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

Titus Andronicus
Aug 6, 2011 - 1:20am
ginger
Aug 6, 2011 - 1:23am

Bag of Gold, Welcome!

Bag of Gold, Welcome! ....I've lurked on your thread over at Kitco but never posted. ..So glad you will be here now! ..Can't wait for your penny stock thread to start up here as that's MY CUP OF TEA!!

PS .....Some people here are partial to really 'spensive mining stocks and don't really understand our admiration for stocks brought to you by the letter 'F'. :D

E*cough*O ;)

maravich44 treefrog
Aug 6, 2011 - 1:27am

Hey Tree @treefrog

nothing goes un-noticed or unaccounted for no matter who you are.

Fortinbras Titus Andronicus
Aug 6, 2011 - 1:37am

@TA... re: Faber

I posted it yesterday, but he called in pre-market and when they asked him where he was calling from, he said, "I'm in Zurich... in a sleazy motel."

I love Faber.

zilverreiger
Aug 6, 2011 - 1:44am

lol faber "i'm in zurich in a

lol faber "i'm in zurich in a sleazy hotel"

Ranch
Aug 6, 2011 - 1:56am

Post Downgrade Markets

Bonds - down big Dow - down big Margin calls Liquidity crisis PMs down as a result - not huge PMs recover by end of week due to liquidated stocks & bonds. Where do people invest that's a safe haven if not US treasuries? How about PMs? Make sense? I hope so...

edge maravich44
Aug 6, 2011 - 2:07am

@maravich44

"roll away the dew"

maravich44
Aug 6, 2011 - 2:16am

@edge Right fire it up

"in another times forgotten space, your eyes looked from your mother's face" Thank You.

Economical Disaster
Aug 6, 2011 - 2:31am

Wow! A Billion Dollar BET! AND HE WON!

Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the United States will lose its AAA credit rating.

In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.

The massive trade wasn’t placed in bonds themselves; it was placed in the futures market.

https://etfdailynews.com/2011/07/25/investors-the-1-billion-armageddon-t...

Biochar Economical Disaster
Aug 6, 2011 - 2:36am

what entity?

One individual doesn't make such a trade. Insider banking entity.

PS ~ Dennis Slothower's Daily Alert: Dow Theory Primary Trend Bear Market Sell Signal given... combined with S&P downgrade this doesn't bode well for Monday equities. Hopefully First Majestic (AG) falls back again.

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