If you have been following the Gold trade we talked about on the blog, We'll see if Gold finds its bottom today. Looks like a flush. Significant downward momentum. Not sure if it can bottom today after such a steep drop.
But lets focus on the wider picture.
The $TSX has been marking a long term topping pattern. I have been blogging about the currencies and the commodity country indexes. We are on the precipice again.
So we can see this trendline under pressure. Gold, Copper, Silver, and majore currencies are all breaking down. We'll see if Canada can withhold the storm. This looks ominous. The Full sto's have rolled over. The MACD is stalling just above zero which is a terrible place to stall. Below is a 2 year chart zooming in on the right side.
Notice this one year head and shoulders top. This is a strong level to expect support. The brief rally off the line last week and a retest this week does not bode well. The surging USD doesn't help us either.The MACD going below zero is an important signal.
Below is a 6 year view. You can see this ceiling has been set and rejected at the horizontal line. The breakdown of the uptrend using the 2009 low is very troubling.
All of the Asian markets are below the 200 DMA. Many are falling back below the 20 month MA which historically has been important.
This appears to be the serious breakdown that the currencies have been warning. Continue to be cautious. My indicators say cash is outperforming.
Here is the one month view. By depressing the Money market fund tab (Green Box), it is outperforming everything including the $SPX for the last month. This would say cash is the best place to hide. The broad commodities look stronger mostly because of oil's strength. But don't be fooled. The commodities are being driven over.
Regarding gold, This may continue to fall abruptly. Caution is advised. When things plunge, we can look for support. But don't be brave. This appears to be more about Japan, China, Korea, Australia, Greece etc.
Good Trading,
Greg Schnell, CMT
