Monday Charts

72
Mon, Jun 20, 2011 - 1:40pm

Yawn. That pretty well sums up the day, doesn't it. Actually, after the Sunday Night Massacre and the ensuing, margin-induced madness, days like today are somewhat refreshing. Of course, we did get a margin reduction in gold last week but, as we all know by now, it meant very little.

https://www.zerohedge.com/article/cme-lowers-gold-margins-hikes-corn-hogs

Onto today. As boring as it was, there still are some very interesting things to watch. Significant technical events may occur over the next two weeks so you need to keep paying attention. First up, there's gold. The Forces of Evil and Darkness again showed up today as gold approached 1550. It seems they wanted everyone to know that they are paying attention, too, and not yet distracted by the bikinis and thongs of Long Island beaches.

I'll get to silver in a moment but I think we first need to look at crude. Did you notice last week when Trader Dan mentioned that "silver will underperform gold until we break from the deflationist mindset and move back toward inflation"? As you know, the key driver of general inflation is energy prices. Therefore, according to Dan's reasoning, we'll need to see a turnaround and reversal of the downtrend in crude before we can get excited about silver. The charts below give us every reason to expect solid support for crude near and just below $90. IF it can reverse there and then, with the help of a short-covering rally, head back above $96, enough strength should spill over into the PM pits to surge them higher.

So, then, here is silver. First and foremost, if it's going anywhere, it has to clear 36.25-50 first. IF it can pull that off, it should be able to make a charge toward $38 and the major resistance that resides there.

So, anyway, that's it for now. If you're looking for something to watch overnight, keep your eye on the crude market. The low today was 91.51. A re-test of that level followed by a rally could be the catalyst to drive silver toward that $38 level and inspire gold traders to attack the Death Star once more.

Have a great afternoon/evening. TF

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  72 Comments

Cleburne61
Jun 20, 2011 - 2:48pm

Actually, a steady climb in

Actually, a steady climb in gold and silver today...with strong buying stepping in at $1533 and $35.25 is exciting to me. Crude continues to sink, yet the PM's are climbing? This defies all the algos that were giving us fits just 8 weeks ago.

TF I hope you're right about crude support at 90 as I own shares of a few companies formerly known as Canadian oil trusts, and their prices aren't exactly singing during this take down. It would seem a logical place for stout support.

The era of strong silver moves of $1 to $2 a day might not be playing out right now, but strong buying coming in day after day at higher levels, to me, is exciting. *yeah yeah, I know...my life must be pretty boring, right?* lol

stoneeh
Jun 20, 2011 - 2:53pm

Margin hike worked

Margin hike worked. Gold OI increased by 10k contracts, silver OI declined slightly.

Clearly, gold is currently holding more steady and is closer to its all time highs, but if you invest in something that is going up or has already gone up a lot, well, you probably should quit investing, or at least try a lot harder to understand investing, because you're getting it wrong. Silver is much much much more bullish than gold right now and will strongly outperform it in the not too distant future.

- Markus

Daedalus Mugged
Jun 20, 2011 - 3:03pm

Margin Theory

Turd, I know you don't normally answer questions in comments, but I was hoping you could opine on the theory that (part of) the motivation for gold margin reduction was to to further lure speculative PM interest away from silver into gold. Au already had much higher leverage than Ag, and they just further increased it.

Any thoughts anyone?

Art Lomax
Jun 20, 2011 - 3:15pm

Grain Margins

Regarding the CME margin changes, looks like the changes for corn and other grains

are for spread margins, not margin on the individual futures contracts. Somebody correct me if this is not right.

Rui
Jun 20, 2011 - 3:29pm

Talking about charts

EGO and TRX are giving me technical buy signals. Those of you are in accumulation mode might wanna take a look.

SilverWealth
Jun 20, 2011 - 3:33pm

an invitation

If you are bored here is an invitation to join me in early morning preMarket trading. All the textbooks tell you not to trade then because of 'liquidity' concerns but if you trade GLD and SLV this is no problem and besides the banksters and pros don't want you in their playground. The spikes up and down in the early morning make for great entrances and exits and good trading opportunities, then closer to the opening the pros narrow the range and make it considerably more difficult to make money via volatility. This is my observation only. But I don't mind being up at 1 a.m. to place buy and sometimes sell orders because that market feels much more free flowing up and down. If you watch the futures long enough you can all see the patterns and tendencies quite clearly. They simply assume that most daytraders will not get up that early and that mutual funds of course don't trade then. Just some thoughts that may be of help to anyone interested.....

zopiloteSilverWealth
Jun 20, 2011 - 3:58pm

an invitation

Thanks, SilverWealth, for your tip on pre Market trading. I looked at spot silver prices for this AM and at about 7:45 it had a 5min RSI of about 24 and was just dropping below the 5min Bollinger Bands. Then they ran the price up to 36 at opening, and waited for all the daytraders to bite. Nice way to make a little money. I'll be watching more closely now - not too tough for me as I'm on the west coast.

Eric Original
Jun 20, 2011 - 4:18pm

Oil looking better

Given TF's comments about oil above, today's action would seem to be pretty encouraging. Maybe those low 91's from this morning will turn out to be a bottom. We are now $2 above there, in the low 93's.

SilverWealthzopilote
Jun 20, 2011 - 4:26pm

zopilot

Zo, - you'll notice that the Asian Market often bids up gold and silver so that at my time when trading in Slv and Gld starts at 1 a.m. Pacific time they will often drive the price directly down into a lower range in a waterfall or a series of spike downs. this I assume is the opening of the London Market but I don't know. Oftentimes then that becomes your high and low for the day and for the morning. Time varies but if you buy any of these sizeable spike downs from 1 to 4a.m. or so or average down into them with a series of bids then quite often the Market will spike up as well as pros and banks and night owls trade. The Market at that time feels much more free flowing and less persecuted by hunter-killer Algo robots. The ranges are larger, the volatility is greater and the movements are more abrupt because I suppose fewer people are trading. There are all kinds of ways to approach this and the hours of activity vary but I feel definitely that they tighten up the trading range and often towards the open so that Joe retail doesn't make much money on the open when all the real deception begins. this is just my experience. I find it very telling however that textbooks which I am very suspicious of in trading discourage early morning trading.

SilverWealth
Jun 20, 2011 - 4:34pm

Zo

I forgot to mention, I don't chase price movement or buy 'breakouts', often they are just bull-traps. I average down into weakness and buy what others are selling. If you look for momentum breakouts in the early morning off of oscillators chances are you will be fooled,conned and deceived. I think they want you looking at that stuff. I just use a simple Stoch oversold reading on a 1 or 3 minute candle or notice the degree and amount of the waterfall down. Sometimes too the waterfalls mark down in an abcd series with the a-b and c-d as two separate legs down and being of almost the same length and the b-c bounce being short in between them. This pattern can repeat frequently though not always and this is why I don't just dive in at a low and define it as a low since a 2nd and last leg down can come to shakeout future's traders, its that last leg that demoralizes them imo.

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