Daily Spot: Metals
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Gold Feb (GCG) A gap up back to 1374.00 was possible after Monday’s gap down failed to extend. Tuesday’s open took that bounce potential and squeezed hard. The gap up to the 1374.00 area extended higher, although an afternoon higher high was retraced back under the morning’s peak.
Rejecting the afternoon’s higher high meant that buyers gained no traction for their efforts. Extending higher Wednesday would require gapping up above Tuesday’s highs. Extending higher would also put into play the three-week old gap back to the 1407.00 area.
Otherwise, closing back under 1381.00 would signal the retest of last week’s highs had ended. A close back under 1367.00 would trigger a new downleg.
Dollar Basket Dec (DXZ) Tuesday’s gap up to new recovery highs didn’t extend higher. The session ranged exclusively in positive territory, but its close was struggling to hold above Monday’s high. It’s not a sell signal, but it does reflect buying pressure waning. Rejecting temporary intraday strength on Wednesday would likely trigger a 3-4 session pullback. Gapping down Wednesday would limit the pullback to 1-2 days.
30-year Treasury Mar (USH) Tuesday’s gap up spent the entire session in positive territory, without closing above prior highs that were probed intraday. This is “ineffectual optimism,” and it confirms the rally is only a corrective bounce. Its sponsorship is probably motivated by fear instead of by accumulation, in a flight-to-safety as stocks drop. The decline should resume when stocks bottom.
Crude Oil Jan (CLF) Gapping down Tuesday wasn’t likely to gain traction, not immediately. Gapping down under Monday afternoon’s lows made it unnecessary to fill the gap back to Monday’s close, but Monday afternoon’s lows still required a test as resistance up to 85.15. That test held, and produced a close under the morning’s 84.63 low to signal momentum reversing down. A second consecutive lower close Wednesday is still needed to confirm the reversal.
Natural Gas Jan (NGF) Monday’s break wasn’t recovered, which would have been bullish. Monday’s break extended, but that was still bullish. Ranging narrowly would have created mass to inhibit a rally attempt. But dipping further only stretched the rubber band tighter. An explosive open Wednesday would confirm Tuesday’s extra dip created pent-up bying pressure.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).