In The Short And Middle Term, It’s About China With Oil Hot On Its Heels

August 24, 2015 - 5:19pm

 by Gary Wagner

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

Last Wednesday we took profits on our gold trade when our OCO (One Cancels the Other) order was filled.  Bought  @ 1104.50  -- Sold @ 1128 (+ $23.50 )

Today our stop was hit on our current trade

Long gold @ 1153 stop hit @ 1147 (- $ 6.00)

Gold Market Forecast

Today we witnessed absolute carnage in the U.S. equities markets, the net result of this dramatic decline was a loss of approximately 4% in the Standard & Poor’s 500, which closed down over 77 points to close at 1893.21. Gold did lose ground but only about six dollars on the day.

However, the real story with gold is the U.S. dollar. The dollar, which gave up almost 2% on the day, accounted for a positive gain in gold of over $18. Subtracting net selling of gold, which amounted to $25 on the day, and you get a net loss of approximately $6.50.

If you take a look at the historical data from our last major equities correction in 2008, we saw gold move in unison and sympathy with the equities markets, both losing tremendous value.

Whether it is simply the baby being thrown out with the bathwater or liquidation of positions to gain equity to cover losses in the stock market will be determined at a later point. The real question on traders' minds is how deep and steep will this equities correction go to before we see a bottom.

Trending Markets: Proper Action

Last Monday we issued a SELL signal in Crude Oil:

Maintain short @ 41.86

Move stop to 40.20

Trending Markets Forecast

Not only the equities markets but also the commodities markets have lost a tremendous amount of value over the last three trading days. The U.S. dollar index continues to trade under pressure, losing almost 2% on the day.

Crude oil also plunged not only below $40 and $39 per ounce but briefly touched the high 37’s before closing just over $38 per barrel.

We believe that this volatility and current downside pressure could continue at least through the week. We need to look at overseas trading, specifically in China, to get some sort of an indication as to when we can see equities begin to find a base or a bottom.

We remain short crude oil but we have issued a recommendation to raise stops and lock in profits. See proper action for specifics.

Sentiment Indicator: