From the Trading Desk
The intense volatility and bearish outlook that characterized the beginning of the trading week has subsided a tad as the week has progressed. The Shanghai Composite Index managed to stage a 5.40% recovery overnight and the Dow Jones put in its second big up day. The Vix index has backed off the lofty 50 level and is trading in the mid-20s. After failing to break through its 100 day moving average at $1,164 on Friday and Monday, gold succumbed to heavy selling pressure along with basically all other markets to kick off the week. It is now down for the fourth day in a row but founds bids materializing in the low $1,120s today. Silver hit a five year low yesterday and traded down to just under $14 on the December futures contract. It staged a nice recovery today despite gold not doing much and $14 is clearly the major support level to watch.
Perhaps the metals market is waking up to the fact that supply is limited, at least for silver which was up today. Gold hit a high of $1,130 and never hit a lower low like silver did. Silver is simply up with most commodities today, like oil which had a nice move up finally despite the dollar strength. But mostly this move up in silver was because of the good GDP news that came out. But if talk about raising rates surfaces again, this has been negative for gold, so keep that in mind.
The dollar moved higher with the news, touching 96 before falling 30 cents. Treasury rates were up slightly.
One of the indicators I follow that has helped to buoy going through this stock market turmoil we have had is the VIX. VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. Read more: VIX (CBOE Volatility Index) Definition | Investopedia http://www.investopedia.com/terms/v/vix.asp#ixzz3k3iWTJuG
I like more extreme action so I look at the leveraged VIX which is represented by the ETF UVXY listed below.
We had a big move up in volatility with the market crash a few days ago. This should have got gold much higher but it seems that the fall in paper assets pushed GLD and SLV down too.
I told subscribers yesterday I lean long the general stock market yesterday and we had a nice move higher. But UVXY ended the day green which shows the markets are still a little jittery. Also called YINN, a China play and RUSL, a Russian play perfectly yesterday for today’s trading too.
Here is where I stand going into tomorrow and the weekend.
Stock market higher.
Gold market trending higher.
Dollar moving higher.
Interest rates moving higher.
But this is all temporary.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.