Three Weekly Charts

387
Fri, Aug 5, 2011 - 6:36pm

Whew! I don't know about you but I am glad this week is over! I'm just glad I had all of you to share it with.

I made a couple of changes today within my trading account today. I guessed that a brief selloff would materialize around lunchtime and, luckily, I absolutely nailed it. I made a very quick and tidy little profit on some ES calls. I quickly rolled out of them and now I am in:

1) October gold call spreads 1700 vs 1800

2) December gold call spreads 1700 vs 1800

3) September silver call spreads 40 vs 45

Only the silver makes me nervous (time is short) and has me worried (didn't rally back today like everything else). Actually, it kind of pisses me off a little bit. The ES rallies 40 points. Gold rebounds $15. Crude bounces back $3. Silver...blechk. Oh well, I must be patient. Provided there are no overwhelmingly bad headlines over the weekend, we look to head into Monday with a general "risk ON" mindset. Maybe I'll catch a break.

Speaking of headlines, did you see this a few minutes ago?

https://blogs.abcnews.com/politicalpunch/2011/08/govt-official-us-expecting-sp-downgrade.html

If you were wondering why gold was so strong on the Globex, I guess you just got your answer! Personally, I still cannot believe that a U.S.-based ratings agency will be allowed to downgrade U.S. government debt. The implications for insurance companies, mutual funds and pension funds would be calamitous. I'll guess we'll see.

OK, onto the charts. First, let's take a look at gold. For all the craziness, the Dec gold contract finished UP another $34. Headline risk is everything at this point, however, gold looks certain to test the 1680-85 level again next week. After that, it's anyone's guess. IF it rallies another $40 next week and closes near or above $1700, all bets will come off. Gold will have the appearance of an accelerating uptrend as it would be breaking out and through its nearly three year uptrend. It's going to be a very exciting and consequential week.

Silver isn't nearly as exciting. You know I've been going on and on lately about lack of follow-through due to the meager 120,000 short interest. OI finally perked up this week as we headed toward 42+ and then, of course, came the smashdown. This weekly chart looks sickly and, frankly, gives me a feeling that 36 is in the cards before we ever go back and break through 42. In the very short-term, however, I can see an early-week rally next week that takes silver back up near $40 and maybe even $40.50. You can bet you arse I'll be dumping that spread when it gets there.

Lastly, I've received several requests for an opinion on crude. I had hoped that 88-90 would hold but, once that failed in the massive dump on Thursday, you had to figure that 84 was in the cards. You can see that on the chart below. That should do it. IF 84 fails, it looks like it could trade to 80. At 80, it would sure look to be one heckuva good buy. If anyone out there is trading crude, be sure to buy yourself plenty of time. It looks to go much higher but maybe not as soon as next week. Be patient and you'll be rewarded.

OK, that's all for now. I'm going to take a couple of days off so consider this your open thread for the weekend. I think we all found great value from this site this week. Go forth and convert as many new Turdites as possible.

TF

p.s. It's 10:00 pm EDT Friday night and I felt I had to chime in. I must admit that I am absolutely stunned and flabbergasted that S&P has officially downgraded U.S. debt to AA+ with a negative outlook. This is truly an historic event and one that will have repercussions for weeks and months to come. At first glance, I can't see how the PMs don't experience a huge rally on Monday but, who knows? One thing I do know, however, is that gold and silver will be higher in a month. They'll be higher still in six months and even higher a year from now. The Great Keynesian Experiment is ending. Do not, under any circumstances, sell you precious metal. They are your only financial protection.

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  387 Comments

tpbeta
Aug 5, 2011 - 6:42pm

What will happen if S&P

What will happen if S&P really do downgrade? MSM talking like it's a done deal. Fitch guy was on BBC just now shrugging about it.

Gil
Aug 5, 2011 - 6:46pm

Thanks Turd

for all that you do. I thought Eric Sprott's comment about the cartel pushing silver down to affect the gold price was interesting. Apparently gold is getting too big for them to inflict serious direct damage on, so they're targeting family members. Typical criminal mindset. Have a great weekend!

Cleburne61
Aug 5, 2011 - 6:51pm

Turd, you really helped us

Turd, you really helped us see things clearly this week, through all the hell and EE assaults. Thank you. Really. I wasn't shaken, but it was nice to have others validate and reinforce the vital mission right now: HOLD THE LINE!

Have a great weekend.

beinki
Aug 5, 2011 - 7:00pm
SilverTree
Aug 5, 2011 - 7:01pm

I blew another 2-G's today on

I blew another 2-G's today on G&A. The wife is not impressed. Ah well she'll thank me later. Food and phyz is my main focus now.

Old Major
Aug 5, 2011 - 7:03pm

more AGQ at 38 and even more at 36

I bought a some more proshares ultra silver (AGQ) when we hit 38 today. With GOLD so strong, I'm hoping we see the slingshot effect in silver. Monday will be a terrible day for the stock market if US credit is downgraded. I know the EE will probably continue their attack, I just can't see how anyone would sell or short the PM's right now. When the banks failed, investors got into cash fast. When governments fail the PM's are the only safe haven.

flaunt
Aug 5, 2011 - 7:12pm

The farce is complete

"S&P served notice it planned to downgrade U.S. AAA rating but is reconsidering, a senior administration official says."

Hope nobody here actually believed the S&P was going to go through with it, in spite of their barking over the past few weeks. It was always just a ploy to bring the politicians to heel, nothing more.

nith
Aug 5, 2011 - 7:12pm
SilverTree
Aug 5, 2011 - 7:14pm

The Bears part 7

Video unavailable
nith
Aug 5, 2011 - 7:20pm

Nobody Gives a Shit About You...

Nobody gives a shit about mining investors... Especially not mining executives...

How low can we go?

My hunch is that we're going (at least) to 160-170 on the XAU index...

Why do I think that?

I believe that so many short positions have been accumulated by TPTB near the 220 level (6 times failed to break out!) and then near the 210 level (I counted at least 5 "breakout failures")... Those shorts need to be disposed at your expense... They will do anything in their power to shake you out of your positions... The clueless will now say that "the mining shares are weak because they follow the stock market"... "They behave more like stocks than like gold, yada yada yada...)... I followed the price action yesterday.... The mining shares were the first to crash... They did this when gold was making new all-time-highs above 1,680 and the stock market was only down by 1.50% at the beginning of the session...... If I ever hear again the term "ratio trade" I am going to puke.... You should try to form your own opinion.... Nothing is written in stone.

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Key Economic Events Week of 10/21

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10/24 10:00 ET New home sales
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Key Economic Events Week of 10/14

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10/8 8:30 ET Producer Price Index
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Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
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9/23 9:45 ET Markit flash PMIs
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Key Economic Events Week of 9/16

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Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
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9/3 9:45 ET Markit Manu PMI
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8/29 8:30 ET Q2 GDP 2nd guess
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Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
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