Market Notes
- New trading month, last for the year
- December is important roll over in gold to (300 value) February
- 17,000 left in stronger type hands, few margin calls expected.
- Gold still off somewhat after jobless claims up 17,000 seasonal adjustment only.
- Open interest low 404,424
- Asset allocators still leaving gold for stocks and strong dollar reasons
- Waiting for December 14 interest rate hike
- Copper seeing a little profit taking as China tightens a little
- Small tax selling also possible in gold but ETF’s classed as collectibles by IRS in regular accounts limits that as well.
- Look for possible improvement in gold after roll is done.
- If it doesnt bounce after roll and tax selling, that is very bad
h/t G. Gero for some of above
Head and Shoulders Reversal?
Last couple of days, we've been seeing charts referencing the potential for an inverted Head and Shoulders bottom in Gold and Silver. Here is the best rendition sent us.
By our single edit to the chart above, you can see we are skeptical. That's not to say the opinion is invalid, as technical analysis is subjective. But this pattern has parameters of validity we do not see here.
John Murphy: H&S Rules
The head and shoulders is the best known and probably the most reliable of the reversal patterns. A head and shoulders top is characterized by three prominent market peaks. The middle peak, or the head, is higher than the two surrounding peaks (the shoulders). A trendline (the neckline) is drawn below the two intervening reaction lows. A close below the neckline completes the pattern and signals an important market reversal.
Volume is Key
Volume is also something to consider when validating a head-and-shoulders reversal. For a bullish reversal, we should see lower volume on the declines. This means volume should decrease on the sell-offs that form the head and the right shoulder, especially the right shoulder. So far we do not see that.
Reasons to Buy and Not Buy
If you want to buy Gold here as an investor, you should. If you are keeping a % of your assets in Gold as a hedge against Equities, then by all means rebalance by taking profits in Equities and buy more Silver or Gold. If you are a bullish spec with a short time frame, focus on hourly and daily charts with tight stops. We are just not comfortable trying to pick bottoms or tops on longer term trades. And nothing tells us to buy here with a 30 day hold in mind yet. Certainly the Head and Shoulders charts making the rounds now should be treated with circumspection.
Good Luck
Gold Monthly
Silver Monthly
interactive chart HERE
Technical Comments for Today
Gold Comment: The market is bearish with selloffs down against 117270* weekly support. A close under117270* implies a wash to 1157. Watch for a fight to hold and bottom off 117270* with sidewayscongestion in the 1180’s now helping base trade.
Silver Comment: The market is bearish with potential for selloff to 1582. A press through 16245 could release theselloff to 1582. Trade may yet fight to bottom from current levels.
Read more by Soren K.Group
