The Morning Fix: A Precious Metals Special Report – June 23, 2011
FMX | Connect – www.fmxconnect.com - (Reported 6/23/2011)
Summary
Yesterday was a failure on many levels. We fear that technical, proprietary and options indicators are all pointing towards a large washout in precious metals now.
Market Recap
The Gold market finally broke through the resistance and congestion between $1550 and $1555 that has held it back so many times. Our own proprietary Trend-Vol indicator would have turned wildly bullish had we settled above that $1555 number, but it was not to be. While this is not necessarily bearish, when weighed with the other factors, we feel the risk is in being long now.
Our tape reading forensics suggests there is a monster long liquidating above the market. We may be wrong about this, but what is true is that the fresh buying has exhausted itself, and unless we get over $1555 on a settlement basis, you should be flat. There will be buying as there always has been near the 50 day MA and the long term trend line, but we would not be buying here.
Other true technicians agree:
From GRI (www.gri2.com)
Comment: The market is in a secondary bull upswing, attacking the previous 1550 downturn level. A close over 155450 is needed to spark rallies to a breakout attempt over the 157770 swing high. Further rejections up around 1550+ still cautions for a failed bull advance and slip to defensive congestion along 152970*. A roll off through 1522 is negative and alerts for selloffs against the 151140 minor low and into the low $1500s.
Silver Now In Our Sites
We are still range bound, but our Trend-Vol system is showing signs that these tight ranges are getting ever so close to a trending break-out. Just as we would have had a break out on a settlement above $1555, now we turn our attention to Silver. The market is showing signs of a pending break down. It is on our radar, and nothing should be done yet. But if the market gets to $35.65 on a settlement basis , we believe the system will trigger an increase in downside momentum. We cannot call the actual price. Instead we merely observe the Bollinger Bands.
If the Bands widen in opposite directions on a settlement basis, then just go with the midline trend. All other indicator criteria has been met. Historical vol has dropped to a sufficient level, and Implied Vol has reached our risk/reward comfort level. All you, as a trader have to do is wait for the Bands to widen. Stop outs should be placed near or at previous session highs. When these hit, profits are quick. If you don’t see profits in 48 hours, something is usually wrong. And the breakdown may be false.
Separately, and from a technician’s perspective, Silver is now below the100 Day MA after having failing to pierce it on a settlement basis yesterday. We’d rather buy strength in this market than weakness now.
We will be shorting Silver in our Personal Accounts should this trigger hit.
Make your own decisions, trading is risky. Keep it simple and DBS. Good Luck trading.
To view our metals reports and articles on your PDA or mobile device, click here.
For comments and questions contact us at 203-504-2786, support@fmxconnect.com or AIM: fmxconnect.
-----
About FMX: FMX Connect is an information, data, and analytics portal for Commodities. The portal provides an all-in-one package including essential market data, independent third party research, industry news, and commodity trading tools. FMX Connect provides efficient, effective, and thorough data that bridges all aspects of commodities onto one screen. The Result; A user friendly application for hedge fund traders, OTC brokers, individual investors, and industry participants
-----
Note: The information presented, while from sources generally believed to be reliable, is not guaranteed and may not be complete. FMX | Connect makes no representations or warranties regarding the correctness of any opinions or information. Past results are not necessarily indicative of future results. Nothing in this report should be construed as a representation to buy or sell shares, futures or options, which contain considerable risks. For internal client distribution only. Any reproduction, re-transmission, or distribution of this report without permission is prohibited. Media correspondents or reporters may not quote any one page or section in its entirety and must attribute all quotes, ideas or concepts herein. Copyright FMX | Connect, ©2009-2010. All rights reserved.