Take A Look At The Gold Index — Here’s Why
Bo Harvey
wrote today’s piece.
The
Fed meeting did indeed provide some fireworks last week, in both
bonds and stocks. The bonds took a further beating on the release of the
unemployment figures, and ten-year yields have now breached the 200 week EMA,
for the first time since 2000. We didn’t get the bounce in bonds I was
suspecting we might, and although the overbought condition in yields could begin
to work itself off any moment, the rise above the 200 week moving average is a
decent confirmation that the long-term multi-year downtrend in yields has
reversed. Given the oversold nature of bonds, though, I would hold off on
initiating any short bond/long yield positions in the near term until the
technicals reset themselves.
The dollar index still appears
uncertain of whether it wants to breakout of the weekly downtrend or not. The
Pound (GBP) appears to have held up best during this dollar bounce, and given
rising interest rate expectations there, it may benefit the most if the dollar
gets a confirmed move lower from these levels.
Commodity currencies have
continued to get hammered along with the precious metals, and may continue to
underperform the Euro, Yen, and GBP if the dollar moves lower. The CAD
(Canadian Dollar) has broken above an inverse H&S pattern with an upside target
in the 1.4200-1.4400 zone, and with minor resistance at 1.4000.
To update the chart of the XAU
posted last week, the long-term 74-78 target range has now been reached, and is
going to be a very significant zone that may underpin metals stocks in the near
term when they begin to work off their oversold condition. If the 73 level
fails to hold it will be a sign of very severe weakness in the metals stocks and
would put the longer term multiyear uptrend into question.
The HUI Index (unhedged gold
stocks) is also coming up to equivalent key long term support in the 156-162
zone.
Have a great trading week,
bo@aspentrading.com