While working in futures and commodities for the past 20 years, one of the most important concepts that I learned is that if you can nail the right "commodity" in the correct "cycle," you can come out very well off. Now each commodity is going to have a different cycle based upon the variables that impact them. For instance, Corn prices are affected by supply, demand/exports, weather, and fluctuations in the underlying currency. For Gold, it's a similar set, supply, demand, interest rates, and underlying currency changes. While it's simple for Corn and Gold, Mining Stocks tend to get complicated. You have to consider what metal they are mining, the price of the underlying metal, interest rates, fuel costs, labor costs, management, what country they are mining in, the correlation with the stock market, and I'm out of breath.
Keeping it simple, this week, we are starting to see the exhaustion of rising Yields, declining Dollar, and the deceleration within price sell-off in Gold. Therefore, I am transitioning from a bearish stance on Gold to more of an "Opportunistic" approach looking for spikes in "Gold Put Option Volatility Premium" as well as buying deep corrections when the public "panic sells." We will still maintain other asset classes such as energies, industrial commodities (copper, silver, platinum); however, Gold's recent washout will justify tactical purchases at critical levels. If you would like to be up to date on the developments of our specific strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up.
Technicals: As sentiment turned too negative through the end of last week, Gold quietly held major three-star support at 1671-1680. Yes, headline sentiment had turned extreme, and the Commitment of Traders released last Friday, before the break below $1700, showed the lowest Managed Money Net-Long position in Gold since May 2019. The last time the CoT was here was before Gold broke out above its $1300 ceiling and when believers were few and far between coming out of the U.S.-China trade war's dismantling of the metals complex. I ask myself, "If everyone has sold, who is left to sell?" In this case, there are a lot of traders on the sidelines that could carry this recovery. If you would like to improve your chart reading, we created a Free New "5-Step Technical Analysis Guide to Gold," which you should print out. The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.
Good luck and good trading, Phillip Streible Chief Market Strategist 312-858-7303 Phil@Bluelinefutures.com Follow us on Twitter: @BlueLineFutures Follow us on Facebook: Blue Line Futures Facebook page Subscribe to our YouTube channel: Blue Line Futures YouTube channel Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.