Thursday, April 3, 2014

Gold Daily April 4, 2014


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Long Term ~ Neutral - Need a monthly close above 1800 to confirm the bull market final phase underway.
Medium Term ~ Neutral – Trend is now neutral after one year in bearish mode. A close above 1420-1480 needed for next significant price point--but a March close above 1322 GETS ONE MORE NOTCH to bullish.
Intermediate Term ~ Neutral– A close above 1355 needed for more bullish action. We are at the end of the short term cycle window. A close below 1262-1272 puts us bearish.
Short Term ~ Bearish until a close above 1296-1305 – The Next short term cycle is underway into mid month but the persistent weakness in gold is very troublesome and the potential now exists that if gold closes below 1272, odds will favor it a down cycle into mid month. The medium term cycle window is still in play until April 10th.

Initial Resistance 1289-1299 2nd tier 1307-1315
Initial Support 1272-1282 and 2nd tier 1255-1265

Resistance was listed at 1293-1303 on the last update and the high was 1294. 
Support was listed at 1279-1289 and the low was 1282.

To say things are becoming very unusual is an understatement.

Fed Board Member Stein Announces Resignation
WASHINGTON April 3, 2014 (AP)
By MARTIN CRUTSINGER AP Economics Writer

Jeremy Stein, a member of the Federal Reserve Board, announced Thursday that he plans to resign next month to return to Harvard University, creating more turnover on the seven-member board.

In a letter to President Barack Obama, Stein said that he will resign effective May 28 and return to Harvard, where he had been an economics professor beginning in 2000. Stein had been on the Fed board since 2012. There had been speculation that he might leave given that he was facing a May deadline to decide whether to return to his tenured Harvard teaching post.

(Note – while it says above it was in the cards and planned, there’s also this to consider)

Dana Saporta, an economist for Credit Suisse, said that in losing Stein, the Fed is losing its leading voice "in the call for policymaker vigilance against financial excesses."

Thus as with every story today, there are two sides of the matrix for you to ponder.

Earlier in the day….. Russia

Russia Demands NATO Answers For "Unreasonable" Eastern European Escalation
Submitted by Tyler Durden on 04/03/2014 - 11:45

Days after the US escalated, announcing it will be sending a Navy warship back into The Black Sea, and on the heels of NATO ordering its military planners to draft measures to beef up defenses amongst its Eastern European members, Russia is demanding answers for this escalation. As Reuters reports, Russian Foreign Minister Sergei Lavrov said any increase in NATO's permanent presence in eastern Europe would violate a 1997 treaty on NATO-Russian cooperation: "We have addressed questions to the north Atlantic military alliance. We are not only expecting answers, but answers that will be based fully on respect for the rules we agreed on.

By the end of the day……….Russia

Russia Recalls Ambassador to NATO As this Spirals Out of Control by Martin Armstrong

The US has been encircling Russia with nukes for sometime and they have been escalating the Ukrainian affair to the brink of war. NATO suspended all cooperation with Russia over Crimea and these people actually think they are accomplishing something. Russia has recalled its Ambassador to NATO and the West is just insane. Crimea was not originally part of Ukraine and that should be respected since it was a gift within the Soviet times. This is why from the outset, I stated hand it back to Russia for it would only lead to war otherwise.

Gold Overview

Gold is having a very difficult time of it and has not been able to move away from the lower channel line for three days now.  To top it off the NFP report is in the morning. Anything can happen and a spike on both sides is not out of the question.  Is it possible that the control boyz are trying to collapse gold here?  If gold was to explode higher here, it would add a whole new situation to what's going on.   

The only other factor to bring gold down here is the concern perhaps of what is happening in China.  That also is viable as another report of lower economic activity took place on Thursday.
Lets go to cycles first tonight.

CYCLES
The NFP report is in the morning and quite frankly, I'm not sure what we should make out of this pattern on the chart. Certainly gold can explode higher on Friday or lower or both in those crazy spikes we get at this report.
How many times has gold been shafted at NFP?
One thing I do want on this update is to share as an observation. I don't know if this is what we should expect, but it certainly is a consideration.
First what the odds favored to happen at this cycle turn is on the chart below and what we've been looking for. Most often gold moves in opposite directions at each cycle turn and odds do favor we move higher to the blue cycle. This can still play out and a red cycle low could lead to a mid month high. But we know that red cycle lows are much less reliable. We also know that cycle inversions happen VERY RARELY in a trending market, but when its sideways like this is, then the rules change.  
gold cycles

Is there another scenario that the cycles can follow? 
After all, odds are odds and not absolutes. THERE ARE NO ABSOLUTES in trading and therefore we must always be prepared for SURPRISES IN A SIDEWAYS TREND. In a strong trend, things are different, but in this situation, with the NFP in the morning, and with price still at the low end of support, anything can develop.

So --- what if the above chart is not the scenario? 

What other evidence do we have?

The next short term cycle is underway and the next cycle date is April 15th (plus or minus 72 hours). 

WHAT SHOULD WE EXPECT? 
Initially I’ve been expecting a bounce to mid-month, but I’m not so sure at this point.  Time is running out for gold to begin its move higher and the weakness in the silver chart also has me worried.

Consider this exercise I worked on tonight in cycles. Whether it can play that way, I’m not sure.

Recall we had been looking for a July/Aug rally type scenario at the beginning of the year and how that served us well. In a search for what’s going on I can’t help but wonder if we are still in the same tracking of the July/Aug cycle. While it’s not exact, have a look at this.

The low of the July/Aug rally was June 28th. The low of the 2014 low was Dec 31st. That is just 72 hours off an exact 6 month time frame. June 21st thru 28th was the medium cycle turn 2 for 2013’s ideal 7 day period. Dec 23rd - Dec 30st was at the final medium term cycle turn 4 for 2013’s ideal 7 day period.

gold cycles

Look at the cycles that are numbered in the chart above. The question I’m asking is whether we are still tracking the phase of July/Aug and if it has extended into Sept/Oct? 

On the left I’ve numbered the July/Aug/Sept/Oct cycle points 1 to 8. On the right I’ve numbered the 2014 price pattern and its cycle points in the same manner. 

The time symmetry of each cycle is exactly 6 months apart at each cycle numbered 1 thru 8. The lows are also 6 months apart at the 1/2 way point of the year and the very end of the year.

The next short term cycle point is point 8 in the pattern. Will it play out in the same manner as the October 15th low? Point 7 inverted then and gave us a point 8 low.

And is it possible that it would be at the same trend line near the key 1222 reversal point that gold reached in October? October 15th and April 15th are exactly 6 months apart also and the next short term cycle turn is April 15th.

Summary:
The above scenario could end up playing out. With that much symmetry in time we can't eliminate it.

I think the bottom line gets answered tomorrow (Friday) at the NFP (Non-Farm Payroll) report at 8;30 am.

It’s not what happens at 8:30, but where we turn out in price that counts and I think that dotted trend line in the middle of this sideways affair we’ve been in for 9 months is the PIVOT POINT. We’re about to either move above that line and higher to mid month, or below it and lower. It’s no use trying to guess at this point, as this market is as screwed up and confused as it gets.

Gold Hourly Chart
It’s been quite a while that gold has gone down this much and been this weak. That dual gold line on the chart is the last uptrend line I have for 2014. Are the control boyz totally at work here in a desperate attempt to bring gold down? With the Russia situation, threatening to barter with Iran and use the Rouble and Gold --- I almost think if gold catches a bid it could be devastating for the US and the dollar.

 Everywhere we look there is trouble on all fronts. Doesn't it seem odd that gold could be this weak? Russia and China can bide their time but when trading with leverage, one has to be very close in time and price in order to make a successful trade. If we lose this line, then 1265 becomes the next target at the FIB 61% retrace. (Silver has retraced to the 78% level).

This chart could break lower at any time. It's now spent 3 days here. That's unusual. It certainly can go higher also or just sit here and meander all evening. Most lows are isolated events with a final spike down and reversal. Once in a while they look like below. But often, they give way. Forgetting cycles for the moment, the trend remains down on the short term. Resistance is the 1289-1299 area and then 1308-1315. Support is 1272-1282 area and then 1265 at the 61% FIB line. If we lose the gold trend line and close below 1272 we have to favor lower is still the trend.
gold hourly price chart
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