Dear Madame Chair:
Allow me to acknowledge your and your Committee's taking to heart our prior missive regarding renewed strength in both Gold and the Bond market as indicative that an interest rate rise, whether sooner than later, imminent or otherwise, would indeed be not wise. These two great markets belie the economic strength upon which so many rely, and for the house of cards reaching the sky, yours is the keystone, the mainstay, the linchpin -- best not to remove it, lest it then all cave in. In the meantime, should you happen by your beloved Berkeley, do ring us up in The City for a café, won't you? Happy Hanukkah and Go Bears.
...m...
And so with the Federal Open Market Committee's fudging with time, yet per Chair Yellen's not changing her mind, it came to pass that the stock market was yet again bailed out of making any noticeable correction, the S&P 500 surviving yet another wrinkle of minuscule "noise" by returning back to where 'twas en route toward making all-time highs on a regular basis, in tow by the Fed's gift of keeping rates low. In turn, Gold and the Bond market spent this past week somewhat stymied in trying to sort it all out. But given the unseasonably high volatility being experienced, markedly so in Oil and to the extent 'tis redounding in kind to the S&P, again we're getting that December to Remember, (which for you WestPalmBeachers down there essentially means the world's gone nuts).
To wit: the S&P has regained its happy feet, but its also having gone wobbly of late seems to portend a turbulent January in the offing, making Gold all the more attractive. Indeed our measured "market speed" at which the S&P futures ("Spoo") moved for the seven trading days leading into to last Wednesday's FOMC Policy Decision reached levels we've not seen in years: typically it takes three minutes for the Spoo to travel one full point; more recently 'tis been just 30 seconds. So at six times the usual pace, that's haulin' some serious rump roast and amplifies the underlying nervousness of just how fragile the stock market has become, (especially by our calculation that earnings are half what they ought be given the Index's level). Moreover, these much higher "market speed" readings were precedent to 2008's Black Swan, (not that history shall repeat itself per such single measure, yet I'm clearly not ruling it out).
But wait, there's more: for as we know having come completely off the boil is Oil: 'tis said that there's plenty of supply to go 'round -- but is its declining price (i.e. demand) an acknowledgment that global liquidity in the form of disposable income may truly be waning? Regardless, Oil's price demise, in turn, has of course comprehensively creamed the Rouble, causing such a flight to the heavenly serenity and security of the Swiss Franc that the Schweizerische Nationalbank in a desperate effort to make its Euro-pegged currency as unattractively Euro-ugly as possible is now charging you rather than paying you to take in your dough. Kinda like the 1970's all over again, but this time sans the once-cherished Swiss Franc being backed by Gold. So much for getting that for which you pay. Meanwhile StateSide, we're all just happy here: gas is comparably "cheap" and thus we're rife with holiday spending sprees, and so shall be going forward, right? Detached from the world's woes we are, right? Indeed forgotten is this graphic herein portrayed last January, right?
As for Gold and its weekly bars, the domino effect is at the very least being held at bay, the fresh blue parabolic Long trend dots instead pointing the right way. The volatility of the BEGOS Market components (Bond, Euro/Swiss Franc, Gold/Silver/Copper, Oil, S&P) seasonally tends to recede over the last two weeks of the year; but as noted, this time 'round, swing is the thing. And as you can see below, one week prior to that just past, Gold reached up to, but not through, the mid-1200s bounded by the purple lines' resistance zone of 1240-1280. Toward Gold getting off to a good launch in 2015, 'tis best that price not deteriorate much from here, rather that it aim to at least finish 2014 in the black above 1205, (else we'll be subjected to nabob natterings of Gold's having declined for two straight years):
This past week being down for Gold, it nonetheless has closed higher for five of the last seven. That said, we are concerned via the daily bars below that Gold has yet to really follow-through higher given the Price Oscillator study having confirmed as turning positive at the close on 01 December, the rightmost green bars thus calling for a Long stance from the open on 02 December, but so far struggling similarly to the three prior stints of going green:
In fact, Sister Silver's daily MACD study confirmed shifting to negative at Wednesday's close, her last two bars (Thursday and Friday) having already gone red:
We next pair up the precious metals and zoom in on the daily bars for just the last three months along with their respective "Baby Blues", the dots which chart the consistency of 21-day linear regression trend. With Gold on the left and Silver on the right, note the similarity in the shaping of the Baby Blues, which, in spite of their current declines, at least tells us that Sister Silver is adorned in her precious metals pinstripes rather than in her industrial metal jacket, and thus she ought not be the laggard she can be upon Gold's next upswing:
Now let's turn to the 10-day Market Profiles. And again for both Gold on the left and Silver on the right, the two markets are right near their respective lowest support levels of the past two weeks. So we have to view these areas -- especially as regards Gold's potential to close up for the year above 1205 -- as critical hold levels. (Sadly for Sister Silver, to close with a positive year, she'd have to finish above 19.43; 'tis a bit of a stretch for her given there being a mere 7 1/2 trading days left in 2014):
Specific to where Gold lies in the overall statistical pack, here is:
The Gold Stack
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
The Final Frontier: 1800-1900
The Northern Front: 1750-1800
On Maneuvers: 1579-1750
The Floor: 1466-1579
Le Sous-sol: Sub-1466
Year-to-Date High: 1392
Base Camp: 1377
Neverland: The Whiny 1290s
The 300-day Moving Average: 1268
Structural Resistance: 1258
Resistance Band: 1240-1280
10-Session “volume-weighted” average price magnet: 1211
Trading Resistance: 1198 / 1211 / 1218 / 1223 / 1230
Gold Currently: 1195, (weighted-average trading range per day: 23 points)
Trading Support: (none)
10-Session directional range: down to 1182 from 1239 = -57 points or -5%
Structural Support: 1179
The Weekly Parabolic Price to flip Short: 1139
Year-to-Date Low: 1130
In closing, we'll send you off into the holiday-shorted trading week with these three quick items to share with your fellow egg nog slurpers:
1) If you're seeking an arbitrage play for that fast food craving: the iconic Big Mac goes for $4.89 StateSide, but even with the Swiss Franc practically back to parity ($1.0177/CHF), their going menu price at CHF 6.50 will still set you back $6.62 in Genève. So here's the deal: given the aforementioned reaming of the Rouble (RUB 58.88/$) the menu price of RUB 45 gets you that burger in Moscow for a mere 76¢! Now yer cookin'!
2) A FinMedia piece this past week pointed to computer trading models as having bettered hedge fund humans in 2014 equities performance. If you didn't think algorithms are driving the trading bus, you ought so do now.
3) Finally, will this disrupt Santa's transit schedule as he sets out on his glorious 'round the globe journey on Wednesday night? Denmark, before the United Nations this past Monday, formally laid claim to the North Pole, the storied residency of jolly old St. Nick. Does this therefore mean the Danes get first dibs on what's in his sleigh bag? If so, 'twould be highly inequitable for the rest of us: "What? No Danish pastry? Just a gift certificate for a Big Mac?"
May everyone's spiritual celebrations be joyous! We'll be back in a week's time with our final 2014 edition.