Something about almost everything … that matters
zerohedge.com
GoldFix: Funds are Getting Short- You Know What to Do
ATTENTION: The GoldFix Weekly Report is accessible by Premium Members for a nominal monthly fee. Goldfix Daily reports and GoldFix Morning Podcasts will remain free to all. More content will be added as time goes forward. It will continue to strive to be the best original content for both investors seeking insight, and active traders who want to grow.
Thank you.
1. MarketsCapital Markets Summary
US equity markets rebounded from Monday's Evergrande fears. But then headlines about CCP State Owned Enterprises preparing for collapse and the payment of a local yuan bond's coupon seemed to spark exuberance.
If one were to guess the S&P's weekly performance after everything that happened – Evergrande's missed coupon payment, Evergrande's EV unit liquidity crunch, more hawkish than expected FOMC/BOE decisions, the FDX/NKE outlook cuts signaling supply chain stress is here to stay, chaos in DC with debt ceiling doubts and complete uncertainty over the size (if any) of a new stimulus bill, crypto carnage, and weak seasonals - we suspect the vast majority of people would have predicted steep declines... as opposed to modest gains.- Source
 Evergrande Weekly
Energy stocks went from worst to first this week after plunging almost 6% on Monday to ending the week over 3% higher. Utilities were the biggest losers.
After the Monday rout, stocks got back to even on Thursday.
Notably the rotation back to Small Caps (value) from Nasdaq (growth) stalled friday at a key resistance level. Nasdaq futs levitated to get back to unchanged on the week. Additionally, 4450 was the key level for S&P.
 https://finviz.com/map.ashx?t=sec&st=w1
The market is now pricing in at least one rate hike by the end of 2022. Metals people take note.
Treasury yields rose for the 5th straight week (biggest weekly spike in yields since March). Also bearish for metals of late.
The Dollar ended marginally higher on the week but was whipsawed around on China and Fed headlines.
Cryptos were sold, hit on China's statement making crypto transactions "illegal".
Bitcoin has remained above $40k though for now. It found support at its 100DMA three times this week. Triple bottoms are made to be broken it is said
A noisy week for commodities saw Crude outperforming along with modest gains for copper while PMs were very modestly lower.
WTI rallied back above $74, its highest since mid-July. And gold ended back below $1800.
Complete GoldFix Watchlist HERE
Finally: Goldman had a warning this week. Valuation is not typically the cause of a bubble bursting.
Stocks can stay 'expensive' for a long time. But rates of return may not.
2. PreciousEvery week day we do a morning broadcast for traders, investors, and people seeking to just be more literate on markets. Below are links to some previous podcasts.
GoldFix Broadcast- Stock market overview, technical levels, and market insights
Bitcoin Brief- Crypto commentary, education and trading levels
We encourage you to surf the content and join us daily.
Committed Traders and MetalsFor the last two months we’ve been watching the flows in Gold and Silver very closely. On several occasions we’ve been fortunate enough to identify when something not typical has been ongoing. First we pointed out that someone big was accumulating Gold between $1750 and $1800 based on how trades played out. That behavior told us the buyer was initiating, was not a typical fund, and not someone the Banks would ignore. We thought perhaps it was the LBMA or an LBMA bank covering paper shorts in anticipation of The Basel 3 deferment ending in 2022. Turns out that was not the case. Soon after that John Paulson announced his intention to ride a bull wave in Gold. Then we saw Bond related buying enter, and likely subsequently exit over the last 4 weeks. But the last 2 weeks have been frankly what we want to see. Funds getting short Gold and Silver.
Historically there is seasonality in metals. We wrote about it late last year here Frequently Gold makes a high in August and a low sometime in November.
Sell Season
 Red Arrows are typically August to November
When you combine that history with several other factors, it makes sense for funds to start to play the short side. Those factors are the growing perception that: inflation is transitory, stimulus tapering in the near future, and the competition from other commodities like uranium and Natural Gas grabbing headlines for investment money. It is the smart trade to sell Gold if you think Stocks are topping due to stimulus withdraw. After all, the Fed is happy with Gold down and will not tolerate stocks to drop too precipitously now. But why is that something we want to see as Gold owners? Three reasons:
It tells us to not freak out if metals tank, it is business as usual.
It makes us more patient in our decisions between now and November.
Even if one doesn’t want to trade it from the short-side, it sets up things for a strong winter rally after the weakest of funds sells it lower.
So, how do we know funds are getting short? That’s where The Commitment of Traders report comes in. For years we used to pour over this report until the smallest detail was known. Looking for clues as to Bullion bank behavior, what we found out was the funds are the “tell”, not the banks. Banks were almost always short metal, even when they weren’t bearish. That is the nature of their business. But funds are almost always long. And when you get a feel for their capital allocations you can kind of handicap when they are done buying. Technicals frequently line up with divergent tops, RSI, and other oscillators showing overbought set ups.
But when they get bearish it is something to behold. Between them selling and the Banks selling, the market frequently craters. But at some point even the Banks start to cover a bit. The other long funds puke (Paulson maybe?), the macro funds reverse short, and at some point there is a big buyer like China or some other whale unknown. It’s when this happens we see smaller momentum funds start to sell weakness. Then the fun starts. Are we there yet? No. Can we predict that moment. No. But there are clues that help traders assess if a tide is turning. Bob Coleman describes one.
The report is harder to read than the math you need to do to understand the changes. This is probably not an accident. Here’s part of how we do it.
In Silver
The Non-Commercials (Funds, CTAs, and Investors) changed their positions by getting shorter ( net less long).- Labeled “1” below. This is bearish until it isn’t
The Commercials (mostly Producer/ Bank related trades) changed their positions by getting longer (less net short)- Labeled “2” below. This is nothing until its bullish
Total Open Interest went up by 4,997 contracts.- Labeled “3”. When this goes up as funds get shorter, then get the popcorn.
In Gold
The Non-Commercials (Funds, CTAs, and Investors) changed their positions by getting shorter ( net less long).- follow the arrows
The Commercials (mostly Producer/ Bank related trades) changed their positions by getting longer (less net short)- follow the arrows
Total Open Interest dropped by 13,591 contracts.- not small
From here one has to assess who closed open interest net. Then an analyst would look at past levels these numbers usually get to before turning around. Also keep in mind that the Comex itself is a shrinking exchange and what was “peak” open interest in the past.
 Red rectangles show past inflection points
For Silver look at exactly how short the specs get before they have their faces ripped off in a squeeze. Those are usually the momentum algo types selling it in the hole. For Gold it’s usually the CTAs that get destroyed but only after they have serious unbooked profits. The question is when. Either way, it is not a timing tool in the micro. It’s a trading tool for patient macro plays over months and for stackers to pick their spots.
Hopefully this will help you to get more out of these reports. There are many layers beyond what was shared here like: Timing of report, swaps, spreads, and more. But this is the correct way to read what you see. Good luck.
Share
3. News
"What On Earth Is Going On In Commodities?"- Morgan Stanley Explains | ZeroHedge ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero www.zerohedge.com
Why BlackRock's Koesterich Cut Gold in Portfolio to Near-Zero
Russ Koesterich, portfolio manager at BlackRock Global Allocation Fund, says his fund has sold almost all of his gold holdings on expectations that… www.youtube.com
Stansberry Research"NEW: Beijing won't let Evergrande fail. While U.S. markets may take on some water, they won't suffer like China. WATCH: t.co… t.co;…
4. Technical AnalysisReport Excerpts Courtesy MoorAnalytics.com
GoldFix Note: Michael Moor’s work is used by oil refiners, hedge funds, and large investors. There are few good objective technicians today. Michael’s work is his product.
GoldI warned we are approaching possible exhaustion areas below at $1,738.6-29.9 and $1,713.8-11.9, either of which have the potential to start this in a new bull structure—we held the upper of these with a $1,737.5 low, and then broke back above the $1,742.3-45.5 area…
GoldFix Broadcast- Stock market overview, technical levels, and market insights
TECHNICALLY BASED MARKET ANALYSIS AND ACTIONABLE TRADING SUGGESTIONS
Moor Analytics produces technically based market analysis and actionable trading suggestions. These are sent to clients twice daily, pre-open and post close, and range from intra-day to multi-week trading suggestions. www.mooranalytics.com
Bitcoin…these are OFF HOLD. NOTE: I would be AWARE that we have areas of possible corrective exhaustion to contend with at $38,655-350, $37,325-6,810, $34,355 and lower. We held a higher with a 40,085 low, and again with a $40,145 low and bounced over $5,000 before rolling over.
Bitcoin Brief- Crypto commentary, education and trading levels
Natural GasYesterday I noted: the drift sideways on GLOBEX put this above the steep trendline, which may bring in short covering—we rallied throughout the day and on GLOBEX. Decent trade below 4786 (+.7 of a tic per/hour starting at 9:00am) should bring in decent pressure;
Go to MoorAnalytics.com for 2 weeks Gold, Oil, and Bitcoin reports free
5. ToolsBest of the Week’s Educational Pieces.
CLIP: in response to some DMs worried about Metals selloff. Bookmark this if we drop $100 or if we DONT drop $100. click.revue.email
Reports:
Light report week. Here are the better ones
China Worries Unwarranted
Blistering Uranium Rally Reign
Another Look at Energy &related
6. ChartsGold
 Funds are now shorting it more
Silver
 Funds are adding to shorts even more
US Dollar
 Wild moves but no difference.
Inflation Bonds
 No fears all week
Bond Yields
 Combined w/ low inflation means real rates increase
Bitcoin
 CCP new crackdown announcement and FUD is back.
GoldFix Premium Premium Weekly Report: Click for description
7. CalendarSome of the upcoming week’s key data releases and market events
MONDAY, SEPT. 27
8:30 am Durable goods orders Aug.
8:30 am Core capital goods orders Aug.
TUESDAY, SEPT. 28
8:30 am Trade in goods, advance report Aug.
9 am S&P Case-Shiller home price index (year-over-year) July
10 am Consumer confidence index Sept.
WEDNESDAY, SEPT. 29
10 am Pending home sales index Aug.
THURSDAY, SEPT. 30
8:30 am Initial jobless claims (regular state program) Sept. 25
8:30 am Continuing jobless claims (regular state program) Sept. 18
8:30 am Real gross domestic product (revision) Q2
9:45 am Chicago PMI Sept.
FRIDAY, OCT. 1
8:30 am Real disposable income Aug.
8:30 am Real consumer spending Aug.
8:30 am Core inflation Aug.
9:45 am Markit manufacturing PMI (final) Sept.
10 am ISM manufacturing index Sept.
10 am Construction spending Aug.
10 am Consumer sentiment index (final) Sept.
10 am 5-year expected inflation rate (final) Sept.
Main Source: MarketWatch
Zen Moment:Comedic Wisdom
RELATED CONTENT
Recent Posts on Zerohedge
Previous GoldFix Reports
Share GoldFix
Sent from my iPad |
