There continues to be a large short position in Gold among the commercial traders based on the COT (Commitment of Traders) report. As a result, I think we will see a retrace in Gold until we at least reach the 38% Fibonacci level around $1146. (See below.) It could go as low as 50%, which would bring it down to the $1134 level, but that remains to be seen.
The RSI and MACD also need to be brought back down to oversold levels which will create an excellent entry point to get back into some Gold positions.
This should satisfy the commercial short positions and allow them to cover and go long for another run up, probably up to the $1250 level.
If you placed stops on your positions, as advised, you should have stopped out with a profit this week. Now all we have to do is wait for the retrace to bottom and then get back in. The bottom could be as early as today, Friday.
Keep your eye on the RSI and MACD as well as the 38% - 50% Fibonacci level. (See chart below.)
Stock Market Indices: (SPY) (QQQ)
The FED driven stock market has reached a point of resistance and the RSI and MACD are in extreme overbought territory. (See red circle below.) We should see a pull back any day now to relieve some of that pressure.
I still think there is a chance of a loss of confidence in the system before the end of the year, perhaps sometime this November. It’s going to require some sort of black swan event to trigger it, but there are plenty of possibilities looming out there right now, like World War III, or Deutsche Bank imploding.
This run up in the market has brought everyone’s guard down. As far as I’m concerned, we are still in a bear market until the DOW gets back up to the all-time highs of $18,400. This market has been completely manipulated by the FED for so long that investors think it can’t end, but I’m of the opinion that they are running out of ammo and some major events are happening behind the scenes that have them scared.
Something’s got to give sooner or later and I think it’s going to be sooner than we all think. Time will tell, but to put all your faith in the FED at this juncture is foolish, IMO.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude dropped below the 50 DMA and then crashed the lower Bollinger band and immediately bounced back up to test the 50 DMA again. It’s hard to say at this juncture which way it’s going to go. If you have any positions, just make sure to manage your stops.
China has maxed out their oil reserves and have no place to put any more reserves and demand is slowing down. This makes me think that there will be pressure on Crude as we move into November.
Natural Gas is a commodity that tends to surge during the winter months. November is typically the start of the season for Natural Gas and it’s currently close to the all-time lows. We should see a bounce to the upside over the next few months. The weekly chart below shows the surge in natural gas during these months for the past few years. I would consider adding some ‘At the Money’ or slightly out of the money, spring of 2016 options in (UNG) and/or (LNG).
Financial Stocks: (XLF) (IYF)
Financials are faltering globally, but until the stock market changes direction and begins to reflect the failing economies, I’m staying on the sidelines.
Biotech: (BIB) (KITE) (IBB)
Biotech has stalled.
Commodities: (FCX) (JJG) (DBA)
Commodities are at all-time lows and hated. That would normally be the best time to enter, except for one thing, the start of an uptrend. Once we get confirmation of an uptrend, I’ll be all in.
The Great American Bully!
Anyone who doesn’t think our government is trying to provoke war with China and Russia just isn’t reading the news. And anyone who thinks we should provoke a war with China and Russia is a victim of our government’s massive propaganda campaigns. Our government has brainwashed the American people into believing that we should be the world’s police state.
The US dollar is the world reserve currency, for now, and as a result, our government has had the power to tell other governments how to manage their own business, all based on the demands of the US government.
I’m an American, but I don’t want our country to rule the world. Heck we can’t even manage our own affairs, much less the world, but that’s not stopping us from trying.
Both China and Russia have said ‘enough’! Russia has taken control in the Middle East and now Obama has sent a US warship into the South China Sea to provoke a confrontation.
China has already stated that it will take ‘all necessary measures’ to defend its territory. The big US bully doesn’t like to be told what to do, so now we are teasing the Panda to see if we can provoke a reaction.
So what if China does react? Does World War III break out? I think that’s a real possibility, considering that Russia has aligned with China and the US is also provoking Russia both in the Ukraine and Syria.
For more on this and other stories, see the ‘Top Stories’ section below.
Managing Debt - LOL
The US operates on borrowed money and time. Every 6 months the debt limit has to go up. Congress is required to approve the debt limit, which they always do because they have no choice.
Now we are up to $19.6 trillion of official national debt. By the way, that’s only enough to fund the government until March 2016. See chart below:
But this doesn’t even include unfunded liabilities, like social security, Medicare, government pensions and the many welfare programs that amount to over $200 trillion.
There is no other way to say it. The US government is bankrupt and with the U.S. government nearly out of money, the last thing the Fed will do is raise interest rates. Heck we can’t afford to pay the interest on our debt now.
The only reason the US hasn’t had to close up shop is because it can print money to cover its debt.
The government is addicted to debt. As long as they can print money to cover the debt, they will never default. The reason they are allowed to print money at their discretion is because the US dollar is the world reserve currency and other nations have always been required to hold US Treasuries in reserve.
But things are changing in this global economy faster than most people realize. The US dollar is losing its value as the world reserve currency and soon will be replaced by another currency, probably the SDR or the Chinese Yuan.
Once that happens, our economy will come spiraling down.
US Economy is Failing
The US Stock market is NOT a good indicator of the economy! It is totally disconnected from the realty of the failing economy.
Instead investors should be looking at the numerous economic indicators such as the earnings reports from Wal-Mart, Caterpillar, and McDonalds. Retail sales figures, industrial output figures, import/export figures like the Baltic Dry Index, money velocity, wholesale sales figures, global trade, and many others which are all near or at all-time lows.
There are over 100 million working age Americans out of work. That’s nearly one third of the US population.
The stock market is nothing but a huge bubble just waiting to pop at any time. All it’s going to take is a single ‘black swan’ event and there are plenty of them on the brink right now.
Live long and prosper.
NATO Looks To Station Thousands Of Troops On Border With Russia
The creeping increase in NATO’s military presence on our frontiers [is] testing [our] patience."
Hail Mary Time For Wal-Mart, As Vendors Pushed To Brink
Make no mistake, Wal-Mart may be teetering on the precipice of a terminal decline. As CEO Doug McMillon put it earlier this month, "this is an important time in our history—requiring all of us to think critically about our business."