Good News Hurts

May 27, 2014 - 5:22pm

 by Gary Wagner

There was far too much good news in the U.S. today for gold.

There was too much renewed risk appetite in the equities markets.

There is a rumor China wants to run the gold markets.

Europe suddenly looks like a political basket case. Will the center hold?

Ukraine, despite the central government's robust attack on separatists, has not provoked Russian ire.

The Conference Board reported its consumer confidence index as having risen to 83.0 this month from 81.7 in April, which was in line with market expectations.

The Standard & Poor's/Case-Shiller house-price index rose 12.4% in March from a year earlier, beating forecasts for a gain of 11.8% and following a rise of 12.9% in February. so, if you had a house worth $300K a year ago, it's no worth $336K (roughly), although it will be interesting to see the granular aspects of where prices have rebounded most. Twelve percent is an awful lot in highly developed, wealthy urban markets. But most of that growth is in ultra-high-luxury sales. ($10 million and above.)

However, one of the problems housing prices will face soon is that stagnant wages and only modest employment growth will keep a damper on the prices of the great bulk of houses that will be moved to market in the next 18 months.

Perhaps most powerful of all the stats that came out today is a seemingly ever-improving wholesale pricing trend.

The Commerce Department reported U.S. durable goods orders rose 0.8% in April, blowing away expectations for a 0.5% fall, after a 3.6% increase in March, the figure for which was revised up from a previously estimated 2.9% gain.

Finally...

As we have said before, when technical trends become so strong that they cannot be resisted, technicals essentially function as a fundamental force.

Read and see more in today's technicals section of the email, and of course, on our daily video.
 
As always, wishing you good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

We were stopped out today in our gold position. In @1292. Out @1280. Loss of $12.

No open positions in gold or silver.
 

Gold Market Forecast

Over the last three weeks we had identified the narrowing of range in the price of gold. The lower highs and higher lows created a compression triangle which was approaching the apex of that pattern. Inasmuch as we were looking for a break in price as we reached the apex, it was our belief that it could be an upside break.

However, our take changed last week, and we moved stops up on our long trade under the assumption that a price break to the downside was even more likely. This was based upon the fact that recent reports on the US economy were in improving and the fact that a peaceful election in Ukraine could cause prices to tumble when trading resumed after a long three day weekend. We see the potential for further downside with a target of 1229 to 1241. Today’s show will explore a number of studies supporting that theory.