar Dec Contract (EC, ETF: (FXE))
Monday’s dip proved to be preliminary, and not in need of retesting the high before extending down. At least, the attraction to retesting highs was satisfied when Tuesday’s gap down retraced to fill the open’s gap. Then a slingshot down into the afternoon closed at fresh session lows, and under the 1.3770 sell signal. A second consecutive lower close Wednesday would confirm the top has formed and momentum has reversed down.

Gold Dec Contract (GC, ETF: (GLD))
The reaction down from Monday’s test of the 1360.00-1362.00 target produced a gap down Tuesday. The close was lower still, after filling the gap intraday back to Monday’s close. A second consecutive lower close Wednesday would confirm momentum is reversing down, but a retest of 1362.00 is likelier and then likely to reverse down more substantially.

Silver Dec Contract (SI, ETF: (SLV))
Tuesday’s gap down was recovered immediately, but not extended higher. This suggests the gap back to 22.80 still wants to be filled, probably probed up to 23.05, but that a bigger top will have formed when that is complete.

30-year Treasury Dec Contract (US, ETF: (TLT))
Tuesday’s dip under the three prior sessions’ lows came too late to gain traction, as the three prior sessions had earned a retest of the 135-25 high. But the shallow consolidation is no more likely to launch a durable rally leg.

Crude Oil Dec Contract (CL, ETF: (USO))
Tuesday’s gap down never extended down, nor did it recover intraday. The “ineffectual pessimism” wasn’t pessimistic enough for its ineffectiveness to be very bullish from a contrarian perspective. But a fresh high would still be vulnerable to launching a new downleg.

Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Last week’s premature 15-cent reaction up from 3.55 support fulfilled the setup’s bearish expectations with Monday’s gap down. The likelihood of also testing 3.50 was fulfilled Tuesday on the way to 3.48. This pattern isn’t likely to pivot up without first forming some bottoming. But closing back above 3.55 would be credible for extending into a recovery anyway.

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A daily summary of high-profile members of several complexes…[pay] View a more detailed discussion of each at the end of today’s Market Wrap.

Today’s Highlight Gold extended its rally Monday to fulfill the minimum higher objective, and to fulfill the requirement for one more higher close. The next higher objective was not exceeded so no higher targets are in-play. The rally must essentially resume without delay and aggressively to maintain its traction.

Dollar Basket Dec Contract (DX, ETF: (UUP, UDN))
Monday’s gap up and enter session spent in positive territory was almost “ineffectual optimism” — except for there not being a fresh high in the afternoon, let alone its rejection.

Eurodollar Dec Contract (EC, ETF: (FXE))
Despite Monday’s open gapping down, the 1.3770 sell signal was attacked but not triggered. A retest of last week’s 1.3885 high may be needed to create a slingshot effect.

Gold Dec Contract (GC, ETF: (GLD))
The 1360.00-1362.00 target area was almost thoroughly tested Monday. Negative territory was being probed overnight, and the target didn’t hesitate long to push back down, so the rally’s strength is suspicious.

Silver Dec Contract (SI, ETF: (SLV))
Monday’s “inside day” did not attempt to fill the gap back up to Thursday’s higher close, which Friday’s opening gap down created. Trending down without yet testing, it or probing Thursday’s high, is difficult at this stage of the pattern.

30-year Treasury Dec Contract (US, ETF: (TLT))
Sideways ranging Monday continued expending buying pressure without gaining any traction for the effort, and without trapping shorts below to refuel the rally. That usually means a fresh high will still print, but the prior high is likely to hold and then reverse momentum down.

Crude Oil Dec Contract (CL, ETF: (USO))
Friday’s corrective bounce extended slightly higher Monday. It wasn’t aggressive, and still suggests that a recovery cannot proceed without at least a retest of last week’s lows.

Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Thursday’s abrupt reversal up from barely touching the minimum 3.55 target, and avoiding one more fresh low close, both made Friday’s gap up and test of 3.70 not credible. In fact, Monday’s open gapped down sharply back to test 3.56, still likely to at least test a fresh low.

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Today’s Highlight Crude Oil’s bounce into the weekend didn’t leave any unfinished business below, and faced two days of illiquidity, but buyers weren’t very enthusiastic. They did neutralize an upside attraction, but gained no traction for the effort. The lows should be retested, whether to form a more durable bottom, or to extend the decline.

Dollar Basket Dec Contract (DX, ETF: (UUP, UDN))
Fresh lows overnight disappeared before Friday’s open, but the session only ranged sideways around unchanged. Probing above Friday’s highs would target a test of 80.05-80.10 as resistance.

Eurodollar Dec Contract (EC, ETF: (FXE))
The sequence suggested not confirming Thursday’s fresh high close, and although higher highs were probed to test 1.3835 before Friday’s open, the session only ranged sideways around Thursday’s close. Almost any break under 1.3770 would be credible for launching a downleg.

Gold Dec Contract (GC, ETF: (GLD))
Friday’s gap down recovered back above 1341.00 into positive territory to confirm the rally next targeting 1360-1362.00. A delay in extending higher should hold any test of Friday’s 1339.40 opening gap as support before recovering to resume the rally, which now requires at least one more higher close.

Silver Dec Contract (SI, ETF: (SLV))
Gapping down Friday held a test of 22.50 to avoid signaling that momentum was reversing down. The gap back to Thursday’s close should attract prirce higher to resume the rally next targeting 23.35.

30-year Treasury Dec Contract (US, ETF: (TLT))
Narrow ranging still contained with the high session’s range further reflects “ineffectual optimism” that undermines any attempt to resume the rally.

Crude Oil Dec Contract (CL, ETF: (USO))
Friday’s shallow gains fulfilled expectations for bouncing further before resuming the decline. The 98.05 high even filled the gap back to Tuesday’s close, neutralizing its attraction above that might otherwise inhibit a decline. Closing back under 97.35 would signal the decline had resumed.

Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Despite gapping up and closing at a fresh high Friday, and despite Thursday’s test of 3.55 support, it’s tough taking buyers seriously when the decline created the requirement for at least one more fresh low close. But closing Monday above the 3.71-3.72 “higher prior lows” resistance would get every benefit of the doubt for extending higher. Otherwise, closing under 3.63 would signal the drop had resumed, targeting fresh lows.

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Today’s Highlight Gold retested support, confirming that Wednesday’s low wasn’t yet a bottom. But while reacting up instead of down still reflects too much optimism for this to be a durable bottom, it also suggests that a bigger bounce is needed before extending to new lows.

Dollar Basket Dec Contract (DX, ETF: (UUP, UDN))
Fresh lows Thursday weren’t required to close lower, since the pattern failed to confirm its earlier break. The sequence now makes Friday unlikely to close lower and confirm Thursday’s break.

Eurodollar Dec Contract (EC, ETF: (FXE))
Thursday was greeted by probing fresh highs, which the pattern did not require. But the sequence now makes a higher close unlikely Friday, since the prior breakout attempt also did not confirm.

Gold Dec Contract (GC, ETF: (GLD))
Wednesday’s dip to 1329.50 support was likely to revisit 1341.00 resistance, which Thursday’s open did. Its test extended sharply higher intraday, forming a breakout. Failing to close higher Friday would avoid confirming the breakout, and be likely to reverse back down to and through 1329.50. Otherwise, extending higher would target 1360.00-1362.00.

Silver Dec Contract (SI, ETF: (SLV))
Fresh highs testing 22.90 Thursday still target 23.35, now so long as 22.50 holds as support. This stage of the pattern is likely either to fulfill the fresh high, or else reverse down aggressively.

30-year Treasury Dec Contract (US, ETF: (TLT))
Thursday’s modest weakness did not reverse the rally’s momentum. But shallow ranging near the high that reflects optimism is not helpful at this stage of the rally, which needs either to extend higher without interruption or else refuel with deeper intraday dips.

Crude Oil Dec Contract (CL, ETF: (USO))
Wednesday’s premature bounce was reversed to probe slightly lower low at Thursday’s open. That avoided extending down, too, and recovered into positive territory, suggesting that a bigger corrective bounce may be needed before resuming the decline.

Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Momentary weakness touched 3.55 Thursday morning before reversing up sharply intraday. Closing positive does not fulfill the pattern’s outstanding requirement for at least one more lower close before a credible rally can begin.

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Today’s Highlight Crude Oil quickly met its next lower target after having spent so long before breaking under its last consolidation range. Such a steep near-term adjustment suggests a major paradigm shift in economic perceptions.

Dollar Basket Dec Contract (DX, ETF: (UUP, UDN))
Ranging narrowly Wednesday didn’t confirm Tuesday’s drop, so no third lower close is required. That doesn’t preclude the drop from extending anyway, and there is no active reversal signal. And not reversing down quickly would make Wednesday’s hesitation irrelevant.

Eurodollar Dec Contract (EC, ETF: (FXE))
Wednesday’s narrow sideways ranging didn’t confirm Tuesday’s rally, so no third higher close is required. That doesn’t preclude the rally from extending anyway, and there is no active reversal signal. And not reversing down quickly would make Wednesday’s hesitation irrelevant.

Gold Dec Contract (GC, ETF: (GLD))
Tuesday’s extra push to 1341.00 without closing above it (still overlapping it at the close) proved to be its undoing, at least for this effort. Wednesday’s open gapped down to test 1329.50 support. But 1329.50 missed the opportunity to break lower, similar to the 1341.00 test. Now closing under 1321.50 is needed to signal momentum reversing back down.

Silver Dec Contract (SI, ETF: (SLV))
Gapping down Wednesday only attacked the month’s “lower prior highs” at 22.50, despite coming close early and then hovering through the day. That optimism is potentially bearish, unless rejected almost immediately Thursday by new highs for the rally.

30-year Treasury Dec Contract (US, ETF: (TLT))
The rally extended Wednesday to a new high at 135-23, targeting 136-28 so long as pullbacks now hold 135-12. But momentum won’t reverse down without closing under 134-24.

Crude Oil Dec Contract (CL, ETF: (USO))
The next lower target at 96.35 was tested at Wednesday morning’s low. The balance of the session firmed, holding the 97.35 bounce limit that keeps alive potential for extending to the next lower target at 92.85-93.15.

Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Wednesday’s gap up helped to refuel sellers for extending the decline to fulfill its minimum third lower close, which was put into play by Tuesday’s confirmation. There is potential for bottoming at 3.53-3.55, but closing under would signal new lows in-play.

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