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.

About the Author

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  387 Comments

Magpie
Aug 5, 2011 - 10:18pm

Monday, bloody Monday?

So what does the world look like by the close of markets on Monday? Dow & gold up, down or unchanged, and silver smashed through the floor or riding gold's coattails?

Prize Fighter
Aug 5, 2011 - 10:28pm

Wowzer.  Epic stuff. Better

Wowzer. Epic stuff.

Better find your LCS this weekend if you haven't already. Great thing about physical is you can still buy it after markets close and a surprise downgrade.

Dr G
Aug 5, 2011 - 10:30pm

@Prize Fighter

Yeah, PMs up on Monday as a result of the downgrade would make sense, which is why it won't happen. Silver will be a bloodbath on Monday (I'm saying that so the opposite will happen!).

diegeiro
Aug 5, 2011 - 10:31pm

US Chickens coming home to roost?

From S&P
"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."

So much for a return to normalcy next week. Just another week of the new normal, whatever that is, since what is normal now changes on a daily basis.

The MSM and the Whitehouse all saw this coming.
Be sure to tune it to CNBC this Sunday for your official update and CNN right now as I write. <sarc off>

Thanks to TF and ZeroHedge for giving us the updates.

¤
Aug 5, 2011 - 10:34pm

Countries listed by Credit Ratings

SAN FRANCISCO (MarketWatch) — With political gridlock increasing the likelihood that the United States will lose its coveted triple-A credit rating, America is poised to join the ranks of sovereign borrowers sporting a double-A stamp, including China and Spain.

The double-A club is a diverse group that includes countries wrestling with their own debt crises, or in China’s case, flush with cash. And it’s one that some countries have successfully left.

Sovereign ratings from
Moody's and S&P
triple a
Australia
Austria
Canada
Denmark
Finland
France
Germany
Luxembourg
Netherlands
Norway
Singapore
Sweden
Swiss Confederation
United Kingdom
U.S.A.
Double a
Abu Dhabi
Belguim
Bermuda
Chile
China
Japan
Kuwait
Qatar
Saudi Arabia
Slovenia
Spain
Taiwan
maravich44 ¤
Aug 5, 2011 - 10:38pm

State of Affairs. Barney

Agreed. Barney Rubble would outclass him and he was a good actor.

TheGoodDoctor
Aug 5, 2011 - 10:38pm

@DPH, Larry and all. Italy

@DPH, Larry and all. Italy sends in the mob to the ratings agencies.

https://blogs.marketwatch.com/thetell/2011/08/05/italy-raids-moody%E2%80...

exiledbear
Aug 5, 2011 - 10:39pm

There no way you can spin AA+ as positive

Funny that they did it going into the weekend, the little fuckers.

I agree, that this was what gold was discounting this week.

The really big questions I have are 1.) how fast will this filter through the system, and 2.) how much will this impact the system?

I thought before that maybe we had a few months left before everything blew up and went sideways, but now I'm thinking it could be weeks or even days. This is it, we've finally reached the very end of the game.

BagOfGold
Aug 5, 2011 - 10:40pm

I finally made it!!!...

Turd...Congratulations on your new website!...I like it so much...I have decided to move Bag Of Gold's Penny Stock Arcade & Emporium from Kitco...over here too!...It is all mrgneiss's fault!...Give me some time...while we try to set everything up!...Both of us wish you much success...& profits with our penny stocks!...We will get this thread started in the Gold Miners forum...& we hope everyone...will stop by & visit!!!...

Thank You Turd...Scottj...mrgneiss...& most of all...everyone who makes Turd's website so successful!!!...

Bag Of Gold

rhome123
Aug 5, 2011 - 10:40pm

DXD SDS QID

Hi all :

imho the stock market is going to roll over might be time to look at the above etf shorts. Have a good weekend all this is not the country I grew up in.

Regards,

Rhome123

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