Expecting A Bounce

238
Thu, Aug 2, 2012 - 3:55pm

Well this week has certainly played out as expected, hasn't it? The question now is: Will tomorrow be the final piece of the puzzle? Will price rally off of a lousy BLSBS report? I'm quite sure that it will. Come on in and I'll explain why.

At the risk of seeming to beat a dead horse, regular readers of TFMR (and subscribers to TTM) know that this week is playing out almost entirely as expected. Last Friday, I had hoped that his week would be an UP week but I put the chances at just 25%. The more likely outcome was an early-week rally, followed by a mid-week beatdown, followed by a Friday rally that leaves the week virtually unchanged. If you haven't yet, you can read all about it here (complete with the obligatory images of the spec sheep being sheared).

https://www.tfmetalsreport.com/blog/4053/get-ready-next-week

So what do we have so far? The early week gold rally never quite materialized as prices mainly attempted to consolidate last week's gains. Silver rallied though, rising by 54c back on Monday. But the rally toward the top of the ranges never happened because the HFTs decided to front-run the Fed and they began to sell in earnest Tuesday afternoon. From there, the gold price fell over $30 from Tuesday high to Wednesday trough and the selling has continued today. After a brief, Draghi-induced rise toward $1615 this morning, The Gold Cartel was able to smash price and even succeeded, by around noon or so, to drop price back through the 50-day MA, which is currently near $1593. Further HFT/algo selling ensued and, before you know it, price dropped all the way to $1583. With the HFTs and assorted other specs sufficiently short, price has reversed and stabilized just below $1590.

So, why do I expect a rally tomorrow?

  • Well, first of all, why not?? So far, the week has played out almost exactly as forecast so why wouldn't it continue? Seriously. The BLSBS will likely drive price back UP through the 50-day MA...which will inspire short-covering...which will push price back above $1600...which will inspire even more short-covering...and so on and so on.
  • Physical demand in London remains robust sub-$1600 in gold and near $27 in silver. This demand continues to put a floor under the paper price and will soon cause another rebound, as well.
  • And look at these charts. The correlation is undeniable. Note that, over the past month, every single time the RSI drops below 40 on these 6-hour charts, price almost instantly rebounds. The average short-term bounce in silver is around 85c and the average bounce in gold is around $30.

The final part of the "prediction" from last Friday was that, in the end, price would finish roughly unchanged for the week. (Upon further review, I'd expect The Cartels to step in late in the day with the intention of assuring a slightly down week and a red candle on the weekly chart.) Last Friday, the Oct12 gold closed at $1618. An "average" rally tomorrow would push it back to...drum roll, please... $1618. Last Friday, the Sep12 silver closed at $27.50. An "average" rally would push it back toward $27.75, up on the week but still below the early week highs near $28.30.

Of course, how would I have any idea what the NFP number will be tomorrow? I'm not a Fed governor or sleazeball, WallSt banker with inside info. I'm simply stating that, because the metals markets are so grossly manipulated on a daily basis, sometimes it's rather easy to predict what will happen next. We'll see.

Of course, if tomorrow does, in fact, play out almost exactly as forecast above, I will graciously accept all platitudes and honoraria. If it doesn't...well, I'll simply delete this post and pretend that I never typed it.

Have a great evening! TF

5:00 pm EDT UPDATE:

​I can't confirm it yet but it appears that silver margins are being reduced on Monday. Keep checking the comments of this thread for updates and/or confirmation.

Also, I just came across this GoldMoney podcast. Alasdair Macleod interviews John Butler. I haven't had a chance to listen to it yet but I'm supremely confident that is is well worth your time.

Death of the dollar: John Butler talks to Alasdair Macleod

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  238 Comments

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recaptureamerica
Aug 3, 2012 - 3:55pm

Im now wondering if algo

Im now wondering if algo espionage is the new game in town... What can stop someone from installing code into an algo, a competitors algo, and have it do the opposite its programmed to do? I have no clue if its possible. If it is, financial hitmen now maybe have new targets

Dagney Taggart
Aug 3, 2012 - 3:49pm

@recapture

It would be done intentionally. The EE has to do something to divert blame from themselves for the pending disaster.

2012: War on Computer Terrorism

Modus operandi.

Big Buffalo
Aug 3, 2012 - 2:51pm

Knight Capital

Wowzers! If someone had the balls to gamble and buy some Knight yesterday at $2.09, It would have been almost 100% gain in a single day.

I like to gamble, but certainly didn't have the balls.

recaptureamerica
Aug 3, 2012 - 2:46pm

Goldman sucks..again...the

Goldman sucks..again...the life out of another.. What a nice bunch of assclowns

recaptureamerica
Aug 3, 2012 - 2:37pm

Goldman Charges Knight $440

Goldman Charges Knight $440 Million for Unwind It was Goldman Sachs (GS) that helped Knight Trading Group to unwind its inadvertent purchase of 148 stocks on Wednesday, say people familiar with the matter, and the bank charged the smaller brokerage $440 million for the transaction - an agreement that has left Knight (KCG) scrambling for extra cash. https://finance.yahoo.com/news/goldman-charges-knight-440-million-182808...

Byzantium
Aug 3, 2012 - 2:33pm

@ Regular Guy

Thanks for the response,

end of the thread & all that, I didn't think anyone was still around.

Regarding the AUD as a benchmark of dollar decline, here it is over 10 yrs for anyone still on the thread.

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

gbend
Aug 3, 2012 - 2:31pm

Ouch

"I realize that alot of people won't be ready for this..."

I wasn't ready for some of the worst web coding I've ever seen. They may--or may not--be right about everything they are talking about, but it hurts my eyes too much to try reading it.

Just A Regular Guy
Aug 3, 2012 - 2:19pm

@ Byzantium

Horray someone gets it!!!! I like looking @ gold in AUD because we are not actively debasing our currency (as far as I am aware). You can check-out a quote for spot Au/Ag on https://www.perthmintbullion.com/au/Bullion-Widgets.aspx

Goto the right of the page and fiddle with the graph. I think the graph there in AUD is more indicative of Supply/Demand of Ag/Au versus US/EUR.

(Apologies if I am advertising another site...... if anyone has another idea please shoot! :)

I am 100% with what you said Byzant.... If Draghi prints, the UK prints too, as does the USA.

I still, for the life of me, cannot see the magical EU breakup.... It's not going to happen! Weak EUR = GOOD FOR ZE GERMANS, non-sterile printing = GOOD FOR ZE GERMANS (except for the inflation thing). If anything, assuming the "structural reforms" (via austerity) are true, and then the EU ppls start getting business started again in Spain/Greece/Ireland then if anything I think the USD and US-debt/bonds are in big big big big big big trouble. The main issue regarding EU breakup (again I don't see it happening - i'm > 90% there is a plan behind the scenes and the crap we see with Merkel et. al. in the papers/media is just smoke and mirrors) is if some crazy government is elected. Take even the moderate center/center-left Hollande.... I havn't heard much about him of late. I guess ze Germans and the other EU peoples told him what was going on and he piped down. What about Rajoy? Not much from him either of late.

So maybe if they get inflation, they'll "export" the inflation back to the countries that have been decimated by the imposed "austerity"/deflationary-depression (think Spain/Italy and the housing crashes), if they can?

Remember too, one of the Achilles heels = OIL, printing = increased price of oil = bad for the US (I assume)? The FED and US-Gov are stuck between a rock and a hardplace because the Gov. has massive debt. I hope they find oil in the middle of America soon, I also heard US reserves are turning more negative of late.

Further why has no-one spoken about the proposed "floating-rate-note"? I gave it some thought the other night - remember when Greece "restructured" their debt? They issued "new" debt, and the "old" debtors took a haircut. I have this feeling the new FED "Floating-Rate-Note" might be somehow tied to inflation/hyperinflation/default on debt that would be primarily held internally, thus fulfilling the 3:1 - 4:1 devaluation of the dollar the Mr.Jackass spoke of.... I don't know.... just thoughts

Peace.

P.S.

U.S. 10-year 1.579% +0.101

Havn't seen a jump like that for a while! More twisting or the market will break the debt-reduction idea.

Byzantium
Aug 3, 2012 - 2:06pm

Re Von Greyerz

I like Egon's interviews, but KWN are quoting 440 billion losses for Knight Capital in that interview; I thought it was 440 million....?

More KWN sloppiness?

Biscuit
Aug 3, 2012 - 2:05pm

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Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

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