Bonds have been the big mover leading up to the U.S. election. TLT is under the 200 day average for the first time since December 2018. The next critical level to pay attention to is 153-154. This is the bottom of a short term channel, the June low, and the long term upper parallel from the channel that originates at the 2007 low (magenta line). The upper parallel nailed tops in 2012, 2015, and 2016 and the low in June. A long term chart is below. Expect the level to act as support BUT a break below would indicate a major behavior change in TLT (and bonds generally).
Gold has turned down from the 200 period average on the 4 hour chart, short term trendline, and 2011 high. Notice the action around the 2011 high over the last few months…gold remembers! Focus remains lower. 1760 appears critical for longer term support. This is the May high, near the 200 day average, and is a parallel that crosses highs and lows since August 2019.
The initial announcement of Trump’s COVID-19 diagnosis caused a knee jerk reaction in the stock market. Is there more volatility to come?
Gold traded into proposed resistance at 1908 today and immediately pulled back. I am of the view that price resumes lower from the current level towards the lower parallel near 1750. Failure to stay below today’s low would risk strength into the upper parallel of the bearish channel near 1940.
To determine if gold is a bubble, we need to understand the demand for gold, what an asset bubble is and the current renewed interest in gold.
My working assumption is that a B wave triangle ended today at 1975.20 (exactly the 8/3 low) in gold. I am bearish against today’s high and looking for weakness lower in a C wave towards 1800 or so by the end of the month.
QQQ has broken down and the same levels are in focus that were noted yesterday (text below). All I’m adding is that if price bounces from here (a gap up on news tomorrow for example) then 279 is proposed resistance.
Gold is sitting on top of the 2011 high…major level. A break below would open up 1765/90 (see hourly chart below), which is a well-defined zone and intersects the lower parallel of the Schiff fork from the high. Proposed resistance is 1941 (high volume level from today). As noted yesterday, I’ve been tracking near term fluctuations in GLD. High today was just above 185, which keeps the short term bearish channel intact (see yesterday’s GLD chart).
Since the 8/6 high in gold, I’ve been closely tracking GLD. The rally from 8/12 found resistance at the 61.8% retrace and a short term bearish channel is confirmed following the median line touch. If GLD has turned lower, then resistance should be 185.00 (38.2% retrace and VWAP from the high).
Gold started the week on the defensive after being unable to hold above the key $2,000 level late last week. Meanwhile, the US dollar has stabilized, finding its feet after falling to its lowest levels in over two years last Tuesday.