Here’s What The Commercials Are Doing In Gold
Yet another day stuck in
the range. I won’t try to put a spin on this one, it cannot be
done. It simply leaves me longing for Summer to pass by. It was fun (not
really) but it is time to move on to bigger and better things.
I was going through my sheets yesterday, and
while I pretty much knew what the outcome would be, I wanted to double check.Â
Every year since 1997, (1998 and 2002 excluded due to extremely volatile summer
trading) at the beginning of September marked a dramatic improvement in my day
to day profitability. While all of the months in the summer had been profitable
(except one) they were meager when compared to other months in the year. It is
this trend that I hang my hat on every year, it is why I do not get all worked
up over sitting patiently during the Summer, it is part of being a trader.
Nonetheless, you want to be alert each day and
make mental notes. The 989 level yesterday held like a rock, and while the S&Ps
did not manage to make a move off that level, it bears watching. Also, continue
to watch the Bank Index (BKX), as noted
yesterday these stocks have been laggards on the most recent run back towards
the 1000 level on the S&P’s. While they do not necessarily need to confirm the
move, it seems suspect if they do not. Perhaps that is why the S&Ps have
recently failed, quite significant I may add. The level which will be key is
850 in the BKX, a break of that and things
may heat up to the downside. One has to wonder if the recent bond market rout
caught many of these banks flat footed and with some ‘big’ losses…time will
tell.
Gold stocks have been a good ride for several
weeks now, but they do appear to be getting a bit heavy. Commercial hedgers are
net short gold, and historically, the big commercials are usually right. It
seems like a good idea to take a little off the table at this point in time.Â
Frankly, I would prefer to lighten up longer-term positions as we head into
Labor Day, I suspect the next few weeks will be pivotal, I simply do not know
which way. There will be plenty of time to make an assessment and position
accordingly.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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I will be away for the remainder of the week and
will pen another column for next Tuesday. I will be expanding my format a bit
and offering some different perspectives in terms of both time frame as well as
asset class. The core of the column will still reflect intra-day trading (HVT)
but getting our hands on the bigger picture should prove to be a valuable
addition to our day to day trading.
All the best during the upcoming holiday weekend,
see you on Tuesday.