Daily Spot

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Gold Dec (GCZ) [Next week I will be adding coverage of Copper (HG) and Silver (SI)] Further evidence of a major trend change underway came Tuesday, when both Gold and the Dollar firmed simultaneously. Normally correlated markets become disjointed from each other, and appear to decouple, as their turns are not always in sync.

Meanwhile, there remains potential for Gold to probe fresh highs for the week. Monday’s recovery all the way back up to last week’s already well-tested 1347.00 resistance – after so deep of a pullback in the interim – makes a fresh high likely. Testing 1357.00 and perhaps also 1363.00/1366.00 before reversing down would refuel sellers for more durable downleg.

Otherwise, simply extending down under 1335.00 would trigger the next downleg, albeit a more limited and temporary correction.

Dollar Basket Dec (DXZ) Tuesday’s gap up to test 78.00 left another gap outstanding back to Monday’s close. It also avoided neutralizing the recent optimism that limited the pullback from fulfilling a test of 76.65 where a more durable bottom could form. Nevertheless, 78.00 is an inflection point, and its recovery would be credible for extending higher. Resistance at the gap back to 78.50 would be the last chance to prevent a multi-week temporary corrective rally.

30-year Treasury Dec (USZ) With no unfinished business above, Tuesday’s open gapped down under the 131’25 sell signal and extended down to probe new lows. The breakout resumes a bigger Double Top underway, its next objective in-play at 128’14 if confirmed by a lower close Wednesday. A close above 131’25 Wednesday would invalidate the breakout.
Crude Oil Nov (CLZ) Still waiting for close under 81.50-81.55 to trigger the next downleg. There is no mandatory unfinished business above whose outstanding retest would change the pattern.

Natural Gas Nov (NGZ) Monday had fulfilled all lower objectives: 1) a new low on Monday is all but required following new low on Friday, and 2) a new low was required following Friday’s confirmation of Thursday’s breakout. Despite an otherwise bearish session – gapping down, probing new lows, trading entirely in negative territory – Monday’s close was still in the process of testing Friday’s prior low. Any strength Tuesday would have been credible for extending higher, and its open did gap up and extend sharply higher. A complete retracement intraday filled the open’s gap back to Monday’s close. Another agrressive open or close above 3.80 would be credible again for extending higher.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Dollar Basket Dec (DXZ) The weekend’s G20 meeting seemed to undo Thursday and Friday’s recovery effort. But we discussed at the time how Wednesday’s pullback had stopped optimistically short of filling the gap back to last Monday’s close. Thursday’s dip was too little, too late, so Friday’s bounce only exacerbated the problem.

Monday’s drop still hasn’t paid the punitive price for having slowed the drop for so long. The pattern still contains excessive optimism, despite having two gaps outstanding above.

The gaps should help to recover from one more test of the lows that includes a print at or around 76.65. The path lower might first fill the gap above back to Friday’s close, but its test should hold as resistance. Otherwise, a close above 78.00 might be able to signal a bigger corrective rally already underway.

Gold Dec (GCZ) Sunday night’s immediate reaction to G20 fulfilled the 1335.00-1336.00 bounce target. Last week’s 1347.20 buy signal that never triggered was retested, too. And it held again, pushing back down to test 1335.00. That should be refueling buyers for another run at 1357.00, and potentially 1363.00/1366.00 before a bigger downleg.

30-year Treasury Dec (USZ) Gap up Monday extended immediately to fulfill 132’20 bounce potential, around which the balance of the day ranged, until afternoon dived to 131’28. Even that stopped optimistically short, barely touching Friday’s “lower prior highs” as support. Close under 131’25 would still trigger next downleg, but now a close above 132’20 would extend the corrective bounce.

Crude Oil Nov (CLZ) Further gains intraday could not be ruled out, and Monday’s open gapped up above the prior three sessions’ highs. But there was no follow-through and the balance of the session fell to fill the gap back down to Friday’s close. The next dip down to 81.50-81.55 should trigger a more sizable downleg along the way to the 77.75 target.

Natural Gas Nov (NGZ) Monday was not going to avoid a new low intraday after a new low Friday, or after Friday’s new low confirmed Thursday’s breakout. The low could have extended, but did not. The open gapped down, probed new lows, and spent the entire session in negative territory – yet the close was still testing Friday’s low. This “ineffectual pessimism” is not a buy signal, but it can form the basis of one. A rally Tuesday would be credible for gaining traction.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Dollar Basket Dec (DXZ) Friday’s bounce didn’t gain traction. That was in-line with Thursday’s dips not having been deep enough to offset Wednesday afternoon’s excessive optimism, which had avoided filling a nearby gap. This maintains the potential for dipping to 76.65 where a more durable bottom can form. Closing first above 78.00 would get a benefit of the doubt, and would likely fill the gap to Tuesday’s close around 78.50. Otherwise the gap to Tuesday’s close will likelier remain outstanding to help attract a recovery from 76.65.

Gold Dec (GCZ) Friday’s relatively narrow range did not deteriorate any further. But the range did hover optimistically above three-week old “lower prior highs” from the rally. A bounce to 1335.00-1336.00 is likely before reusuming decline. Closing above 1344.00 would put into play a test of 1358.00, probably up to 1363.00 or 1366.00. That opportunity has otherwise passed.

30-year Treasury Dec (USZ) Friday morning’s bounce left the balance of the day to range around 131’25, whose test Thursday tried to trigger a sell signal. The open’s gap down had tried to confirm, but that also stopped short of gaining traction. The shallow dip does reflect too much optimism to form a bottom. And the recovery back to 131’25 did not gain traction. There remains potential to resume the decline, but a bounce up to 132’20 first cannot be ruled out.

Crude Oil Nov (CLX) Friday’s session was an inside day. Its opening gap quickly peaked, and the morning’s dip from there stopped optimistically short of filling the gap back to Thursday’s close. The open and closing action essentially tested “higher prior lows” at 81.50-81.55. An inside day, on a Friday, that gains no traction while holding a test of resistance – it could not be any less influential. Further gains intraday cannot be ruled out, but the pattern remains intact targeting 77.75.

Natural Gas Nov (NGX) Friday’s drop to new lows was the second consecutive lower new low following Wednesday’s bounce that had closed above prior lows. This is a breakout and its confirmation, all but ensuring a new low Monday. Positive divergences among RSIs at Friday’s low suggest a new low would not extend. A new low that recovers to close positive would trigger at least a near-term corrective bounce.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]30-year Treasury Dec (USZ) Nothing about the recent corrective bounce was accumulative. It stopped short of its potential to 133’06-133’10 before stumbling, and now 131’25 is being tested as support. A break under 131’25 would signal the downleg had resumed, so closing back above 131’25 Friday would rob sellers of their traction and renew the potential to 133’06-133’10.

Otherwise, closing under 131’03 would confirm the break, next targeting the 127’00 and 125’20 areas.

The bigger picture depicted below is a Double Top that has already closed under its 61.8% retracement. The character of price action resuming the decline should be noticeably aggressive. So, falling from here only gently would undermine the downleg.

Gold Dec (GCZ) A corrective bounce was never able to trigger above 1347.40, before resuming the drop to sharply lower lows.

Crude Oil Nov (CLZ) Another corrective bounce was rejected, leaving no accumulative pattern or higher objectives to inhibit the downleg targeting 77.75.

Natural Gas Nov (NGZ) Wednesday’s failed shallow bounce never could have prevented the requirement to probe new lows. But no bottom could form without recovering above the prior lows, and that opportunity has passed.

Dollar Basket Dec (DXZ) Thursday’s bounce from filling the gap back to Monday’s close was only obligatory, and still too optimistic to yet launch a rally leg. Maintaining potential to test 76.65 first.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

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Crude Oil Nov (CLZ) October’s topping formed a Double Top whose interim consolidation sloped upward. Its test of August’s high formed another, larger Double Top, whose interim consolidation also sloped upward. Corrections are intended to let pessimists trap themselves short. Upsloping corrections reflect optimism, so buying pressure is sorely missed just when it is needed most – to break above the prior high.

The rally into October’s high was signaled above 78.00 (above 77.00 basis Nov at the time). Its complete retracement down to “lower prior highs” at 77.75 is targeted.

Further bounces aren’t necessary to refuel sellers in this pattern. The gap back up to Monday’s close in the 84.00 area should not be filled if 77.75 is in play. Recovering 84.00 now that a dip has tested 80.00 would suggest another upleg was underway instead.

Natural Gas Nov (NGZ) Friday and Monday’s consecutive new low closes (highlighted red) constituted a breakout and its confirmation. Before a bounce could gain traction, it would resolve down in a new low. Tuesday’s inside day (highlighted pink) made that bounce likely Wednesday.

My objective for Wednesday’s bounce was 3.98, but it failed upon probing 3.95. This shallow bounce allows a new low to be shallow, too. I have labeled 3.82 on the chart as having potential for launching a recovery. That said, this depends upon there being some bottoming action, such as a same-day recovery back above prior lows. The trend otherwise remains down.

Gold Dec (GCZ) Wednesday’s sideways ranging hardly bounced, certainly not relative to the Dollar’s retracement. Resistance at Tuesday afternoon’s 1347.40 high was influential, which helps to confirm that its resistance is relevant. Also that its resistance is being chipped away. Retest of Tuesday’s 1357.70 gap open remains likely – potentially up to 1363.00 or 1366.00 – before resuming the decline.

30-year Treasury Dec (USZ) Wednesday absorbed a second consecutive lower open to probe a fresh bounce high, where RSIs deteriorated. The path up to 133’06-133’10 could dip first to 131’25. A close under 131’25 would suggest 133’06-133’10 won’t be tested before resuming the decline.

Dollar Basket Dec (DXZ) Wednesday’s steep morning drop kept the door open for forming a more durable bottom. Despite attacking Monday’s 77.14 close before noon, the entire afternoon hovered narrowly just above it. The inhibition to filling the gap reflects optimism, at least enough to expect one more dip before a more substantial rally leg can begin – preferably after testing 76.65.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).