JUST LETTING YOU KNOW…
Today was not typical.
In the answer to several hundred of your emails, there was supposedly Ben Bernanke on Capitol Hill saying this that or the other thing. A couple of other Fed Heads some something. I couldn’t care less.
What I care about is – Gold took out the last five week of the move up in a matter of hours. And on huge volume. If one does look at the GLD, you’ll see exactly what I am seeing.
Chart courtesy of StockCharts.com
It also took out the lows of the past few weeks. One can also look at Silver (SLV), which kinda sorta did the same.
Chart courtesy of StockCharts.com
But just leave no doubt, on a couple of things with this move today.
- It was not Aunt Mary and Uncle Bob selling. That was some Big Institutional money that, on the first sign of a stronger dollar (which is what happened today), they were gonna say “night night” and they did.
- What I’ve been telling you, is that we have to be cognizant that Gold only went two legs to the downside…usually there’s three. Me thinks we probably started the 3rd one today. That would be the guestimate. Nothing’s ever 100%.
But that was ugly. From here, typically you’ll be bouncing up some. Then you’ll probably do some retesting toward the lows.
I’ll let you decide what you want to do. You long-termers that have owned it for a while, you should close your ears and not listen to a word I’m saying.
On top of that, I have been telling you that the weak area that has not been able to get going was the metals and mining (I’m not talking about Gold and Silver). I’m talking about aluminum, steel, copper and the like. That looked to be rolling over today.
Here’s the XME, the Metals and Mining ETF. You see what I’m saying. A break below 5150 would not look good on a resume.
Chart courtesy of StockCharts.com
Now…what does that mean for the market? Because after all, there’s been this thought process that a stronger dollar would hurt the market. Well the market came in a little bit today. It was down a lot, got back the flatline…and then they sold it off in the last hour.
Distribution day today in the market. That’s higher volume selling on a down day.
6-7 pm EST
Best of Investor’s Edge
Saturdays 1-2 am EST
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.
I agree it looks pretty bad on a daily candlestick chart for Gold and Silver. But check out the real time data on the Kitco charts (before tuesday rolls of the board):
http://www.kitco.com/images/live/gold.gif
http://www.kitco.com/images/live/silver.gif
Turns out 1 seller dump 10,000 gold contracts all at once at 10am.
I’m a little worried about the follow though selling after that in gold, but if you look at silver it recovered nicely right after the sympathetic plunge.
Based on that I think the highest probability going forward is a pause for it to regain confidence over the next week or two before challenging higher prices than right before the plunge.
Of course as you say anythings possible.
If Bernanke saying ‘this and that’ was enough to cause this kind of action in gold and silver, imagine the reaction if he were ever to come out and say he’s raising the Fed rate. But if he keeps his word, we won’t have to worry about that until at least 2015.