Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold – Commitments of Traders – hedge fund longs liquidate

Commodities / Gold and Silver 2016 Oct 10, 2016 - 10:10 AM GMT

By: Dan_Norcini

Commodities

Fortunately for we traders, the Commitments of Traders report did at least catch the big move lower on Tuesday of this week so we were able to get a peek inside the market to see what happened to those massive hedge fund long positions during this week’s meltdown in the gold price.

Here is the first chart. Hedge fund outright positions.


We had a sharp drop in hedge fund long positions ( a bit more than 42,000) in the plunge from $1330 the previous Tuesday to $1269.70 this past Tuesday.

We also had this category of traders begin moving into the short side to the tune of adding 14.6 thousand new short positions.

As is the pattern during these events, Swap Dealers and Commercials were busy covering short positions into the hedge fund selling.

The problem that I see for gold is the size of the net long position of the small traders, or the general public.

By a nearly 2:1 margin, they remain net long even after Tuesday’s sharp drop of some $42.

Those are weak hands. With the gold price now making two consecutive closes below its 200 day moving average, the technical picture has deteriorated significantly.

That June low is going to be the location of the battle for control of the market.

Price pushed down through that level and managed to close right at it for the purpose of the settlement price but I noticed that it did move higher later in the session and rebounded up to reach closer to $1258. Whether this rebound continues Sunday evening and into Monday morning remains to be seen; it could very well have been a round of short covering by shorts ringing the cash register after a very good week.

On the Heikin Ashi chart, you can see the chart remains in a negative posture. These charts are composed slightly different than your standard bar charts or candlestick charts but you can still see the significance of that June low. That low was formed on the day that gold staged an upside breakout above $1320 so you can rest assured all of those longs that bought in on that day near those lows are going to try to either defend those longs if they have the financial wherewithal to do so, or if they do not, hoping that their allies can rescue them.

There is no doubt that a substantial number of margin calls are going out or have already gone out to those small specs.

There is one bright spot in this recent gold and gold-related debacle that I have seen however and that concerns the giant gold ETF, GLD.

It actually witnessed an 11 ton increase in reported gold holdings today. I must admit that I find this extremely odd given the deluge of selling that hit both the Comex gold futures this week and especially the mining shares.

One does not often see the GLD holdings moving in the opposite direction to the gold price and the gold mining shares. That it did should offer some consolation to gold bulls as it shows that Western-based specs were interested in buying the metal over at the ETF even if the hedge funds were busy selling it over at the Comex.

One last chart for now… this is the HUI/Gold ratio. Close observers of this chart might have noticed that I LOWERED the line I had been watching. The previous level that I was monitoring was the low made in the ratio on September 1. That was crushed this week.

Now I am watching the May low in this ratio, which also cratered this week.

Why is that important? Because in looking at the chart of the HUI, the low made by the index was made that same month.

That low is under serious attack at the moment with the HUI having bounced off of it on Friday. If the ratio of the HUI to Gold could not hold, there is the real possibility that the index will not be able to hold those lows. This, plus the fact that the HUI also has now had two consecutive closes below its 200 moving average paints a rather sour picture technically of the longer term view by investors of the gold sector.

Bulls have their back to the wall and will need to perform next week to at least stabilize the damage and try to stem the bleeding. If they can keep the index above the May low, there is a chance the ratio could reverse higher. Perhaps the addition of those 11 tons to GLD will spur some buying early next week. We will have to wait and see but for now, I will feel much better about the mining share prospects if they can at least push it back above the 200 day.

A climb back above 220 will be needed to provide some glimmer of hope for the bulls.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules