An absence of buyers vs. the presence of sellers...
Interesting day in the pm markets.
The Dollar opened slightly down. The Dow opened up. And
FCX which is a proxy inflation trade, opened up very strong.
All of which should have been positive for gold & pm stocks.
But, gold and gold stocks went from a soft open, to now
getting hammered.
So whats up?
Well the first thing I always look at is volume. While GLD
is getting sold off today on big volume, this correction in
PM stocks over the last couple of weeks has been on light
volume.
There has been absolutely no large volume/institutional
selling in the GLD ETF, the GDX, or in the large cap stocks
like ABX, NEM, or GG.
Neither ABX, or GG have even traded up to their average daily
volume over the last two weeks, and NEM only hit it twice.
The GDX hasn't hit it's average daily trading volume in the
last 8 trading sessions, and the GLD ETF only hit it twice
out of the last 10 trading sessions.
While naked shorting is illegal, it hasn't gone away. And
a soft market on light volume is easy to game, especially
when the intention is to accumulate.
We got a little pop off the GDX pivot point a couple weeks
ago, but that rolled over, broke support, and triggered a
stop out.
The HUI is also doing a double re-test of support along
the bottom band of it's current trading range. It's now
at critical support and needs a strong rally into the close
today to hold it's bullish uptrend.
On a break of this trend, next technical support for the
HUI is 274, and then 254.
Fundamentally, this rally was powered by the $787 billion
dollar stimulus package, the Fed announcing the monetization
of Treasuries, and a weaker dollar from exploding US deficits,
and runaway spending....into the face of a faux greenshoots
story.
Well, now we're correcting on the reality that the greenshoots
story was purely the result of mainstream media talking points,
and was not based on positive earnings, or a recovery in jobs.
Now the bet is on whether the Chinese and Russian rhetoric
will keep Helicopter Ben's hands off the QE printing press,
and whether the Obama administration will issue another
stimulus package.
One aspect that I don't believe too many gold pundits are
factoring in, is the role that the Waxman-Markey Cap & Trade
Energy Bill, and the Health Care bills will play on how this
administration supports (props up) the economy and the stock
market.
These two bill are of primary importance to the globalists,
especially the Cap & Trade bill, and I'll get into that
(in detail) over the next couple of days.
About a month ago, I posted these thoughts on what I viewed
as "peak sentiment" in goldbugdom...
Message 25695404
Gold bugs got everything within reason that they could have
hoped for. A near trillion dollar stimulus package, Bernanke
announcing the monetization of Treasuries, the Chinese and
the Russians calling for a new reserve currency, and a massive
long commodities/short the US dollar, momentum trade.
The question I kept bringing up was... who are you going to
sell your gold stocks to, and what event is going to cause
them to want to pay you a significant premium?
In my mind, we pretty much ran the table on good news.
And that, married with staying disciplined to the charts,
triggered profit taking at HUI 370, and again at 400,
and patience on re-entries based upon selling deep out
of the money, long-dated puts and waiting for the HUI to
pull back to the lower band of support... which is where
we now find it today.
We got a bounce from GDX 35 to 40, and from HUI 316 to 361,
off the GDX pivot point, and HUI support. But, that 15%ish
pop, rolled right back over, and triggered stop outs.
Now today, we find ourselves once again dancing right at
critical support. So what's the trade?
I like silver and silver stocks here better than gold.
I sold puts on the first retrace to HUI 315ish and GDX 35,
so I'm not looking to sell any more puts, here at the same
level. But I am stepping in and buying a few shares for a
trade today (AUY MFN SLW CDE HL) to see if we get a bounce
off key HUI/GDX support. Not loading the boat, or backing up
the truck... just a trade.
There are times to step in with total confidence and load
the boat into a sell off that takes us down to key support,
but imho, this isn't one of them.
If you're a buyer today, ease in slowly and hold back some
dry powder, as we could easily re-test HUI 254-274 if the DOW
correction continues.
Personally, I think they want take gold down to $865ish,
keeping it comfortably under $1,000... where if they announce
another stimulus package this fall, it will have room to run
without setting off all the canary in the coal mine alarms.
And that's the bet here.
Will we get another stimulus package this fall (giving it time
to take effect before the 2010 elections), or bow to pressure
from China, Russia, and the American citizenry who are tired
of bailouts that go to bankers, and stimulus that goes to
bigger government.
Keep in mind, they will continue to try to churn the gold market
for both price suppression, and for accumulation. And do NOT
forget that you have an opponent on the other side of the
gold trade. And do NOT underestimate them. There's nothing
wrong with rolling trading ranges - take what the market
gives you.
Let's see if we can get some buyers to step in during the last
60 minutes today. We really need for the HUI & GDX to close
strong here.
SOTB
PS: You also might want to be short "something" to hedge
your long positions in gold here.
UNG is holding up today, trying to find a bottom. Nice to
see something green.
Kind of wish I would have put on a long UNG/short USO paired
trade, but I didn't. Just short the DOW. But, thinking about
going short USO as a hedge to being long Nat Gas.
Curious to see if DOW 8000 is defended. Waiting to see what
the PCnbc cheerleaders come up with. And have you been following
CNBC's Dennis Kneale? Can you say Rabbit Ears? Hey batter,
batter...schwing~ Kinda brings back memories of being 11
years old again.
PPS: Gold aside...
We have to keep pounding the phones on the Hate Crimes Bill,
on Cap & Trade, and Nationalized Health Care. There is so much
coming so fast, that you can not let up.
Waxman-Markey Cap & Trade is literally the kill-shot to
America as you know it. It must be stopped.
US Senate switchboard - toll free: 1-877-851-6437,
and direct at: 202 225-3121. |
