Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Getting Stale? – Charts and COTs

Commodities / Gold and Silver 2016 Apr 03, 2016 - 12:27 PM GMT

By: Dan_Norcini

Commodities

Notice on the very short term chart, a 2 hour run, gold has been in a steady decline since the middle of last month with rallies attracting selling at the key resistance levels noted on the chart.

Price is currently holding below $1212 – $1210.

Initial resistance begins near $1225 and extends higher towards $1228. Above that lies $1237-$1240.


Watch out if that low near $1205 were to give way. There still remain a large number of spec longs in this market.

On a percentage basis, this is the largest combined large spec long position going back past 2011.


It should be noted that back in August 2011, gold peaked above $1900 with the large spec long position actually at 39.1% compared to this week’s 40.3%. Also, this week’s combined large spec long position on a percentage basis exceeded that of January 2015 which was at 40.0%. In other words, this trade remains very, very crowded.

Here is a chart showing the hedge fund only positioning compared to the gold price. Notice, that the number of outright longs in this camp exceeded the January 2015 peak.

Here is the hedge fund NET LONG POSITION.

As you can see in this format, it remains below both the January 2015 peak and is certainly much lower than it was back in 2011 when gold was above $1900. Viewed in this form, it does not look quite so intimidating.

Next is the Commercials/Swap Dealers NET positioning.

It remains significantly heavy.

Lastly, here is the standard format that we typically view.

So where to things stand now for gold? Answer – specs remain in a very bullish posture with commercials/swap dealers remaining strongly bearish.

The key for this spec position, which remains heavy, is whether or not downside chart support levels will hold if those are tested.

In going back to the Daily chart, I am struck by the fact that gold remains stuck beneath the median line of the Bollinger Bands. That in itself is negative. One indicator is already in a sell mode; the DMI lines are very close to generating a negative or a sell signal as well.

With that heavily lopsided large spec long position, and with an increasingly negative chart pattern forming, if $1205 were to be tested and fail to hold, we will see a significant amount of selling hit this market.

I do not know whether $1205 will be tested; I can only say what will happen if it is tested and fails. I could easily envision enough selling to bring price back down to the February spike low near $1190. If that were to go, Katie bar the door.

On the upside, for the bulls to turn the current negative posture of the chart positive, they would need to start by pushing price back above that median line of the Bollinger Bands which comes in near $1245. It certainly is not helping their cause with the gold ETF, GLD, losing gold.

GLD shed another ton of gold yesterday. It lost about 5.6 tons of gold the past week. That is going in the wrong direction if you want to be a bull.

The HUI is not very insightful as it is moving sideways between support and resistance. Its current technical posture remains mixed.

The HUI/Gold ratio continues to hold up well – that is constructive but it should be noted that it is not rising into fresh highs.

The problem for gold, in my view, is that you have a large number of STALE LONG positions in this market. With traders these days having the attention span of a gnat, there is the risk of impatient longs beginning to throw in the towel. That would precipitate the selling avalanche that is possible when a market becomes this lopsidedly crowded on the long side. Again, at the risk of repeating myself… as long as key downside support levels do not fail, this speculative position will be okay. If they do fail, all bets are off.

Bulls are going to need some fresh ammunition from somewhere soon. WE can only get so much traction out of Yellen being a super dove for so long. The market will shift, as it always does, into “WHAT ARE YOU GOING TO DO FOR ME NEXT”. Yellen being a super dove is now old news. Negative interest rates in Europe is now old news. Fed rate hikes being off the table for a while is old news. Bull markets need to be fed every day to keep going. That is what is lacking right now. I am convinced that is why we are not seeing fresh inflows into GLD.

Something new needs to come along soon.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in