C. Banks Delaying The Inevitable

  • 2015 – 2016 correction was allowed and c. banks react with various stimulus pledges
  • 2016 June post-Brexit correction was short-lived and stopped before the “true” damage has been priced in
  • Our concern is that market was stimulated to the current elevated condition that risk the same inevitable drop
  • It is perhaps c.banks interest has not been met – surprised by the Exit vote and went to panic mode to shore up global equity
  • The simple analogy is to see c.banks as a drunkard dude in the bar-levitating and enjoying the highs but soon going nowhere before the puking begins

Stages of the Global Equity Market

  • Drinking higher (Baby is the market) (Beer is the stimulus)

It has impulsive moves, irrational at times but financial media has found ways to justify the run higher despite knowing whatever it was jabbing was pure BS.

  • Drinking towards one direction

Image result for drunk phase

The market is drunk but it is heading straight for heaven but the fundamental for heading higher means it is not thinking straight after all.

  • Making sense of the inevitable results

After it peaked at its high, the process of going lower takes time.

  • Final stage of a drunkard

Image result for drunk puke

Sometimes, too much of the good stuff given by c.banks have its consequences.

The next worry is as follows:

  • if drinking is no longer fun or working – what other tools does c.banks have?
  • does c.banks have more tools after exposing itself to jump in too quickly during Brexit vote?
  • how will it react if the market pukes?

Disclaimer: NO BABY OR INDIVIDUALS WERE HURT OR DRUNK WHILE WRITING THIS ARTICLE

 

 

Advertisements

Expect The Unexpected – FOMC & BOJ

FOMC

  • Policymakers to remain largely dovish and uncertain on the timeline for a minimal rate hike
  • Confidence remain low and Brexit will be the topic used to suggest that a rate hike is not imminent
  • Optimistically suggest and forecast better numbers ahead – maintain inflation outlook and maintain the status quo that everything is “as awesome as it gets”
  • Perhaps a hawkish remark could turn the market upside down – a September rate hike could trigger market reaction

BOJ

  • Overwhelming expectation of a large stimulus package 10t? 20t or 30t – Further clarification needed
  • Market expects something from the BOJ – otherwise a potential tantrum could happen
  • USD/YEN on the agenda – helicopter money will not happen for now but will be lightly mentioned
  • Revision on inflation and growth target
  • Waiting for lift-off – currency weakness could be their main priority

Gold Monthly

Gold Weekly

Gold Daily

Silver Monthly

Silver Weekly

Silver Daily

Gold/Silver Ratio Weekly

Platinum 4 hour

Where are the Yields? Gold Appeal

  • In search of better yield, fund managers and investors are piling on ETF investments
  • Negative yield and negative interest rate posed a big problem
  • US equity market is chugging higher amid TINA (There Is No Alternative) and FOMO buying
  • Against this backdrop, money flow into commodities sector remains healthy – money put to work to generate better return
  • Pre-ECB, FOMC and BOJ – all eyes on additional stimulus measures or rate cut but FOMC could come under pressure to introduce a hike

Gold Monthly

Gold Weekly

Gold Daily

Silver Monthly

Silver Weekly

Silver Daily

Gold/Silver Ratio Weekly

Gold/Silver Ratio Monthly

 

Losing Its Appeal? Gold & Silver

fear greed index

  • US equity is the best out of a bad neighborhood
  • Gold failed to rally higher – priced in Turkey failed coup and Nice terror attack
  • Gold daily posed a bearish double top formation
  • Gold weekly posed a bearish engulfing candle
  • Specs long could use this opportunity to reduce exposure
  • Investors maintain ETF investment – short term supportive
  • Gold/Silver ratio indicate a possible pullback in favour of gold rather than silver
  • Silver broke below $20

Gold Monthly

Gold Weekly

Gold Daily

Silver Monthly

Silver Weekly

Silver Daily

Gold/Silver Ratio – Weekly

TBT – Precious Metal Review

Previous post from TBT – Trade Ideas – Yellen Dependant remains 

Here are some trade ideas as we head into Janet Yellen speech and this is valid for the week prior to FOMC meeting.

  1. Buy the pullback to $1223-1233 and aim for $1263 (stops at $1220)
  2. Sell and fade the rally at $1266-1276 and aim for $1226 (stops at $1280)

Please note this is NOT a trading service – just ideas.

Dollar Daily

  • Trying to bottom here
  • If fail to bounce, a retest of 76.4 or 88.6 is the last line of defence
  • If it reaches that level, we look for RSI to confirm the end of the selling pressure
  • Could bounce to 20 DMA and if it break and stay above – we envisage trend reversal for higher dollar
  • June rate hike out of the question – July is data dependent but Summer Doldrum expect raft of bad data?

Gold Daily

  • Complete wave 5 corrective move?
  • Will we start the move lower? Rejection off the favoured level was not strong – noteworthy
  • Risk to the upside is the breach towards the top Bollinger Band for a short

Silver Daily

  • The chart does not imply overbought or bearish at all
  • Dip buying came in to rescue the bull
  • Risk to the upside further – perhaps 18.50 then we can consider RSI div
  • Remains bullish for now
  • See ratio below which confirms this move

Gold/Silver Ratio

  • The daily chart count for a 5 waves move lower is not complete – we are in the final phase
  • This support higher silver prices

Platinum Daily

  • Platinum rejected off the 20 DMA – only a close above will allow higher prices
  • Top Bollinger Band is converging – may limit upside – expect overhead supply there
  • A potential AB=CD formation – a break below the magenta line may confirm the move
  • Gold/Platinum ratio remains supportive for platinum to trade lower but need to watch it with caution

Gold/Platinum Ratio

Palladium Daily

  • Needless to say much but Palladium can be volatile at times
  • Upside risk is the target to the long term DTL (dark blue line)
  • Move lower seems possible – allow prices to retest previous support or even make a new low at 445 level

Conclusion 

  • Further dollar weakness is possible – need a key reversal candle on the weekly chart to signal the end of precious metal runs 
  • Dollar holds the key – a reversal will allow shorts to scale in 
  • Otherwise, risk of global equity rout could remain supportive for precious metal prices – certainly worth watching 
  • Slightly bearish gold due to ratio
  • Silver has rooms higher but will be on the lookout for divergence 
  • Platinum unclear
  • Palladium next rally is another sell opp 

 

Currency Wars – Bullion Daily 11th Aug

Bullion Daily

The following information is a guideline (trading plan) and should not be treated as financial advice. Not advice but banter and active in sharing trade ideas via twitter @sugardaddyFED. You can also follow us via TradingView.com for the latest charts update.

Daily Update

We have gold rocketed as high as 1119.79 but no follow through buying has brought the market down

Today close is crucial and if gold can mount a close above 20 daily ma then it may stand a chance to test higher

The dollar whipsawed after Yuan devaluation has given several opportunities for traders to add short positions

Dollar index remain resiliently strong – meanwhile gold is considered oversold and money flow here is no surprise

Severe equity sell off may have lifted the metals today but close is key now

Daily Update

As mentioned previously – we warned of a potential move higher in silver

A potential double bottom in the making at 14.37 levels and the daily RSI has a bullish divergence

Despite a strong dollar, we do not see any major sell off in Silver – a potential turn here?

A break and close above the 20 ma will give us the signal to take a long position

The balance has shifted in favour for bargain hunters to build short term long exposure

Any pullback on Silver remains a buy and as long as it trade above the daily 20 ma

Look to add on pullback to 14.78 (an area to retest the down trend line)

Weekly

Daily

A rather positive response on platinum as it trade and close above the 20 daily ma. We highlighted the weekly chart as well just to show the possibility of a fractal at play. We could see that the 2014 price action may well repeat itself after a massive sell off – and for the next few months, we could expect range trading as platinum look to retest the lower end of this box several times before ending the year with a potential move to 1070. Time will tell on this trade and with Yuan devaluation and extra stimulus taking effect, the probability could well be high.

The daily RSI continue to diverge while price action is stuck between 6586 – 625 levels. Today price action does not bode well for Palladium as it tested higher but gave back most of its gain. A period of consolidation could be healthy for the market before retesting higher. One positive note is that the selling seems to have abated and price did broke out of the downward channel.