Well, Alrighty Then

Wed, Jan 25, 2012 - 4:38pm

Finally, some action similar to what I was looking for this week. Thank you, Mr. Ben Bernank!

For this post, I'll dispense with all of the economic doom and gloom and concentrate solely upon the technicals. I know that most of you reading this are only looking for numbers today anyway so, here you go.

First up, The Pig. Today is Primary Example and Reason #1 why I never trade Forex. Just this morning, the POSX looked to be recovering and headed to 81. Not anymore! If you look really closely on the finviz chart, you'll see an ORD. Maybe some would call it a bearish engulfment. Whatever. All I know is that this chart looks terrible in the short term. Though the index may find some support near 79, the area around 78 looks to be a likely destination. 77 isn't out of the picture, either.

Onto gold. These are some very exciting charts! Getting through the brutal resistance area of 1680-1705 is HUGE. I had speculated late last week that it might take some kind of "extraordinary event" to generate the enthusiasm and momentum necessary to overrun The Cartel encampments there. Well, we got it! Now, the big, big key is holding 1705 on a weekly close. This means that gold needs to hang in there for the next 48 hours and withstand any and all Cartel counterattacks. The good news is that there is very minimal "headline risk" overnight so we should continue to see buying in the Asian and European sessions. Let's hope that gold can, in fact, continue higher overnight so that it has a little cushion for The Cartel's inevitable attack, sometime before the close on Friday.

Below is silver which presents, for once, a much less complicated picture. Having cleared the first EE suppression hurdle from 32.80-33, silver is now ready to roll even higher. Though it may see some light chop near 33.75 or so, I expect silver to continue steaming higher until it reaches the area between 35 and 35.50. This is clearly visible on the chart below. If I had to guess, I would say that, over the next week or two, silver will tackle that resistance and beat it. It will then encounter the main downtrend line, currently near 37 and fail. After a fall back to (now) support at 35.50, it then mounts a second charge at the line and breaks it, sometime in mid-February.

Lastly, just a word about the latest OI numbers which were again rather eye-opening. As you surely recall, gold was down almost $14 yesterday. It appears to be a mass long-liquidation. HAHAHAHAHA! Suckers! The OI in the Feb12 fell by 18,000 contracts but only 9,000 rolled into April. The rest of them simply capitulated. Dweebs. They shoulda been reading more Turd! Clearly today's rally is primarily due to those same "traders" rushing right back in. I expect a pretty healthy bounce in OI when the numbers are reported tomorrow. Probably something like 7000 new contracts.

In silver, the OI situation remains stable and this is a very good thing. Yesterday, price fell by 30 cents but OI only declined by 5 contracts. A battle is being waged between resolute longs and the EE, which, as The Wicked Witch told you yesterday, is intent upon only allowing silver to move up slowly. Well, their plan sure failed today. Let's look for another, healthy 2000-3000 OI bump when today's numbers are released tomorrow.

OK, I'll stop there. Again, in the expected absence of raid-inducing, headline risk overnight, let's look (hope) for a continued rally in the PMs. Maybe we can get gold to 1720 and silver to 34 before the criminals in London take over at their usual, appointed hour. Keep your fingers crossed! TF

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Key Economic Events Week of 6/21

6/21 9:45 ET Goons Bullard and Kaplan
6/22 2:00 ET CGP on Capitol Hill
6/23 9:45 ET Markit flash PMIs for June
6/24 9:30 ET Durable Goods
6/24 9:30 ET Q1 GDP final guess
6/24 9:30 ET Goons Bostic and Harker
6/24 11:00 ET Goon Williams
6/24 1:00 ET Goon Bullard again
6/25 8:30 ET Personal Inc and Spending
6/25 8:30 ET Core PCE
6/25 10:00 ET UMich Consumer Sentiment

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