Thursday, February 6, 2014

Gold Trend Feb 07/2014

Follow The XM Bull
Long Term ~ Neutral - need a monthly close above 1800 to confirm the bull market final phase underway
Medium Term ~ Bearish - Need a close above 1293-1333 to neutralize
Intermediate Term ~ Bullish/NEUTRAL – 1272 DID NOT GET TAKEN OUT ON THE CLOSE yet and thus intermediate term did not go full bullish.
Short Term ~ BULLISH –   we need a close above 1272 to keep uptrend going.  We must hold 1222 on a closing basis otherwise the trend goes to neutral/bearish. 
 Initial Resistance 1262-1272 2nd tier 1284-1294
Initial Support 1243-1253 and 2nd tier 1222-1232

Last update listed 1262-1272 as resistance and the high was 1267.
Support was listed at 1243--1253 and the low was 1252.50.

NOTE: Of historical significance – it was 50 years ago today that the Beatles landed in New York.  On Sunday night it will be 50 years since the first Ed Sullivan Show.  The lowest crime statistics ever recorded on an hourly basis in USA still stand today for that one hour.  No wonder---everyone was home watching.

We discussed last night that the stock market was due for a bounce at the end of the report in the “What Next” portion of the report and it delivered on Thursday with a 188 point rise.  The other factor is that our 10 year interest rate watch on the weekly update reached the medium term moving averages on Tuesday reaching the 2.5-2.6 area and bonds dropped on Thursday keeping the rates above the medium term moving averages.
Interest rates have either bottomed and will now move higher or this will just be a bounce that will lead to a low in early March.  For now expect the 10 year to hold 2.5-2.6 going into mid next week and then we’ll see.
As for the stock market, here’s the deal.  You’ve all heard of the January barometer.  Historically, if we now make a new low in February beyond this week, then odds favor a down year.  If we avoid a new low from here, then the stock market can come roaring back.  But make no mistake, we remain at the biggest long term resistance in the stock market (see SPY chart on the weekly update) where we have the crossing of two very long term lines and price touching both in December.  The weekly update has discussed the potential for up to a 3 to 5 month correction since early December.  For now, any NEW LOW next week in the stock market will add to that potential.  If we hold the lows of this week, then expect a bounce back up to test resistance in the 1770-1800 area.
Gold once again made a bid for a breakout and this time reached 1267.50 before it was once again knocked down to our key number we discussed at the beginning of the week (1255) Price meandered all around that number once again all day long.  The rumor is a lot of buy stops will be triggered above 1270-1280 and thus the longer it keeps getting knocked down in such a fashion the more believable it becomes.
Perhaps the most bullish aspect of gold is the chart below where you can see the tremendous drawdown in registered gold at the COMEX and at the moment there is only 1 ounce of gold in inventory for every 85 ounces long in the market.  It was almost 120 before the February contract rollover into April.  This alone does not mean that there will be a default at the COMEX but it does highlight the tight supply of gold at the moment.  Certainly a lot more ounces could be made available at any time but still, this is a very low inventory of which the likes have not been seen for at least the last 10 years.  It’s something to keep watch on.  Rumors are that JPM has been snapping up the inventory.
On Friday we start with the NFP PAYROLL report.  While we don’t know what the outcome will be (who does anymore) there are two things to consider.
Tomorrow is bench mark revisions for last year in employment, which of course impacts last month’s number and tomorrow’s number.
And then there’s this; 9 of the last 10 January’s have seen negative surprises.  That in itself does not mean we won’t have a good number and if the GOONS have any say in the matter, they could tweak that number to the moon if they so choose.  The price of gold and its outcome most likely rests on the number.  A bad number and gold should spike up.  A good one could send it plummeting to earth as the FINAL DAY OF THE CHINESE New Year and a closed physical market is upon us. The fact that the control boyz were not able to sell off gold will become a HUGE PLUS ---- next week.  If we get by Monday/Tuesday without a selloff in gold it will yield a second clue that the low in gold from December should hold and that a July/August type of rally is still unfolding.
Gold Short Term
Last night’s quote --- “It’s still going to take a close above 1267-1272 to favor higher” remains in play as we enter Friday.  (Note the Thursday high was 1267.50undefinedright at this price point listed above).   Resistance remains tough in the 1275-1280 if we get above 1285-1295 there then the potential to move towards 1322-1333 will be favored.
Support is 1243-1253 and then 1220-1230. It looks like the NFP report on Friday is going to be the price mover of the week.  At this point either way can still go due to the simple fact that someone doesn’t want gold above 1272 on a closing basis.  That has been our key weekly number to close above for a few weeks and we have yet to see it.  Look at the spikes on the chart that keep getting resisted at 1267-1272.  Also look at the price action at 1255.  We’ve been there all week.  Support is the 1245-1255 area and then 1228-1235 and the key support 1220-1222. As we enter Friday we remain in the up channel that began on Dec 31st/Jan 2nd and the short term trend remains up.  Any close below 1222 and the situation reverses.  Get ready for Friday and the NFP as there’s usually a price spike.
gold hourly price chart
 What Next?
China is closed this week so be careful--- as we are on the last day.  We’ve got to get beyond this 1255 area and we’ve been there since the Monday close.  Also the NFP payroll report is out on Friday.
Bottom Line
The bottom line is someone is not allowing gold to close above 1275-1280.  If gold were to close above 1272 on Friday it would favor 1322-1333.

IT COMES DOWN TO THE NFP ON FRIDAY and what the control boyz decide to do if anything before China returns next week.

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