Will Gold Retest Its Uptrend? Odds Favor It

Naturally, when I attend a conference, gold does its best to make me look bad. And we saw gold fade badly last week. However, if you think gold is now in a bullish trend, we're coming to a buying opportunity.


(Updated chart)

You can see that gold ended Friday right at its 50-day moving average. Maybe it will bounce here. However, I think it more likely that gold will go down and test that uptrend that started in August-September. If you're bullish on gold, that would be a buying opportunity.

This move lower should be accompanied by wailing and gnashing of teeth. RSI will give a sell signal, and many technicians will act on it. But it's fair to say that RSI is not useful now, and has been faking out bulls and bears for some time. We've seen this momentum indicator dip to give sell signals only to find support further down. The same this time around would not be surprising.

Most interesting is that the U.S. dollar faded along with gold on Thursday and Friday. I'm not sure what that means, but it bears watching. 

Gold sold off (and the dollar rallied) when the Fed hinted that it might hike interest rates in December. That's a lie not worthy of a Florida used car salesman, but this jittery market bought it anyway. It seems like currency traders are figuring things out. Maybe gold traders are next.

The potential debt ceiling fight was resolved with astonishing quickness, and that also supported the dollar and hurt gold. At least I think so. Maybe the fear trade will fade. That's what the bears are probably hanging their furry hats on. But remember this is seasonally a strong time for gold (the love trade, as Frank Holmes calls it).

Hat-tip: GoldCore blog

Good luck and good trades. And to all the folks who attended the New Orleans Investment Conference and took time to talk to me about gold, oil and other things, it was great seeing you. There were some sharp minds in that crowd. Thanks for coming.

US Dollar -- Breakout or Fakeout?

I post a chart of the US dollar all the time, but I'm going with UUP today, because stockcharts won't update its $USD chart until after the close today.

Anyway, UUP is a pretty good analogy for the US dollar. And recently, the US dollar looked like it was breaking down. But the past two days have seen an astounding recovery in the Greenback. It is now back above its 200-day moving average, as well as testing the upper boundary of its down-channel.


(Updated chart)

The dollar got a big lift yesterday as traders hoped that the European Central Bank would embark on a new round of stimulus (easy money in Europe, which would potentially weaken the euro). Today, it got another boost as China's central bank cut its interest rate for the sixth time since November and urged its banks to lend more. 

There were also many bears betting against the dollar. That boosted the dollar with a short-covering rally.

So is the dollar heading higher from here? I want to bring up two things ...

The Fed is not going to raise interest rates this year. It missed its opportunity in October, and recent data has actually been weaker.


A debt-ceiling fight is looming in Washington, D.C. This has the potential to drag on the U.S. economy and even impinge the credit rating of America.

We'll wait and see. One interesting point: Gold is really showing strength in the face of this dollar rally. That's very unusual.

Good luck and good trades.

Bombs Away in US Dollar Index -- Up Goes Gold!

It's time to take another look at the chart of the US Dollar Index that I keep posting. I previously warned that if the U.S. dollar couldn't manage a bounce soon, it would be "bombs away!" That's just what we saw on Wednesday, October 14.



(Updated chart)

The U.S. Dollar Index made a lower low today after making a lower high three weeks ago. This is the first time we've seen the greenback show this much technical weakness in more than a year.

And you wonder why gold rallied like a rocket yesterday, eh?

And yes, the US dollar is rallying today. It looks oversold, this is a technical bounce.

More importantly, the US is headed into a budget crisis (artificially forced by the Republican majority in Congress, which is being led around by the nose by their Tea Party minority) in just 19 days. That could weigh on the US dollar even further. 

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Chart of Gold ... Breakout Time

This is the way the chart of $GOLD should have looked in my story "The Golden Hour" that ran in the FreeMarketCafe.com today.





Crappy day in the market today. All the gains I had at 2:30 disappeared by 3:30.



SB

GLD Shows Gold Breakout

Looking at a weekly chart of GLD, which tracks gold, you can see that it pushed above and closed above overhead resistance last week. Now it needs to confirm the breakout. A retest of support would not be surprising. Last one aboard is a rotten egg.





(Updated chart)

US Dollar Weakness Bodes for Higher Gold, Silver Prices

It's time to check in on my US Dollar Chart. You can see it's weakened quite a bit since the last time we looked at it.



(Updated chart)

This morning (not shown on the chart), the dollar is weak yet again. If the dollar doesn't rally soon, it could plunge rather quickly. What do you think that could do to the price of gold, which is priced in U.S. dollars? How about the price of oil?

Some links to go with this chart:

The two-day devaluation of the yuan in mid-August might have been a masterstroke of strategy

China actually triggered a wide-spread revaluation of the dollar. By undermining US export markets, China has effectively taken control of America's interest rate policy from the Fed. She has shown that China, not America, now sets the pace in the global economy.  MORE.

The dollar just received a death sentence
Yes, the usual embarrassing hypey headline, but read the story for its insight on how foreigners dominate the US dollar market, and could dominate it even more in years to come. MORE.

This plays to a thesis I've been working with for quite some time, that the Fed doesn't dare raise rates for the ripple effect it could have in foreign debt markets.

Good luck this week, and good trades.

$RIGP Breaks Out to the Upside, Handing Us a 24% Open Gain

Here's a stock I recommended to $10 Trigger Alert subscribers on October 1.



(updated chart)

I recommended RIGP because of the double bottom. Also, it paid a fat dividend that looked fairly safe. And I thought the oil market was due for a turnaround (due to bullish action in both oil and Exxon-$XOM).

All these things turned out to work in our favor. Now, RIGP is breaking out to the upside. Of course, we'll have to see where it ends the day, and anything can happen (including reversals!).

Good luck and good trades to you all. And remember, you can ask me anything in my Scutify.com chat at 1 pm Eastern Time on October 7 (today). The link for that is  https://www.scutify.com/premium-scuttles.aspx…

I Receive a Letter From a Brain Surgeon

I recently joined Scutify.com. No sooner did I do that than the SPAM started. 

Here's one: 

HELLO I AM A RETIRED BRAIN SURGEON AND ACT AS A PRIVATE INVESTOR TO SOME CLIENT IN THE UNITED KINGDOM RANGING FROM TOP BUSINESS PERSONALS SERVING AND RETIRED ARMY. COLONEL,LIEUTENANT-COLONEL AND TOP GOVERNMENT FUNCTIONARIES WHOSE PRIVACY IS SHROUDED IN TOPMOST SECRECY. AM SEEKING FOR INVESTORS / START UPS WHO NEEDS TO EXPAND THEIR BUSINESS. I HAVE 50 MILLION DOLLARS TO INVEST IN ANY PROJECT .IF INTERESTED OR ANY OF YOUR CLIENTS, PLEASE GET BACK TO ME. MY EMAIL IS mott2015-2016 (rest of address deleted to protect the idiots*).

My Reply:

Dear Sir and/or Robot:

While I won't reply to you on Scutify, I'm glad to do it here on my blog. 

I notice that despite being a "brain surgeon" ....

• You write in ALL CAPS. A brain surgeon can't figure out the caps lock key, eh?
• Punctuation is mysteriously misplaced. Meanwhile, at least one necessary word ("I" at the beginning of a sentence) got bored and wandered off.
• Perhaps we are lucky more is not lost in that stream of not-quite consciousness.
• Seriously, I read your all-caps paragraph three times before I figured out what you were trying to say. 
• Brain surgeon indeed. Listen, sir or robot, we've already got one too many brain-damaged brain surgeons in America, thanks very much. 

To that point, I suggest you address all further communication to the website Ben Carson for President. He's badgering me for money, too. I'm sure you and Dr. Ben have lots to talk about.

Sincerely, 

Sean Brodrick

*Not you. That other guy

Ask Me Anything ... on Wednesday at 1 pm

I'm hosting a live chat on Wednesday at 1 pm Eastern Time on the website Scutify.com. Scutify is like Twitter for market gurus and analysts; a big difference is that you can make posts longer than 140 characters.

Anyway, you're invited to the chat. You can either make your own Scutify account -- it's free. Or you can bypass registration by logging in with your Facebook, Google+ or Twitter account at: https://www.scutify.com/login.html. It should be fun.

The direct link to my chat is HERE: https://www.scutify.com/premium-scuttles.aspx?q=5611df1fb6d377204473250e

I'll talk to you on Wednesday. You can look for my chat under the hashtag ‪#‎AMA‬ (Ask Me Anything).

Silver Rallies, and Silver Standard ($SSRI) with It!

We've had Silver Standard Resources in the $10 Trigger Alert portfolio for awhile. Nice gains on this one. And they could get bigger. Hark! A breakout looms nigh!



(Updated chart)

Should we grab gains now or stay? Just kidding ... I think precious metals look good here. We'll stick around. But like Sandstorm, it could take SSRI some time to work through overhead resistance. So be patient.

Sandstorm Gold ($SAND) tests Its Downtrend

We added this position to $10 Trigger Alert recently. Nice rally up into resistance.


(Updated chart)

This could take a while to work through that overhead resistance, but be patient. I think the best is yet to come.

Mind you, gold is down slightly as I write this. If gold is down, why are gold miners up? I think I know why. Do you have a theory?

Japanese Yen Breaks Out to the Upside

As I mentioned earlier this week, the Japanese Yen has been consolidating, and looked poised for a breakout. I was expecting a breakout to the upside but cautioned that you should wait until the breakout actually happened before buying. Let's look at today's chart action ...

(Updated chart)

Look for confirmation of the breakout on Monday. If we get it, then the yen (as tracked by the FXY) could rally to overhead resistance at 89. That's a huge move in a currency.

We'd have to see what happens then.

Have a great weekend. I hope you were on the right side of gold this week.

When Are Investors Most Bullish?

I found this on Stocktwits.com. This shows how investor sentiment (on average) changes both by the hour of the day and during the day of the week.

Stocktwits' conclusion: "investors were most bullish when the market was closed."

Something to keep in mind when you're going to buy, and when you're going to sell.

There's a lot more at the original article.