Where were the Asian Buyers? Gold

From Kitco

I have mentioned previously that watching the overnight Asian buying in Gold is an important indicator of future trends.  The cyan line is Jan 12, and as you can see highlighted in Yellow Asian buyers were no coming into gold with much force.  I expected that this meant this move about 1380 might not last.  A nice bull trap occurred as the North American markets started opening.

This does not mean gold can run up again, but right now being a bit cautious might pay off.  There are many junior mining companies that look like deals compared to their last month performance however, a correction back to 1350 and even 1300 could be in the works.  The USD looks poised to make a run and if this occurs commodities around the world will fall, however, the world has wised up to commodities prices in general and by the end of 2011 there is no doubt gold should have at least touched 1500 and if any major events occur gold 2000 is not just a pipe dream.  Look at Silvers move this year, if this is the beginning of a run past $50, pay attention to the silver mining companies profits over the next 6 months. 

All eyes on the USD

The USD has had its ups and down lately.  Looking at the UUP which is a 2x bull ETF we see a direction could be determined shortly.

This count is how I view what is happening.  We are currently a wave 2, There are two targets the 38.2% fib retracement level 22.96 if that breaks the 23.6% level 22.86.  These fib level are from the most recent high and low.  The orange horizontal line is the 50% retracement from the previous impulse up C - 5.

If this scenario is correct, then when the Slow Stoch pulls back to the an oversold condition, wave 3 to the upside will begin.  This means US gets stronger, commodities get pounded along with stock indexes.  Good that comes from this will be lower prices of gas, as oil has broken $92 per barrel.

The danger I see on this chart is that oil range and consolidated through time for almost 1.5 years.  now it is in the high range, if destabilizing event occurs such as war, currency issues, addition defaults from Spain and Portugal, prices of energy could rally substantial.  However, it is my believe that a pull back is in works with a higher USD, pulling down crude prices maybe the 70-75 area.  Looking at the slow stoch, oil is oversold but the trend appears to be locking in.  If the bands remain about 80, generally a strength of trend occurs.

January 22nd, is Options Expiration.  I really believe volatility is going to be quite high this week.

AUD/JPY falls in evening trading, Volume check on markets

After 5 pm, the AUD/JPY tumbled.  The  Jan 11th candle will change over the course of day.
This move has completed a lower low, in the pair.  The purple line is part of a Andrew's Pitchfork, as seen below.

This purple line is quite important, and if broken could lead to a trend change.



Volume Watch

Above is a 15min chart for FAZ, covering this chart because I am expecting some upside movement this week.  The volume has become a lot more bullish and heavier compared to previous days.  I have mentioned that the last few minutes of trading sometimes is a good indicator of the next day's price action. 

This type of volume distribution can be seen on the bear side of SPY and other indexes.  I believe there is potential for a desperation run, before the US markets correct appropriately.

Have a look at the VIX, the "fear" indicator measures the volatility.

The pop in the morning was above 8% before selling off again.  Look like a bull flag, so expect tomorrow to continue up.  This would drive stock markets down.

Also notice that the VIX broke above a key resistance level of 18.30.  Tread carefully.


Euro zone is destabilizing again,


Portugal has to go to the debt market Wednesday, last auction was around 7% for 10 year bond which is not sustainable without additional ECB / IMF support.
Japan is helping out with Euro Debt

AUDJPY slugish, look for a strong move within the next couple of weeks

Up or Down is the real question.   I think the only way to trade this is to wait on it for some breaks of key levels.

Using Andrew's pitchfork, I have drawn in some channels. Any break below this channel would result in heavy selling, note that the price action would be below the 20 and 50 MA in this case.

At this moment i think the Slow Stoch is important.  Watching for breaks below the 80 level, which would break the embed nature of the trend.  In that case expect more volatility / pull back.  The consolidation period looks like it is coming to an end, so expect a bigger move one way or another during this upcoming week. 

A failure to hold the 61.8% retracement would be a decent entry into the short side of this market, with a stop just above the 81.93 level (61.8%).

Options expiration week Jan 22 as mentioned in previous posts is suspected of being very volatile.  

Poor Entry on FAZ, but trade still likely

This is FAZ the financial sector 3x bear ETF. 

Entry at $9.18 but as you can see the price dropped by $0.18 by the end of the day.  Entry was made based on a Buy stop set at $9.18, 1 cent after a key resistance level.  Looking at the 15 min chart below you can see the price was a bit over extended when it broke through the 9.17 level. 

Exit will be at the 9.69 level 1 cent below a key 9.70 which is a swing low Dec 13th. 
The Chart above shows a increase in volume on the 2.39% gain.  This is some confirmation the move could lead to continued upside.

Closer look at the daily and the MACD / Slow Stoch.

Looks like I jumped the gun on this trade but it is likely the Slow Stoch will get above the 20 level and a positive MACD histogram tick tomorrow.

Looking at the 15 min chart

Looking at Fridays volume distribution, heavy buy volume with unimpressive sell volume coming in at the later stages of the day, as price deceased.  The slow stoch is signally an oversold condition indicating that a bounce is likely monday.

I plan on picking up a small position in out of the money call options (Strike 8) on a JASO for Jan 22nd expiry as a hedge against this position.