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

Indentured_Servant
Aug 5, 2011 - 8:46pm

AA+!

Just saw it on dare I say it......FOX News. Should make Sunday evening/Monday interesting!

B'rock O'bummer must be furious as I heard earlier that the regime was in direct talks with S&P to avert the downgrade. Happy Birthday dumbass!

I_S

ginger
Aug 5, 2011 - 8:47pm

...downgrade.. ..very sad

...downgrade..

..very sad that our country is here. ...and scary..

Dr G
Aug 5, 2011 - 8:47pm

Of course the downgrade comes

Of course the downgrade comes after hours when trading is closed. Shocking, I know.

Prize Fighter
Aug 5, 2011 - 8:53pm

Aaaaaand it's gone!  My fiat

Aaaaaand it's gone! My fiat that is. Nice haul of 90%, roll of ASE, and my coin guy had a Liberty Dollar! That's the coin which that guy went to prison over. Nice conversation piece

Reasons I purchased now instead of waiting:

1) I was more fearful than greedy in terms of price. I'm my own contrarian.

2) The GSR moved up enough to close that gap down in July, touched the 200DMA and 40WMA.

3) FRNs are still being accepted.

I can't seem to paste the ratio chart here but here's the link. Check out that weekly GSR. Lots of room to fill below down to 31 . Let's do this!

https://stockcharts.com/freecharts/gallery.html?$GOLD:$SILVER

Eric Original
Aug 5, 2011 - 8:53pm

Ginger

You've mentioned an interest in natural gas occasionally in the past. I don't know if you have had a chance to listen to Rick Rule's newest interview on KWN, but he mentions nat gas starting around the 9:20 mark. Though as usual, I don't recommend skipping anything Rick has to say.

cris
Aug 5, 2011 - 9:00pm
ginger
Aug 5, 2011 - 9:04pm

Nat Gas... Oh Yeah.. ....Def

Nat Gas... Oh Yeah.. ....Def have plans to buy some shares *soon* EricO... ...Thinking of some LNG, UNG and a few others. I have not listened to the Rick Rule interview yet. ..I normally will listen to all the KWN broadcast interviews for the week on Saturday morning but I may have to go ahead and break tradition and check in over there tonight. ;)

Thanks for the heads up!

BTW... ...Bill Haynes has become one of my favs over there in the weekly metals wrap.. I don't generally hear too much mention of him on the blog here.. ..Are there other Haynes fans here? .....He speaks in a way that I get alot from what he has to say.

Violent Rhetoric
Aug 5, 2011 - 9:07pm

Peter Barnes “Is there a risk

Peter Barnes “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”

Geithner’s response: “No risk of that."

“No risk?” Barnes asked.

“No risk,” Geithner said.

kenklaveginger
Aug 5, 2011 - 9:14pm

Haynes

I am a little wary of Haynes. He talks like a salesman. He may be ok, but I don't trust salesmen.

¤
Aug 5, 2011 - 9:17pm

Holy Shit!

0

S&P Downgrades US To AA+, Outlook Negative - Full Text

Submitted by Tyler Durden on 08/05/2011 - 20:27 Bond Congressional Budget Office Debt Ceiling default Demographics France Germany Gross Domestic Product Medicare Monetary Policy ratings Recession recovery Reserve Currency Sovereigns Structured Finance

Well, so much for the conspiracies. S&P has just released a scathing critique of the total chaos that this country's government has become. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability." What to expect on Monday: " it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021." And why all those who have said the downgrade will have no impact on markets will be tested as soon as Monday: "On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors." Translation: unpredictable consequences: you are welcome!

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