Daily Spot

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

Gold Dec (GCZ) Another big intraday drop Tuesday tested the 1338.00-1342.00 objective, filling the gap back to 1337.60 and testing much of the structure that included it.

After testing it thoroughly intraday, the gap was still being tested through the close. Neither of two possible bottoming setups was triggered, meaning that the gap’s test did not produce a bottom. The gap’s 1327.10 prior low wasn’t probed, and the gap’s 1343.40 prior high wasn’t recovered.

Although not required, a bounce is possible. But a bounce would be unlikely to gain traction, perhaps peaking in the 1365.00-1372.00 area before resuming the decline.

Dollar Basket Dec (DXZ) Having broken out of a three-day consolidation Monday, sharply higher highs Tuesday confirmed the breakout. The highs also tested 79.50 resistance. The rally is entrenched, which allows a counter-trend dip to refuel buyers.

30-year Treasury Dec (USZ) A retest of 126’00 as support was too much for sellers to maintain. But a bounce up to 127’23 was not the product of the long bond’s attraction as a destination in a flight-to-safety. The bond’s rally mostly came after the stock market had paused in its deterioration. This is troubling as it suggests the sovereign debt issues are actually affecting the price of U.S. Treasuries. This bounce has room up to 128’03-128’14, and the steeper its slope the more bearish its resolution.

Crude Oil Nov (CLZ) Having paused Monday to absorb Friday’s shock to the system, the decline resumed Tuesday. Its low came within 30 cents of this leg’s 82.00 target, which is likely to be tested down to 81.30.

Natural Gas Nov (NGZ) A recovery of Friday’s drop back above 3.93 was needed at Monday’s close or at Tuesday’s open to resume the rally. Neither parameter was fulfilled. Tuesday’s intraday high did complete the retracement, but it was too late for its recovery to be predictive. The pattern would have been bearish had there been more optimism, like probing 3.93 before failing. Its recovery Wednesday would get a benefit of the doubt for at least targeting a retest of last week’s highs.

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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) Monday’s action confirmed Wednesday’s ineffectual optimism was not bearish. It had only forecast a brief consolidation that would resolve up. Monday’s open gapped up and probed prior highs, hovering at highs into the close. And post-close action probed fresh highs.

Now that the consolidation has resolved up, it must avoid any other challenge to it. Any delay in extending the rally would be very vulnerable to sellers gaining traction. Sellers gaining traction at this stage of the pattern – that stage being a fresh resumption of the rally – would likely trend down sharply.

The bottom is becoming obvious. “QE2” is not having the expected impact, suggesting that its effects were already discounted, or it may be withdrawn. Regardless, the recovery should start to accelerate.

Gold Dec (GCZ) The drop was consolidated most of Monday before ending lower. Nex objective in-play is 1342.00-1338.00, so long 1381.00-1381.00 holds as resistance.

30-year Treasury Dec (USZ) The next objective as 126’00 was met, but at a trajectory so steep that an immediate bottom is unlikely. A bounce is possible, perhaps driven by a flight-to-quality during a stock market decline. But a bounce would be only temporary, and the decline is next targeting 124’16-124’20.

Crude Oil Nov (CLZ) Monday’s price action was essentially a non-event, mostly about absorbing the shock to the system of Friday’s steep decline before extending lower on the way to test 82.00.

Natural Gas Nov (NGZ) Reinstating the rally depends upon rejecting Friday’s drop to close above 3.93. Its recovery by Monday’s close would have been optimal, and at Tuesday’s open would suffice.

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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]

Last week’s action began with hints of the turning points we have been looking for. The week ended with those turns making themselves obvious. The turns can still be proved false, either at this week’s opens or by reversing initial gains by the close. But their turns are likely to hold, being in the making for multiple weeks.

Special request Cotton (CT) A 97.00-107.00 consolidation ended as September became October. Its rally extended higher to 156.45. Friday’s pullback ended while testing 140.35 as support. This can serve as a complete correction, if several days of basing then resume the rally, whose next target would be 167.00 (+/- .25). Failing to hold the 140.35 support through Monday’s close would be bearish.

Special request Sugar (SB) – Friday’s close was in the process of testing 26.30, which could serve as the correction low from Tuesday’s 33.32 high of the rally. Regardless, there is near-term potential for at least a bounce up to 30.05 (+/- .25) where the decline could resume abrubtly, or else the high’s would be retested.

Dollar Basket Dec (DXZ) Friday’s opening gap down into negative territory recovered intraday at least close flat. There is no reason to further delay triggering a new rally leg.

Gold Dec (GCZ) With no unfinished business remaining outstanding above, Friday’s opening gap down extended sharply lower to close under October’s prior highs. No bounce is required before extending down, but a bounce would be limited to testing 1381.00-1382.00 as resistance.

30-year Treasury Dec (USZ) Friday’s close was still in the process of testing 128’03, which held its test Wednesday to avoid triggering a bigger downleg. Extending down without any further delay would next target the 126’00 area. Otherwise, a corrective bounce has room up to 129’24-130’00, and perhaps also 130’12-130’16.

Crude Oil Nov (CLZ) The reaction down from Wednesday night’s test and retest of the 88.40 target extended down sharply Friday to 84.52. The open gapped down to the rally’s previous 86.40-86.45 target, which should now hold any test as resistance to maintain the drop’s 82.00 target

Natural Gas Nov (NGZ) Thursday’s dip extended Friday, back down to 3.80 where the first upleg’s buy signal had originally triggered. This must be rejected with almost no delay to resume the recovery without first probing new lows, and potentially triggering a new extended downleg.

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

30-year Treasury Dec (USZ) Thursday continued improving after Wednesday’s test and retest of the 128’14 and 128’03 targets. The subdued bounce wasn’t overly optimistic, so may be able to extend its 129’24-130’00 bounce objective to 130’12-130’16.

For as long as 128’14 has been targeted, the brevity of the move suggests it will not be the ultimate low. Although the corrective bounce can extend a little further, it need not, and the decline can resume at any time.

Dollar Basket Dec (DXZ) Wednedsday’s ineffectual optimism wasn’t bearish, but it could have been if Thursday’s open had gapped down. Gapping up instead was bullish.

Gold Dec (GCZ) The attraction back to Tuesday’s 1417.80 opening gap was essentially filled Wednesday night (within 20 cents). This allows the pattern to resume its decline any time. Not resuming the drop by Friday’s open would make a more thorough test of 1417.80 likely.

Crude Oil Nov (CLZ) Wednesday night’s action fulfilled the 88.40 target, and retested it while RSIs diverged negatrively. A close under 86.50 would signal momentum reversing down. Not reversing down by Friday’s close would make the rally more likely to extend further, next targeting 91.50.

Natural Gas Nov (NGZ) The shock of Wednesday’s steep reversal was still being absorbed Thursday, extending down further to test 3.92. The rally could resume as early as Friday afternoon, or Monday afternoon, by recovering 4.15. Delaying the recovery any longer, or closing any lower, would suggest the rally off of October’s low was just a monster correction that is ready to resume the decline.

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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]

Crude Oil Nov (CLZ) Monday’s failure to reject Friday’s new high (as if a new high on Friday could be rejected on a Monday) confirmed the next higher target in-play at 88.40. Tuesday’s higher high came close, but retraced into the close. And post-close action reversed down sharply.

Had the post-close action happened intraday, then the rally would already be done and momentum would have reversed down. But the post-close dip was recovered by Wednesday’s open. Sellers did not gain traction. As evidence the recovery extended to probe Tuesday’s highs within 30 cents of the 88.40 target.

RSIs diverged negatively into Wednesday’s highs. It’s not a sell signal, but it does make the rejection of a higher high more likely to gain traction. Fulfilling the 88.40 target and reversing down to close under 85.60 86.50 would signal a new downleg underway.

Natural Gas Nov (NGZ) Tuesday’s recovery to a new high close was reward by Wednesday’s open gapping up even further to 4.25. The balance of the session trended down sharply to test 4.02.

The close under 4.15 jeopardizes the rally’s momentum. It could be recovered at Thursday’s open and continue rallying as if nothing had happened. More likely is a couple of days consolidating to absorb Wednesday’s shock to the system.

That shock to the system was a gap up above the prior session’s high that closed back under the prior session’s low. It’s an “outside day,” but not a reversal signal, since the reversal expended so much selling pressure already.

So long as Wednesday’s reversal doesn’t extend down Thursday, the rally targeting 4.40 could resume by Friday’s open.

Dollar Basket Dec (DXZ) Wednesday’s continuation pattern gapped up Wednesday at Wednesday’s open. Extending higher to 78.34 got was retraced back to session lows. The entire session developed in positive territory. This “ineffectual optimism” is not itself a sell signal. But the pattern is vulnerable either to dipping a little further Thursday, for a temporary correction, or else to quickly extending through Wednesday’s high.

Gold Dec (GCZ) 1380.00-1381.00 has yet to be probed as support. But it was retested Wednesday, just short of touching Tuesday afternoon’s attack on 1380.00-1381.00. This optimism chips away at support instead of reinforcing it. A bounce is still possible – if not likely – to fill the gap back to Tuesday’s 1417.00 opening gap up. But now neutralizing that attraction above is likelier to launch a durable downleg.

30-year Treasury Dec (USZ) The reaction to Wednesday’s pre-open econ reports triggered a drop that fulfilled the 128’14 and 128’03 targets. A bounce to 129’00 was rejected when the 1:00 auction results triggered a drop to 127’14. The fresh low was recovered immediately. The interim bounce was recovered eventually. The bounce should extend to 129’24-130’00 before retesting Wednesday’s lows, which its oversold RSIs make likely.

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