Daily Spot

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

[pay]Gold Dec (GCZ) Gold narrow ranging Tuesday was a non-event, even overnight, as currencies are starting to dance more to their own tunes. There is potential to dip, but even a drop is unlikely to become a new downleg.

Hesitation at filling the gap back to last Thursday’s 1357.60 gap open (dashed line on nearby chart) continues to reinforce the pessimism. Pessimism doesn’t end rallies, or launch new downlegs.

And the longer the delay to filling last Thursday’s opening gap, the likelier to probe it. Candidates include the 1362.40 intraday high, but more likely a retest of the 1366.00 overnight high up to 1370.50. I’m very reluctant to be a seller before neutralizing at least one of these elements.

Meanwhile, the consolidation has formed an Ascending Triangle. Forming under the trend extreme, without incorporating it, makes the pattern “complex.” It’s still likely to resolve up, but that resolution is likely to react down much, much more sharply than the triangle’s breakout.

30-year Treasury Dec (USZ) The bond was all but closed on Monday’s holiday. A dip got underway with room down to 133’06-133’08. Its test can launch another upleg targeting 135’20. But closing under 133’06 would extend the decline to levels capable of offering only obligatory support and temporary bounces.

Crude Oil Nov (CLX) An overnight was recovered, as was another dip intraday, but neither into positive territory. Sellers are expending energy without gaining traction. A retest of the high above 84.00 would be triggered above 82.65. Otherwise, closing under 81.00 would suggest a downleg already underway.

Natural Gas Nov (NGX) There was no way to avoid new lows, which is how Tuesday started. The day ended by probing “higher prior lows” as resistance. This is not yet a rejection of the lows, and it is not buyers gaining traction – there is no unfinished business below. But sellers gained no traction for their efforts, which can become bullish. Recovering 3.65-3.68 could trigger a new rally leg.

Dollar Basket Dec (DXZ) Monday’s recovery from Sunday night’s new lows failed to close above last Wednesday’s close. Closing Tuesday above their 78.00 interim high might have served by proxy, but the open’s gap up made 78.00 likelier to push back. It did, back into negative territory. A new rally effort would be credible, but another test of the lows cannot be ruled out.

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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) Sunday night’s open probed Thursday’s 77.28 opening gap down, and also Thursday’s 77.15 low. This essentially fulfilled the downside objective. But Wednesday’s 77.60 close was still in the process of being tested by Monday’s close.

Not triggering a signal that has otherwise formed can be a contrary signal. Going so far as to probe new lows and then to recover from new lows can be bearish. That sponsorship has expended its buying pressure, and can only leverage its efforts by attracting more buyers.

Another dip to 77.28 that recovers above Monday afternoon’s 77.77 high would be credible for trying another steep rally leg. And this time the launching pad would start out higher, helping to ensure success. But that’s much less likely without either recovering from another dip, or else extending higher Tuesday without delay.

Canadian Dollar Dec (CDZ) The rally from September’s low peaked upon reaching a 261.8% swing of the consolidation that launched it. The sudden and steep reaction down from 9922 helps to confirm that much buying pressure was satisfied at the bounce’s peak.

Perhaps all of the buying pressure was satisfied there. The current bounce is an obligatory bounce, the product of testing “lower prior highs,” and has yet to prove buyers have regained traction. A close above 9885 would be credible for resuming the rally. Otherwise, closing under 9766 would signal a bigger dip underway targeting 9550.

Gold Dec (GCZ) Sunday night’s rally stopped just short of filling the gap back to Thursday’s 1357.60 opening gap. Its dip back to 1341.00 at the open was fully retraced into Monday’s close. But it, too, stopped short of filling the gap. This pessimism suggests there is still potential to probe Thursday’s highs up to 1170.50 before reversing down more substantially.

30-year Treasury Dec (USZ) Government bond market closed during Monday’s Columbus Day holiday, futures ranged narrowly.

Crude Oil Nov (CLX) Overnight action tried to extend the rally. Monday’s open gapped down and ranged sideways throughout. Despite rejecting the overnight high, sellers never justified it by gaining traction. A close under 81.46 would signal a new downleg underway. Otherwise there is potential to test 83.60 first.

Natural Gas Nov (NGX) Friday’s excessive optimism was unlikely to be overcome on a Monday. In fact, Monday’s attempt to rally reacted down to a fresh low. Recovering from more fresh lows Tuesday to close above Friday’s 3.65 low could launch a substantial rally. The trend otherwise remains down.

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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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Gold Dec (GCZ) Weakness before the Employment Situation report retested the 1329.30 pullback low. Its reaction up held a test of the 1349.30 target that had stopped Wednesday’s rally from gaining traction. Testing Thursday’s 1357.60 opening gap and closing back under 1349.30 would signal the top was forming. There’s room to probe new highs intraday up to 1370.50, but a big intraday reversal would be more difficult.

30-year Treasury Dec (USZ) The wide reverberation following Friday’s report recovered well into positive territory intraday. The afternoon slid back into negative territory. The range was shockingly narrow for such a watched market ahead of such a weighty item. It is almost a narrowing range, but not yet extended, whose first breakout attempt would be false. Closing under 134’10 would be bearish, but I would be suspicious until confirmed the following day.

Crude Oil Nov (CLX) The rally’s 83.20-83.25 target was met Wednesday. Thursday’s probe of higher highs was rejected sharply that day. But the reaction down already recovered back to within a dime of the target Friday. This reflects a lot of optimism still influencing the pattern. In fact, Friday’s low stopped at only a 38.2% retracement of the rally. A fresh high above 84.35 cannot be ruled out, but rejecting it through the close would seal a significant top.

Natural Gas Nov (NGX) This market may be the new destination for so-called Gold Bugs that have been priced out. The pattern continually shuns every opportunity either to neutralize sellers or to gain traction. Most recent is Friday’s pre-open new low that reacted up strongly into the open. But two lower lows intraday each stopped optimistically short of retesting the low. The drop continues, apparently being accumulated by weak hands.

Dollar Basket Dec (DXZ) Friday morning’s volatility disappeared quickly, as the market essentially flat-lined into the close. But this all took place above Thursday’s 77.28 opening gap that must be filled to begin any bottoming process. Preferably, a bottom would also probe Thursday’s 77.15 low before recovering to close above Wednesday’s 77.60 close. Otherwise, the trend remains down.

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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) The long bond couldn’t be resting more comfortably ahead of a major economic report, unless reports were released on Saturdays.

The attractions were neutralized to two overnight highs that had yet to be retested intraday. Their test also targeted 134’27, which was probed intraday and held on a closing basis. A higher close Thursday, or a close under 134’10 would have signaled the next direction.

Each was pushed, but neither snapped. A close beyond either would still be predictive, but that’s probably not very helpful on the day when a multi-point move is possible. I’ll update Friday, but I’m inclined to fade any early morning trending.

Gold Dec (GCZ) Wednesday had closed at the 1349.20 target without closing above it to gain traction. So another gap up was needed to advance the trend. This gap up was reversed to fill the gap intraday (quite a big day, in fact). This is the “warning shot across the bow” that indicates a top is starting to form. An immediate drop is unlikely, but the next several days should trace out a distribution pattern. Topping can begin as soon as Thursday’s 1357.60 opening gap is retested.

Crude Oil Nov (CLX) Wednesday’s test of the 83.20-83.25 target had held on a closing basis, having been reached by excessive optimism. More excessive optimism Thursday triggered a gap up and higher highs to 84.43. But a quick reversal fell to 81.00. This is a 38.2% retracement back to the rally’s 75.65 low. A close above 82.65 would try to resume the rally, or else launch a new downleg targeting 78.30. A close under 79.95 would target only 79.02.

Natural Gas Nov (NGX) A close above 3.91-3.95 would have been a compelling buy signal. It was attacked by Wednesday’s bounce. EIA triggered a deeper drop to new lows.

Dollar Basket Dec (DXZ) Having entrenched themselves with two consecutive lower closes, bears could have allowed a bounce to refuel the decline. But a gap down to new lows first created an opportunity to bottom. Retesting Thursday’s 77.28 opening gap and closing above Wednesday’s 77.63 close would create another opportunity to bottom.

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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.

Crude Oil Nov (CLX) The rally’s 83.20-83.25 target was met overnight before pushing back into the open, and then retested later Wednesday. Tuesday’s gap up (circled green) came suspiciously soon after Monday’s hesitation at 82.10-82.15 resistance. Just extending higher already was optimistic. Gapping up implies excessive optimism, too.

If the target’s test is the product of excessive optimism, then it is the end of the rally that began from 75.76-77.00. The afternoon’s probe of a higher high (circled red) was rejected, which could be the rubber band snapping back to start the rally unwinding.

Unless extended higher without delay to close above 83.20-83.25, the target likely will have fulfilled the pattern’s objective. Another day or consolidation would define the trigger for at least a corrective leg down.

Natural Gas Nov (NGX) Tuesday’s inside day and Monday’s new lows (both highlighted green) were all but ignored by Wednesday’s opening surge. The surge ended early but wasn’t pushed back. It filled the gap back to Friday’s close where Monday’s high stopped a little pessimistically short.

Other gaps outstanding from the decline remain outstanding to help attract price higher. And since the break began with one or two as yet unfilled gaps, filling them would be bullish for helping buyers gain traction, and not necessarily bearish for neutralizing buying pressure.

Gold Dec (GCZ) The next higher target put into play at 1149.20 was tested overnight, and retested while RSIs diverged negatively. A dip recovered to retest the target, which was still being tested at the close. Without having rejected it forecefully, there is potential to probe it up to 1163.20. A higher close would target 1180.00.

30-year Treasury Dec (USZ) This week’s earlier resilience against a sell-off had made the pattern likely to probe fresh highs. The first of its targets at 134’27 was tested early Wednesday. The second higher target at 135’20 was attacked later. The market is anticipating QE2 and weak economic numbers, such as Wednesday’s “surprisingly” weak negative ADP report. Three more jobs reports come Thursday and Friday. A close back under 134’10 would signal momentum reversing down to resume the decline.

Dollar Basket Dec (DXZ) A second consecutive lower close confirms Tuesday’s breakout. Having entrenched themselves, bears may allow a bounce to refuel. Extending down instead would allow another bottoming pattern to try forming. Friday, or Tuesday.

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