This Setup Struck Gold
Gold at the COMEX surged in what is being called a technical rally. Locals were
purported to have loaded up on the metal and fund-buying drove it up throughout
the session as gold surged to its highest level of 2001.Â
In the May 15 Futures
Market Recap, I pointed out that
June gold
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potential was also brought to your attention on May 16 in the Recap and in Dave
Landry’s Futures Markets Trading Outlooks. Commodities like gold that are on the
Momentum-5
List and (on May 15) the Pullback From Highs List can make explosive moves
as witnessed today in gold’s close 13.0 higher to 287.8.
A very interesting divergence is occurring along the
yield curve: the curve is flattening. The yield curve flattens when T-bond
yields fall and shorter-dated debt instruments go up in price. This movement is
reflective of traders’ anticipating the Fed is done lowering interest rates.
Tony Crescenzi pointed out his vision of a “yield-curve-flattening trade”
and you can read about it in this week’s “Trade of The Week” on TMWorld.Â
The flattening action paid dividends again today as
T-bonds
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103 19/32.
Unleaded gasoline
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refinery in New Jersey shut down. Inventories of unleaded gasoline are already
9% below last year’s levels. The Jersey facility refines the cleaner-burning
reformulated gasoline required in designated metropolitan areas such as New
York. Unleaded continues rallying off its 50-day moving average hit two days ago
and closed up .0478 at 1.0690.
June crude oil
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also now trading near the neckline of an inverted head-and-shoulders pattern and
hit a high of $30 a barrel before settling up 1.00 at 29.91.
I received an e-mail from member Cecil Chaudoir. Cecil has
been trading grains for many years and has an intimate knowledge of these markets
having been a cropduster and a grains trader for years. Cecil informs me that
there is an “army worm infestation that is sweeping the Midwest is the
worst infestation in fifty years. The worm count is exceeding 50 worms per
square foot in some areas.” New crops could be effected and Ohio, and Indiana
are already having problems. Thank you, Cecil! Grains are down slightly today.
Coffee
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setup in an outside bar that has taken out its pullback consolidation range and
closed up 1.20 at 66.40.
Also in the softs, cocoa
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on the Momentum-5 List yesterday, resumed its push higher in a nascent flag
formation and closed at a two-month high, up 33 at 1103.