Bill Downey update

Last Nights update listed 1773-1793 as support and the high so far is 1795. Support was listed at 1730-1742 and the low today is 1756.

The big question really comes down to one thing. Was the drop in gold a manipulated event to bail out the option writers and is it now ready to move forward without haste? And that is the problem with manipulation -- one is not sure when they will strike again.

The situation in Europe has stock markets selling off hard again today as the rumors and evidence of real liquidity concerns in the system. Then take Warren Buffett buying Bank of America yesterday. What a coincidence as the discussions of insolvency were rampant this week. Along comes Buffet and buys the bank ? Is it me or are we reaching different levels of incredible manipulation. Now the pundits are issuing buy signals on it on bloomberg ? I mean how crazy can it get.

The big Bernanke speech begins now and over the next hour will probably the most anticipated speech that will say as little as possible.

Going to the chart (see goldtrends.net for charts)

The hourly chart shows the triple test of 1700 yesterday and the subsequent bounce back up. So far the bounce is 38% of what was lost --- a typical retracment number. Even a run to the 50% would not be out of context after such a fast drop.

Deciding as to whether the trend has turned down we have the weaker cycles due to come into full force next week.
In addition price has not even pulled back to the 34 day average and today's bounce is still within the confines of a bounce. The only thing we can say that provides evidence is the July channel line held yesterday on the 8 hour chart. Besides that, there is really no other evidence that the correction has ended. And that is the problem with manipulation. It brings into question whether the whold gold and silver thing was to bail out the option writers. All global stock markets are selling off very hard --- so the question is this --- Do we really want to enter in a market like this where everything is all over the place? Gold has already experienced two 30 dollar drops this morning, the latest just during this update. Is it that important that we have to have a position coming into Monday? I don't think so. And if your worrying about the market getting away from you on the upside --- I would ask --- were you worrying about that on Monday night before this selloff ?

From a long term perspective -- buying at the 34 week moving average is usually the best play. In the past few years, it hits it twice a year. From a shorter term perspective --- i try to find trades that last longer than a day -- as it is difficult to get the info out to everyone not knowing if they are at the email at the moment. Had I bought yesterday --- i would be selling and getting out at this area. So I don't think its a good idea to get either long or short from a trading perspective today. At least not for me.

If trade you must --- support is the 1750-1760 area and resistance is 1783-1790 and the 1805-1810 area. In summary -- due to options expiration -- it is possible that this whole thing was a set up and higher prices are coming. I want to see at least one pullback and see how the pattern looks. That should give some clues as to whether we moving higher next week. My best take is that prices usually are higher the last few days of the month --- and the first few days of a new month so that has a slight favored status at the moment.

Bottom line --- I favor higher prices into early next week. The 1750-1760 area is first support.

Gold Trends Intra Day Silver Update - Aug 26th

Silver looks very strong --- and the longs have not been liquidating they are holding and buying up everything the shorts are throwing at them. A close above 41.50 would put the bulls back in charge. We'll look at the situation over the weekend -- and try to isolate a good point of entry. Right now --- the 38.60-40.20 area is first support today -- and resistance is the 41.20-41.50 area.

In Summary -- the shorts look like things got worse, not better.

4 comments:

GM Jenkins said...

Downey has a very sure hand, always a great read.

GM Jenkins said...

Interesting to see him talk about manipualtion too.

And that is the problem with manipulation. It brings into question whether the whole gold and silver thing was to bail out the option writers ... Do we really want to enter in a market like this where everything is all over the place? Gold has already experienced two 30 dollar drops this morning, the latest just during this update.

It's worth remarking that if a pro like Downey sits on the sidelines because of questions about how much of the current volatility is manipulation-based, you can imagine how the average joe who's all in cash and bonds feels. The same effect is caused by guys like Jon Nadler: scaring people from buying what should be a safe haven. If there is a currency collapse (and granted it's a big if, but then i havent heard anyone argue it's impossible), then it probably isnt too far a reach to say that these guys, manipulators trying to cover their shorts, the anti-gold bastards like nadler, etc. will have blood on their hands.

Louis Cypher said...

He is good people and he seems to live by the motto "there is always another trade".

Louis Cypher said...

It's tough as both sides of the argument are fervent and sure of their positions. The subject is deep and all the average Joe wants is just someone to cut through the bullshit and give them one answer. Both sides know it's about winning the argument. You are right people like Nadler and Bob Moriarty etc. really have a lot to answer for.