Operation Cap & Hold
By now, you know how this works. Unleash the London Monkeys at 3:00 am New York time. Put the New York Monkeys to work as soon as the Comex opens. All in the hope of containing yesterday's breakout rally by capping and holding price until momentum begins to wane.
So, in the wee hours of the London morning, gold again rallied toward the 100-day moving average. Once again, it was halted at $1238.90...precisely where it was stopped yesterday on the Comex...just ticks below the 100-day moving average, which yesterday was $1239.30 and today is $1238.50.
Then, unleash The Monkeys at exactly 8:00 am London time. Let them massage price for a little while. Three hours later, both gold and silver are down over 1% from their 8:00 am London levels.
Price, of course, begins to bounce as soon as The Monkeys relent. Gold rallies over $9 to $1235 and silvers rallies over 2% from $17 to $17.36. What happens next? The Comex opens for business with gold trading beginning at 8:20 New York time and silver beginning at 8:25 and, whaddayaknow, down go the metals again. It looked like this:
Again, why here? The Cartel goal is to keep price below the 100-day moving average, first and foremost. After that, they'd love to batter price back down and below the long-term trendline from last May. And in silver, they must see the need to keep it from closing above $17.50. Above there, and silver heads directly toward its own 100-day MA and critical resistance at $18.20. Lastly, after rallies such as yesterday, The Forces of Darkness will always fight to keep things from extending. The last thing They want is two, consecutive, huge UP days for fear of igniting all sorts of positive momentum. As long as They can contain the rallies to a single day, They can maintain the illusion of just a short, quick bounce.
Conveniently, though, all of this capping has given us a pretty tight range to keep an eye on. Check the hourly charts below and be sure to watch for a breakout in either direction:
Blunting Their efforts and providing support is a yen that continues to rally today. IF it can extend through yesterday's highs and move through the 85 level on the chart below, all of those momo-chasers who are long the USDJPY are going to start getting pretty freaking nervous. And, obviously, a strengthening yen weakens The POSX, which in turn helps the metals.
Just two other things before we wrap this up...
Crude continues to wash out. Recall that in yesterday's podcast we noted the almost total lack of bounce following each steep selloff. This is indicative of a market that has yet to find a bottom. With this in mind, is it any surprise that crude is making new lows again today? Of course not. Again, $60 is your target, at a minimum. However, DO NOT be surprised by $56-58...
And, just for fun, check out this daily chart of the S&P. Are we getting ready to roll over again, just like October?
Finally, I thought I had finally landed one of my dream guests for A2A this week but he seems to have wriggled off the hook for a moment. If I can pull it together, I still hope for a podcast either tomorrow or Friday. If not, it's back to the drawing board. I'll keep you posted.
Have a great day,