Daily Spotlight: Metals
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]As this post’s title implies, I’m reinstating and expanding my coverage of other markets. Each day will focus on a different complex (the schedule is at the bottom of each post). Soon more coverage within each complex will be added, and Softs will be added on Fridays.
[pay]Gold, Dec (GCZ): New highs are not a sell signal. And the rally from July’s drop has retraced enough that new highs may be only a formality. Extending higher from there, instead of simply probing fresh highs, is unlikely.
Extending back to the highs now being tested was also unlikely. This current leg should be only a corrective bounce, a bear market rally. Its eventual resolution was likely to resume the bull market. But the pullback into July’s lows stopped short of its target.
Two recent sessions (circled green) have gapped and/or spiked down – suddenly, sharply and substantially – only to be recovered intraday. Their gaps/spikes down created pent-up buying pressure, which was neutralized that day. But sellers both times failed to exploit the vulnerability.
This suggests at least one surge / gap / spike up to follow. Its reaction would identify when momentum is ready to reverse down. Closing under the surge’s origin or its prior low would be one example. Otherwise, I am only monitoring this market for a new pattern.
Crude Oil: Tuesday’s weak morning tested 72.75 support whose break would signal a new downleg underway. The test held so that the gap back to Friday’s close could be filled. The gap held as resistance. Having chipped away at support, the next attack on 72.75 is likely to break lower.
Natural Gas: Tuesday’s open gapped down to test the decline’s low close. It held, and produced a bounce. The bounce stopped pessimistically short of filling the gap back up to Friday’s close. Any close above the 4.16 area would be credible for reversing momentum up.
30-year Treasury: The long bond’s gap open reflected holiday improvement that already tested the 131’22 bounce limit. It was exceeded while stocks fell. Perhaps the test will be a two-day affair instead of one. Regardless, a close back under 131’22 is needed to signal the decline has resumed.
Dollar Basket: The Dollar gapped up and trended higher to come within 2 cents of its 82.85-82.96 bounce limit’s upper-end. Closing any higher would signal a last leg up to new highs underway. There’s room down to 82.55-82.65 before signaling momentum has reversed down into a new downleg.
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Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…
Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).