Equities Earnings Foil Gold

October 23, 2014 - 5:06pm

 by Gary Wagner

Caterpillar, 3M and GM all posted better-than-expected Q3 results - far, far better than analysts had been predicting, in fact - and the U.S. stock markets reacted heartily, adding anywhere from 1.3% to 1.7% as the afternoon wore on, NASDAQ reacting most emphatically.

Adding a little kick to the party punch was yet another low claims number among those filing for unemployment for the first time.

The dollar against the euro was essentially unchanged but the greenback rose powerfully against the yen. Crude oil and Brent found their inner bull and bounced back from lackluster days recently.

Safe havens in general were under pressure. Gold is down, obviously, but so is the price of the 10-year U.S. Treasury, while the yield was up modestly.

Some analysts are saying that the equities in the U.S. today were limited only by technical resistance. Others claim that in an already-jumpy market, reports of a potential new case of ebola in New York limited upside interest in stocks. The former seems feasible, the latter rather far fetched.

Also nudging the equities was what seems like a swift resolution of the murder of a soldier at Canada's Parliament yesterday. Our hearts are with our neighbors to the north.

There was even good news out of the eurozone. September's manufacturing index there rose, confounding experts who had predicted it to fall significantly from August.

The biggest question for the sustainability of the long bull run in equities is this, though: if Europe, Japan and China stay slow or shrink, can the U.S. economy make it on its own? So far indications show that it can.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

Yesterday we sent out a special trade alert to raise stops up to 1239.50. This was done because we saw real weakness enter market.
we went long at 1244 out at 1239.50 for a loss of $4.50 (450 per contract)
We have no open position in gold or silver

Gold Market Forecast

We have spoken about the multiple outside pressures keeping gold price depressed on many occasions. Primarily the US dollars and the equities markets have been at the front of this list.

Today these two factors have surfaced to the top of the heap, as both the dollar and stocks rage to higher ground.
 
On a technical basis we observed some real weakness in gold when prices were unable to trade and close above 1250. This is what prompted my concern yesterday, and why we moved the stop up so high. As I said on yesterdays show, I expect this stop to get hit, and for gold prices to head lower. Today's show will speak of the critical importance of good risk-reward techniques, and why the are essential to profitable trading strategies.