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Trump Trade Kills Gold – Again

 The Time for Action in Gold is Near

an update of previous post entitled : ‘Gold is in a Bear Leg..with an $1800 Target’ | Zero Hedge

The death of hope enables freedom to be responsible for your own actions. Hope is merely the flip side of denial. Be prepared or blame the gods for your misery. 

Originally posted By Soren K. Group on marketslant.com

Yesterday we posted an article noting the Trump Trade’s birth  was responsible in part for the 2016 EOY swoon. We also noted that the tax bill was a likely reignition of that trump trade and warned that gold could succumb to it. We also noted that of yet “gold was hanging tough”. Trump Trade in stocks and Gold (post tax bill momentum on right). Charts here 

Stocks post election and during the tax bill process:

<span style="background: rgba(220,220,220,0.5); background-image: url(https://www.marketslant.com/core/assets/vendor/ckeditor/plugins/widget/i…);”>?

Gold during the same periods before yesterday:

<span style="background: rgba(220,220,220,0.5); background-image: url(https://www.marketslant.com/core/assets/vendor/ckeditor/plugins/widget/i…);”>?

Kiss of Death

Yesterday killed that potentially. Markets seemed to discount even more the Tax Bill ratification. 

Our prescience is not a happy event as far as our macro position goes, but it does make all the more real our story last week called “Gold is on a Bear Trend with a $1700 Target”  

So here we are and new things are now on our radar.Blame the Tax bill if you like.  But an actionable  decision will be upon gold traders/ investors soon. 

Here’s where we stand now:

If you have interest in either buying gold or selling what you have the time is now to prepare for the conditions that will trigger your decision to buy, add, sell, or short Gold. We have been saying that the macro buy signal put us into a long position. We have also said repeatedly we are swing-trading from the short side looking to reassess what action to take should certain levels be penetrated on the downside or upside.

Those levels are dynamic but center on the following areas:

1- Fund Finder MA- which has Gold as a long with 6-12 month holding period provided it does not settle below $1263 at end of (now) December (yellow line)

This got us long last month. Chart here 

<span style="background: rgba(220,220,220,0.5); background-image: url(https://www.marketslant.com/core/assets/vendor/ckeditor/plugins/widget/i…);”>?

 

2- VBS- our proprietary momentum signal used primarily for short term and swing trading is setting up for a much longer term volatility expansion should we go below $1193 or above $1336. It alone does not suggest direction on trigger. It does reliably foretell expedited movement is coming soon when triggered.Chart here 

<span style="background: rgba(220,220,220,0.5); background-image: url(https://www.marketslant.com/core/assets/vendor/ckeditor/plugins/widget/i…);”>?

3- Moor Analytics– Major Trend Lines with which we are not intimate but a respected analyst is, have been pointed out by Michael Moor. His work, independent of ours recently called for a large bull move higher over a 9-12 month period provided certain lows held. 

“The break ( and sustaining) above here projects this upward $172 minimum, $491 (+) maximum—the maximum to be attained likely within 9-12 months.”

This independently corroborated both our macro reason and VBS alert should gold trigger one. Now, after the previous day’s sell-off, he gives an early cause for concern in our own systems. Simply put; Michael’s lows did not hold. See chart below. Accurate, not precise as we are drawing from the road

<span style="background: rgba(220,220,220,0.5); background-image: url(https://www.marketslant.com/core/assets/vendor/ckeditor/plugins/widget/i…);”> ?

 

Currently:

According to Michael, Gold has broken a strong formation that underpinned Weekly support.This he says, puts the Gold bull-call on hold but does not negate it. 

The formation being broken to him indicates a further 19 to 97 dollar drop is on the menu for gold. The only thing that negates this would be strong activity above $1274 on a weekly basis that lead us up to $1300 quickly. This would then reignite the Macro Bull scenario of $1400 to $1800 he reported last month. 

 

Take-Away:

Essentially one can say be short below $1274 on the weekly and flat to long above it depending on your risk, time frame and tolerance for volatility. Or like us, you can stay long macro with an exit on a December settlement below $1282 and continue to day trade from the short side hoping to lessen your macro cost basis while keeping your finger on the pulse come the real event like if a major dip or re-rally would occur. Whether those are buy orsell decisions depends on the individual.

 

To that we’d add:

The VBS says there will be volatility below $1192. We’d like to be in a position to buy physical averaging down if that happens. To do that we’d have to be out (or have hedged) our macro longs long before then. 

Which way gold goes if $1192 is touched is not known, but a decision should be made to buy or sell, or as we may likely do, buy straddles or hedged put spreads the “secret weapon of the Bull”. Just have your levels now and do not hope for divine intervention as the intro quote stated

Original article HERE

Good Luck

Zerohedge

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