Rhetorical questions, by rationale, are rooted in truth. We all know some of the classics: “Does a bear relieve itself in the woods?” “Do politicians do different from that which they promise?” “Is the stock market going to crash?” “Are the Cleveland Browns a bad football team?” And as we queried a week ago, will it be “Another May of Dismay for Gold?” Why even ask?
This past Tuesday with May Day barely underway, (the Euro-bourses shut in honor of property destruction), Gold wasted no time ringing in its month of dismay by promptly making a new low for the year, trading down to 1302.3 at precisely 07:53 Pacific Time. And to quite literally put a big red cherry on top of it, Gold’s weekly parabolic trend flipped to Short, price then settling the week yesterday (Friday) at 1316. No surprise:
Aiding (indeed abetting) Gold’s demise were dollar traders, who in just the past three weeks have pushed their Index from 88.945 to now sit at 92.425, the biggest like-period upswing since year-end post-election posturing back in December 2016. And while never abetting (albeit not helping) was the report from the World Gold Council of the global demand for Gold bars and exchange-traded funds backed by such as falling to a 10-year low, and thus directionally did Gold go.
With a Market Rhythms analysis, here’s what it found:
For the past two years covering 10 weekly parabolic flips, (i.e. five to Long and five to Short), price’s average maximum follow-though was 52 points and the median maximum was 44 points. Technically for this new flip to Short, we’ll measure such distance from the opening price of this ensuing week. But using the present 1316 level as a surrogate, less 52 points = 1264, (or less 44 points = 1272). That said, we know — for what has now been years — Gold nauseatingly finds endless price consternation around the 1290s, and failing that, The Box (1280-1260). Shorting Gold is a bad idea, we often say, but as it’s the month of May, prudent cash management is the right play.
Leave A Comment