Gold: Spot gold has now been down for four consecutive weeks.
Gold prices tried to unsuccessfully take out resistance at 1,180 for three straight weeks, before the bottom fell out of it. In the process, Gold also lost support at 1,140, and is now testing the July 2015 low of 1,072.30.
So far, so good. That July low is holding, with some signs of exhaustion. Daily technicals for Gold are grossly oversold, with weeklies not too far away. Odds favor that low holds – if nothing else, for a decent bounce. For at least the next several sessions, spot Gold needs to go sideways for its own good.
COT Report Data: Â Currently net long 68.4k, down 48k.
Russell 2000 mini-Index: If we believe that the Federal Reserve is all ready to hike in December and that it wants to do so not because it wants to fill its monetary quiver with arrows but because it expects the economy to improve, small-caps are not buying it.
By nature, small-caps are domestically-focused, and should do better than multinationals, who might suffer if the US Dollar Index continues to strengthen because of positive interest-rate differential.
But the Russell 2000 just does not act well.
First of all, large-caps stocks led both small- and mid-caps during the most recent rally. So when the Russell 2000 broke out of 1170 early this month, it was treated as confirmation that small-caps stocks were finally participating. But the index was never able to take out larger resistance at 1210-1215. And now it has lost 1170. Yet another false breakout!
COT Report Data: Â Currently net short 42.9k, up 1.3k.
US Dollar Index: After five-plus-percent move the past four weeks, the US dollar index was essentially flat last week.
The US Dollar is grossly overbought, but still has momentum. If it comes under pressure, the level to watch is 98, give or take.
Per the recent COT report data, non-commercials have been adding to net longs of late. But, that said, they do not look as enthusiastic as they were when the US Dollar Index was trading at a similar level back in April.
COT Report Data: Â Currently net long 43.8k, up 3.9k.
VIX (Volatility Index): The MACD crossover in the week before proved to be prescient. The VIX Volatility Index rallied five-plus points last week.
That said, daily conditions are now overbought on the VIX, although a weekly chart has plenty of oversold conditions left to be unwound.
The action on early this week should encourage equity bulls.
COT Report Data: Â Currently net short 9.5k, up 5.8k.
Thanks for reading.
Twitter: Â @hedgopia
Read more from Paban on his blog.
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
