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Today, we discussed the resurging tensions following North Korea launching a missile over Japan, and how it is impacting the ‘risk-trade’. We are seeing flows into gold following an already strong reaction on Friday’s Jackson Hole speech by Yellen/Draghi (more Yellen). Gold broke the 2011 trend-line with conviction not long ago, and then yesterday easily cleared the double-tops from April/June. It’s positioned to test levels from 1337 up to 1375, with both of those levels being the most significant from 2016. The former was the Trump spike-high, the latter is the 2016 high. There are levels in between, but considered to have less significance. Today could be important in the near-term as we have seen recent events involving North Korea turn out to be only spikes in souring risk appetite. Keep an eye on equity markets, as they have quickly rebounded following escalation. Gold may wilt if this happens again.
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Silver prices are following along, obviously, and trying to clear the trend-line running down off the July 2016 high. It has room to run towards 17.75 if it doesn’t fail to close above the trend-line. The rising channel dating back to last month’s low is keeping prices pointed higher, with a thorough rejection on Friday of the lower parallel providing further underpinnings to its importance.
Crude oil, broadly speaking, has a macro rounding top to it and the positioning profile of large speculators in the futures market shows us there are plenty of sellers out there should it start to roll over again. The channel (correction) off the June lows was broken earlier this month, and we are now seeing price sag below the important 47-line we’ve been discussing since March. It looks as though momentum could soon set in if trade can sustain below the noted threshold. Sub-40 still remains the target.
The DAX broke a triangle we looked at last week, and continues to be a global leader to the downside. It is getting a double-whammy as both risk appetite sours and the euro strengthens. A move towards sub-11500 looks to be in the cards. The FTSE 100 is treading precariously around major support in the vicinity of 7300. A solid close below exposes the 7100-mark or worse. The S&P 500 continues to be a global leader, but if it can’t rebound from today’s gap-down open and selling accelerates we are looking to 2405-ish as the next level of support. The February 2016 trend-line lies not far below that point, and with its connecting points being the major 2016 low and just prior to the U.S. elections in November, it’s viewed as a significant trend-line.
For full technical considerations, please see the video above…
---Written by Paul Robinson, Market Analyst
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