Just to chime in here...

In my mind the Fed, CB'er's etc... are trying to orchestrate and spin a scenario:
"slowdown = lower commodity prices"

... and like it or not... this is how the tape
(gold and oil) has been painting itself lately.

It will be interesting to see how oil reacts to Iran's rejection today of the UN Nuclear deal..

I still see Oil as the key here - if it falls - everything else "hard" falls... IMHO

there is a crossroads quality to this market here.

trading-wise, it looks to me like the golds are in the same boat as several other strong economy stocks (e.g., CAT, NUE, TIE). their trading ranges have gotten tighter; after the more dramatic swings of may and june and july, their daily ranges have narrowed. this narrowing of volatility will not persist. it never does.

will the same macro factors that drove the homebuilders, the rails, the metals and the oils over the last few years persist?

or will the economy sink into a much deeper slowdown than the one which is visible now?

the way we're trading, it looks like we're about to get several questions answered very quickly.

intra-day, i am not willing to fade this rally. with all of the bearish reversals we've seen on the indices in the last few days, my guess is that the fade has become a crowded trade.

Readers new to trading,

please note how Colin Twiggs calculated the downside price target for gold (on chart). Calculating price targets based on various chart patterns is useful knowledge and has been profitable for me over the years. Learn them and prosper.

Fib targets on downside: $614, $586. Also, $600.

Re: trendline breaks

One rule of thumb is that the trendline break is confirmed with three days close through or 3% past. More art than science though.

IMO, the only way that this gold bull is over is for an absolute reversal in so many areas; government spending, money supply growth, interest rates, global economic growth, asian middle class growth, war on terror, etc. etc. etc., that it won't happen overnight. IMO, gold has a long way to go on the upside, but it is the most emotional trade around. Emotions create risk and opportunity.

Fall is the time for gold.

Re: Colin Twiggs:

A symmetrical triangle is a continuation formation and not a reversal formation.
The breakout must occur at about 2/3 through the pattern or the signal will be false.

So Colin Twiggs should do his homework and read a few books on the subject.

That doesn't mean gold can't reach the target that he mentions, but not based on this chart pattern.

http://www.baresearch.com/education/technical_analysis/chart_patterns/continuation/symmetrical_triangle.php

i just saw an interesting headline.

it read: "U.S. Homebuilders' Outlook Least Optimistic in 15 Years."

i think that's old news. if they had been pessimistic in, say,february, that would have been news. telling us now that business is horrible is pretty much passe.

what might be newer news is that whenever markets and sectors bottom, they bottom amid carnage and ugliness. they bottom amid negativity, hopelessness and headlines that read they haven't felt this crappy about business since the days of the R.T.C.

what also might be news is that the monthly R.S.I. on RYL - a good proxy for the group - looks to be below 20. as best as i can tell, this has only happened twice before - december of 1973 and during the desert storm correction.

i'm not long the framers yet but on another pullback with some oversold R.S.I.'s on the weekly and daily, i think they'd be a great long.

Re: Colin Twiggs

Quoting "Technical Analysis of Stock Trends" by Edwards and Magee, 8th edition, pg. 684

"SYMMETRICAL TRIANGLE - Also called a Coil. Can be a Reversal or Continuation Pattern".

That is what I have always gone by.

Differing opinions I guess.

Mtzion, Carl Icahn just bought a junk of Ryland Homes. But he did buy a piece of TWX quite awhile ago.

There's an excellent description of the symmetrical triangle pattern in Stockcharts.com chartschool.

http://stockcharts.com/education/ChartAnalysis/symmTriangle.html

As g034 references, these patterns can also signify reversals (but are usually continuation patterns).

Oh, and for an example where a large symmetrical triangle pattern _did_ mark a trend reversal, take a look at the $COMPQ weekly back when the bubble burst.

Long gold miners.

$VIX at a one month low here.

yeah, alan, when am i picking something up near the bottom and when am i just trying to catch a falling knife?

i'm going to watch the homebuilders and see if they shake out some more. they've always been a group that's been pretty good to me.

coming up here, they'll probably see some tax loss selling in the fall and there's an awful lot of inventory overhead to work off so for now i'm content to let it evolve.

general market-wise, i'm wondering this: if they run this up into the close, is it safe to go short that lift ahead of tomorrow's number? right now, there are not a lot of warts on this rally.

If this is a breakdown from a triangle or pennant, where is the volume?
But I must admit that I was wrong to say that Twiggs should do his homework.
Thanks doug11 and g034 for your comments.

Mtzion, Wall Street reminds me of a good pro football defensive back. In order to continue to play, you gotta not only forget you've been burned, but just put it out of your mind. Ditto Wall Street, all huge price increases up to now are all in the past.

So if the CPI data comes within estimates tommorrow - another rally?

And then HPQ for a rally on Thurs?

Although I agree "yesterday's prices are in the past" - to me yesterdays strange retracement seems at odds with today's data - was Wall Street caught by surprise? Unlikely - maybe they run the market down to cover shorts yesterday?

I'll have to look at the OEX data ...

I still sense at least one more good short before the 4&8 year cycles bottom in about 2 1/2 weeks.

... By the way interesting they were running that story on CNBC this morning about Utah making Short Selling (naked that is) illegal.

Takes all the fun out of it....

tradesman

If we assume that housing crashes, isn't this deflationary? Isn't deflation bearish for gold? I would welcome comments.

The signals for a decline in gold are there. Slowing growth; failure to breakout during the following: Isreal/Lebannon conflict; falling interest rates; stronger dollar; strong inflationary trends & the FOMC grinding to a halt. Gold has had plenty of excuses to breakout to new highs and hasn't. Based upon what happened today, I believe gold is done for the immediate future. The technicals and tape say short!

raging,

if you're right, i would think the whole thing is a short across the board....

I try my best to trade what I see. I see significant weakness in gold and problematic overhead resistance in many sectors. If the CPI comes out weak, I'm a seller around 1295/1300 level on the S&P. This market, imo, is more worried about growth than inflation and this is a bull trap. No question about it, the shorts are being squeezed. I think that will climax soon.

"...trade what i see..."

that's the essence of trading.

trade what you see. not what you think.

that's why trading is an honest way to earn your living. very few other types of making your living offer you so honest an opportunity.

peace, out.