Because I seemingly like the adrenaline rush of putting my neck on the line, The Turd is ready with another fearless prediction. So, sit back, relax and read as Turd once again attempts to predict the future.
As stated often, what do I know? I'm just a dope with a Macbook. However, several of my favorite indicators converged today so, after warning you last week to be cautious, I'm ready to get excited about buying again. Why, you ask?
1) The Swiss unexpectedly devalued their currency 5 trading days ago. Long term, this move is extraordinarily bullish for all commodities and hard assets. Oddly, commodities and hard assets have fallen, instead. It's been my experience that counterintuitive moves generally last 3-5 days.
2) The POSX rallied in the face of the Swiss devaluation. This rally has also lasted 5 days and appears to have run its course.
3) Trader Dan was kind enough to to give us this CCI chart last week. Note that many of the declines have lasted 4-6 days. I expected the current decline to last into this week and reach down toward the convergence of the 50-day moving average and the red trendline, near 645. Today, the index hit 644.
4) Both PMs traded down and touched the bottom boundaries of their current channels today. In gold, the low trade was $1804. In silver it was $39.75. Both have since rebounded and I have lasts of 1818 and 40.17. On the charts below, look at the powerful rallies that have followed the previous five approaches toward the lower trendlines. It's as if our Buyer(s) of Size are watching these channels, too, and using them to time their trades.
Upon considering all of this, I feel it's safe to call a bottom to this mini correction. I expect The Pig to reverse lower from here, thereby easing the selling pressure on the commodities and the PMs. As sellers exit the pits, prices will levitate. Later this week, The Cartel will be forced into covering more shorts and we will end the week considerably higher than we are now. In short, the lows of the week, and likely the month, are in.
Lastly, I've been waiting to take a swing at some edamame and I finally got my chance today. The chart below is a textbook case of basic technical analysis. Note that the price of soybeans had been contained in a $1 range for all of 2011. Last month, it finally broke higher. Moves out of such long-term ranges almost never persist without first a successful re-test of the top of the old range. Remember, "what had been resistance becomes support". So, when I saw beans break out last month, I promised myself I would buy some on the inevitable pullback to around $14. That occurred today (intraday low of $13.89) and I am now the proud owner of a few Nov11 $14 calls. I'm looking (hoping) for a rally back toward $14.50 and then on to $15.
OK, the guillotine has been raised and Turd has inserted his head. Let's see what tomorrow brings. TF
9:30 EDT UPDATE:
In a stunning development that no one could have anticipated, gold was mercilessly attacked by a goon squad of thugs from the LBMA overnight. After rallying over $30 on the Globex in Asian trading, the evil defenders of the status quo staged another 3:00 a.m. attack that was brutal enough to make even Tommy DeVito blush with shock.
However, the growing FULBMA on the chart indicates that today may be different. Instead of initiating an all- day raid and liquidation event, gold double-bottomed at yesterday's lows and has since rallied. I have a last in the Dec11 of 1826. Keep an eye today on the levels listed below. If today truly is a "Turnaround Tuesday", the metals will move higher, slowly at first and then accelerating into the close as The Cartel squares off some shorts ahead of the CoT survey.
More later. TF
10:30 am EDT UPDATE:
Lots of chatter again today about European "bailouts". Yesterday, it was the Chinese. Today, it's the Russkies. Whatever. Like it matters. Somehow the status quo dead-enders will piece together a "rescue package" to buy themselves some more time. In the end, all that matters is the undeniably inflationary effect this will all have. (Tr)Billions of dollars and/or euro need to be created and/or extracted from reserves to pull off this rescue. Again, Econ 101 shows that more supply invariably equals less value. The metals, the grains, crude...all going higher. Period. Buy the dip. Do not look for extended downside unless the trend from July is broken.