Current Market Rates Per Ounce
September 08, 2010 4:19:24 PM PST
| USD $ | CAD $ | |
| Gold (AU): | 1,256.00 | 1,302.47 |
| Silver (AG): | 19.93 | 20.67 |
| Platinum (PT): | 1,552.50 | 1,609.94 |
| Palladium (PD): | 522.00 | 541.31 |
| USD-CAD Exchange Rate: | 1.037 | |
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Gold - 'Tis the Seasonal to be Checking
By John Winston
October 9, 2009
Charts courtesy stockcharts.com.
As we move into another quarter it is always good to review the seasonal aspects of the market so as to have an idea what, on average, usually happens. The hard assets and the paper ones too have amassed quite a rally over the year.
http://www.spectrumcommodities.com/education/commodity/charts/cl.html
Let's look at the gold seasonal. First the gold chart, then the seasonal.
Gold has followed the seasonal pattern very close this year. We can see that a major price peak occurred in mid-February right on time, and that a late March bounce to April and a correction to May took place. The May to JUNE period was a much stronger seasonal upward bias as is the average. We can see by the chart that the gold market usually explodes in September and then has a peak in early October and a sizeable correction into the November or December time frame. Price is usually choppy until December.
Gold's technical condition is still in BULLISH mode ... although one can make a case that RSI is flashing OVERBOUGHT. We would agree, but we think that %R must drop below 80 and the MACD histogram bars need to stop RISING first.
These markets have pretty much followed each other this year and the time has come when all of the seasonal trends seem to favor the downside. Not that they will, but the odds favor a correction to begin sometime between now and November. The stronger the commodities are, the longer before the correction starts.
Ok, one more chart.
Yes ... it's the US DOLLAR.
We can see that the year started out right. The dollar made a strong seasonal high in March right on its seasonal schedule. And that is when things turned. The stock market bottomed.
We can see a CONTRA SEASONAL that began in mid-April. Instead of moving higher to June the US dollar collapsed. As stated earlier, this is usually what happens when a contra seasonal appears. The trend becomes strong as market participants are not positioned as they usually are.
It's been pretty much down since then for the US dollar.
Conclusions
If you've been having difficulty understanding market behavior lately, these charts suggest to me that the analysis is already what we all know. ALL MARKETS RUN COUNTER TO FUNNY MONEY. Can you imagine calling the US Dollar funny money? That is what it has become. Actually, it's become UNFUNNY money as the situation is serious.
Look at how long it has stayed OVERSOLD as %R just can't come out of bearish mode. If you’re saying to yourself, hey, this looks like an EKG of someone who has died your close.
So while the dollar trend is clearly down, there will be at the very least a dead cat bounce. Therefore, we should expect a 4-6 week reprise in the dollar as the seasonal chart suggests. Seeing that the first October period in the dollar seems completed with that little October bounce, odds favor that the commodities correction in gold and even in crude or copper might not arrive until the mid November time frame.
Whenever the time frame arrives we should see the US dollars technical condition show %R come out of oversold, RSI begin to rise again (NOTICE THE HUGE DIVERGENCE THERE as RSI has not made a new low with price) and for MACD histogram to hold the zero level and put in a higher bar. At that point in time, the gold market should begin the autumn correction for a brief time before the next leg down of the dollar begins. Keep an eye on these subtle clues and when you see them it will give you a clue that a short term bounce of 4-6 weeks and a subsequent commodities pull-back is probably near.
If things play out, these commodities will take a breather and then resume their trend near year end.
Get my commodity trading reports each week www.TechnicalCommodityTrader.com.
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