Gold Picks up the Pace, Ready Set Go

Thursday Oct 4 2012

posted 7:40 AM CST

Even Bloomberg  is giving Romney credit for making a real race of it after the debate. I don't know if my link works but Dan Henninger has a good take on the wsj.com site in the Opinion Journal, ie, Romney puts barack on the defensive. 

Singapore looks to Malaysia  for more space. In an related article some 11 million square feet of office space is will be completed this next year in Singapore. This is an echo of the one kilometer Kingdom Tower in Saudi. And note in  this article that the daughters of a Formula One boss are becoming big investors, recall our coverage of the F1 track in Austin, TX, Altogether now, the world goes all out optimistic on real estate and F1. This is typical top market thinking and action. 

Mark Hulbert  notes the Dow has an average 2.7% increase in the 4th quarter. 

GDXJ Ready to go Again?

The blue boxes outline a reverse head and shoulders pattern in both instances. it appears that GDXJ is ready to launch again, gold is up $10 in pre open trading Thursday Morning, silver is up 30 cents. 

TLT Peaking Again?

TLT looks to be completing its second counter trend rally since the top in July. If so it should decline as GDXJ advances. MACD is rolling over on this 2 hour chart. 

US Dollar via UUP

Spanish bond yields  have dropped two hundred basis points since the last auction. That is a huge drop in a short period. That should bolster the Euro again, above the dollar appears to be completing a bit of counter rally but not as strong a one as TLT in bonds. 

For the record I own puts on TLT and calls on GDXJ. Hence the subject of today's post, but frankly those are good proxies for what is likely to happen in the next weeks or month. 

My sense is that we are now past

Sept options expiration

Sept third quarter end

the first debate, now it's a real race despite all the blather about Obama being ahead. So the markets are on the move, up. 

 

One more thing, Crude Oil AWOL to the Commodity Party

This sentence on page C4 of today's WSJ seems to sum up the oil situation.

Signs of slowing growth in China, economic weakness in Europe, and falling fuel usage in teh US has some investors expecting that there is plenty  of oil supply to meet global demand.

The article goes on to note that only the Israel Iraq situation has held the price up anyway.  In the US we are driviving less in higher mileage cars while producing the most oil and fewest imports in a dozen years. 

Above,  the line in the sand appears to be the 200 day MA around 95-97. after the Feb to May period, one more try into that territory failed in Sept. Crude is now down 11% from there. The feverish pitch of activity in the Dakotas, south of San Antonio, and in the Permian Basin,  will slow now that price has fallen below all the MAs.  This may well be an early warning DEW line indicator of coming deflation. The DEW line was a series of radar stations in far North Canada constructed during the Cold War. The idea ala the map in Dr. Strangelove, was to warn of an incoming missile attack of the Pole against the US. DEW stand for 

Distant Early Warning. 

XES Energy Services has dropped from 37 to 33. This is another stock we sold on our exit Tuesday morning Sept 18. XES topped Friday Sept 14. 

We have noted that different markets top at different times. In  2008 oil topped last, this time it appears to be topping first. 

thanks for reading TMP.

Comments

[ndmaster]

Dr. Dennis- I don't pay a lot of attention to the general stock market, but it appears to me that commodity producers and commodities, for that matter, are in the process of either consolidating or bottoming and moving higher. There is one very simple reason for this. It's like the Fed has finally said "enough is enough, we are going to do whatever it takes, open-ended asset purchases to get unemployment down".

Now, some of that money may flow into the general stock market, but it's not all that likely, but I am quite positive that money will flow into commodities. Right now, and for the foreseeable future, commodities don't care about the economy. Investors are beginning to understand exactly what the Fed's actions really mean. Basically, I think we could see a massive divergence between the general stock market and commodities and commodity producers. Do you disagree?

[Dennis Elam]

Neil

I expect the real divergence will be between the bond and the dollar versus the stock and commodity markets. Money will be flowing out of bonds, TLT, and the US Dollar, into more speculative investments including both the stock market and commodities markets.

TTL and the US Dollar should bottom as stocks and various commodities top out. It will be a process with the various indexes Russell, Dow, SPX topping at differenttimes and with the CRB at another time as well.

It does appear based on the action so far today that the move has begun. The channel charts I showed this past weekend suggested this but it took until today for all that to kick in.

thanks for your reflection.