The Strong Reaction To The Heightened Certainty Of A Rate Hike

September 28, 2015 - 5:22pm

 by Gary Wagner

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We have no active trades in either gold or silver. We were stopped out of our trade today.

We went long gold at 1151.50, we were stopped out at 1132 (- $ 19.50)

Gold Market Forecast

Inasmuch as uncertainty in global markets can bring safe haven buying in true support to the precious metals markets we certainly did not see that today. Along with the precious metals complex, traders today witnessed an absolute breakdown in the commodities complex as a whole, along with the US equities markets.

Gold breaking below 1133 is absolutely significant as it breaks below an important support level. The next real support levels in gold are at 1121 and 1109. Although gold sold off almost 1.5% on the day it certainly was not the greatest percentage drawdown in the precious metals complex. Platinum, palladium and silver closed roughly 3% lower on the day, double the drawdown that we saw in gold.

Trending Markets: Proper Action

We are currently flat with no active trades in trending markets. It is my belief that our strongest play here could be initiating short trades in the E-mini S&P 500.

Trending Markets Forecast

At the beginning of last week’s trading we noticed some real weakness enter the US equities markets. On a technical basis we had identified a true compression pattern developing in which we had a series of ascending lows (higher lows), and a flat top. Most notably was the fact that we saw the range compressing. That indicated to us a potential break with a great release of energy. We certainly saw that emerge today with the Dow Jones industrial average closing off approximately 2% on the day, trading to the recent lows that we saw last week. Based upon our technical studies we would not be surprised to see a continuation of the downside pressure that has been so evident in the market over the last two weeks.

Sentiment Indicator: