This is about as far a we can go in a test of the 104.35 high. Today the range was the smallest in months if not years and the volume was also the smallest in a long time. Clearly demand has dried up, in a test of the highs, but will supply kick in? 9/1 tells us there are eager sellers, but show me.
XLF rose sharply in the first week of August, peaking on the largest turnover in months. A decline of about 6% followed and the decline was tight, indicating more rally ahead. Prices advanced on diminishing volume to 8/24 with a small reversal day, some sideways movement and an upthrust to 14.90 on the smallest volume since 7/8 that was not an inside day. 9/1 supply overwhelmed demand in the widest range day since the move on 7/8 began. The rally that follows was on even less volume a sure indication that demand is exhausted and today the close was on the low. Check out the charts of MS,
WFC,
BAC,
JPM and GS to see if this makes sense.
There is clear shortening of the thrust into the high at 1030, 980 was three boxes greater than 950. 1010 three higher than 980, but 1030 is only 2 boxes more than 1010. Shortening of the thrust means that either demand is waning or supply increasing. A move to 1010 puts us on the hinge, so time will tell.
This is the most bullish possible response to the 9/1 downward spike.
Every close with the exception of 1 is within the range of the first 15 minutes. What this tells us is that demand did not have the strength to push prices to close above the range nor supply the power to push prices below it. I expect this stalemate to rapidly resolve and knowing the sneakiness of this market I suspect it will be while we sleep.
Three days of almost equal closes, high volume and the today being a reversal day are all cause for caution. However should prices not react, and I am not sure after all this preparation I expect them to, we are off to the races. Although we are not here to discuss fundamentals, our research department notes the Chinese are encouraging their citizens to buy gold and maybe even foreign securities to drain liquidity from their system. That liquidity is from our Fed's
QE and raising interest rates will not do the trick in China because it will only encourage more foreign money to seek Chinese assets. Interesting.
This is about as far a we can go in a test of the 104.35 high. Today the range was the smallest in months if not years and the volume was also the smallest in a long time. Clearly demand has dried up, in a test of the highs, but will supply kick in? 9/1 tells us there are eager sellers, but show me.
XLF rose sharply in the first week of August, peaking on the largest turnover in months. A decline of about 6% followed and the decline was tight, indicating more rally ahead. Prices advanced on diminishing volume to 8/24 with a small reversal day, some sideways movement and an upthrust to 14.90 on the smallest volume since 7/8 that was not an inside day. 9/1 supply overwhelmed demand in the widest range day since the move on 7/8 began. The rally that follows was on even less volume a sure indication that demand is exhausted and today the close was on the low. Check out the charts of MS,WFC, BAC,JPM and GS to see if this makes sense.
There is clear shortening of the thrust into the high at 1030, 980 was three boxes greater than 950. 1010 three higher than 980, but 1030 is only 2 boxes more than 1010. Shortening of the thrust means that either demand is waning or supply increasing. A move to 1010 puts us on the hinge, so time will tell.
This is the most bullish possible response to the 9/1 downward spike.
Every close with the exception of 1 is within the range of the first 15 minutes. What this tells us is that demand did not have the strength to push prices to close above the range nor supply the power to push prices below it. I expect this stalemate to rapidly resolve and knowing the sneakiness of this market I suspect it will be while we sleep.
Three days of almost equal closes, high volume and the today being a reversal day are all cause for caution. However should prices not react, and I am not sure after all this preparation I expect them to, we are off to the races. Although we are not here to discuss fundamentals, our research department notes the Chinese are encouraging their citizens to buy gold and maybe even foreign securities to drain liquidity from their system. That liquidity is from our Fed's QE and raising interest rates will not do the trick in China because it will only encourage more foreign money to seek Chinese assets. Interesting.
