Bill Cara’s Blog for Dec 19, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
Yesterday, the US Dollar broke the support shown in the posted chart:
This led to a rally in the S&P:
I first posted that chart a few weeks ago. My opinion was that price was going to rally up to the Question Mark by sometime in January. You can see that price is cooperating, but you can also see a bearish rising wedge pattern playing out. Should price rally up to the point marked, price oscillators will be overbought and we could see a decline from there. Of course, that is all speculation at this point but with the US Dollar unable to find support, the chart is still in play.
You can see the strength in the market in this chart:
Should this analysis be correct, I expect that the following Stock/Bond Ratio chart to be overbought and telling us to sell stocks and buy bonds when we reach the Question Mark in the chart above.
But, in short-term overbought conditions, there is reason to be looking for a dip before moving higher:
However, we are entering a strong period of time for the market so price may remain overbought so take action based on your timeframe.
Let’s move on to what most of you are most likely interested in, Gold:
Yesterday, I mentioned that something was amiss in the price action in the gold space and sure enough, that continued throughout the day.
The US Dollar broke support which should have launched gold and the miners higher but they were sold off in a major “pukefest” as we used to call it in the pits.
However, GDX didn’t break below the Daily Cycle Low so that long trade is still in play:
Yes, I am disappointed that gold didn’t do what it was “supposed to do”, as it simply continued to correlate WITH the dollar as money flowed out of safety and into stocks but it is what it is.
The COT report will be interesting to see this weekend. The high level of Speculative Longs should have dropped this week, hopefully enough to allow price to rise. I will say that short interest in many miners dropped yesterday as the shorts took advantage of the decline in the metal to get out of the trade, and a nice trade it was.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||26.24 (1.09%)||Components, Chart, More|
||22.50 (0.91%)||Components, Chart, More|
||14.24 (0.39%)||Components, Chart, More|
||14.63 (0.19%)||Components, Chart, More|
||1.63 (0.47%)||Components, Chart, More|
|^OSEAX||OSE All Share||496.53
||5.04 (1.03%)||Components, Chart, More|
||0.23 (0.07%)||Components, Chart, More|
||51.15 (0.74%)||Components, Chart, More|
||30.96 (0.52%)||Components, Chart, More|
||9.82 (0.95%)||Chart, More|
||2.75 (0.19%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||859.69
||21.61 (2.58%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
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Point and Figure on Canada
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report