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Welcome all Safety in the Market traders to this month’s dedicated newsletter.
Well what a month it has been since I last wrote to you. Stock Indices have continued to rally, with the U.S. Indices (Dow, S&P and NASDAQ) taking out their April highs. (The Australian market has not managed to do so.) The Aussie dollar has reached the magical parity mark with the U.S. Dollar and Gold has continued on its merry way.
It is Gold (GC-SpotV) that I’m going to follow on with this month. Last month I shared with you work that’s been in place for more than 2.5 years and potentially coming into play again around now.
Chart 1 is the image we had of Gold at the time. The futures market had reached highs around $1,350 an ounce and a last trade of around $1,320 an ounce. Our outlined target was $1,414.60 an ounce, being the 150% Pressure Point based on the major bull market range (August 1976 to January 1980) added to the February 2001 low.
Chart 1 – Monthly Gold – Major Ranges Pressure Point Projections
click chart to enlarge
Now that’s where we were last month and if you picked up the message that there could be some continuing long trading opportunities and made the most of that, then great. If you shorted gold during this time, shame on you!
Chart 2 shows us the current picture of Gold in relation to the same pressure points at work. Take a moment to study the chart below and then we can discuss.
Chart 2 - Gold – Major Ranges Pressure Point Projections Update
click chart to enlarge
The December Gold contract has traded to a new all-time high on 9 November 2010 of $1,424.3/ounce. That is about $10 per ounce over the 150% Pressure Point, which when we you are talking about 150% of $773.0/ounce range, is not a big deal. Of course when you have a runaway freight train of a commodity, then it is risky business to try and nail a top.
I suggest all ProfitSource owners take a look at the daily chart for Gold on 9 November. You will notice that it was an ‘Outside Reversal’ day, with a temperature of -4. If you apply volume to this chart you will also see that the volume on 9 November was just over 300,000 contracts traded, which is certainly higher than the average, and more than any day in the past couple of weeks.
I again reiterate the risk of picking tops on runaway commodity markets. That being said we are at a very interesting point right now in the midst of this big run. I have currently covered long positions and I am watching things very closely. We will know a lot more about the outcome next month. If you don’t already own ProfitSource, this is a taste of some of the opportunities you are missing out on potentially. ProfitSource comes with all the data and history for the major futures markets of the world. Along with advanced Gann analysis tools, I wouldn’t be without it.
Until next month...
Noel Campbell
Professional Derivatives Trader
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