Gold The Global Currency

       The problems with the Euro most agree will not be solved soon, but will take months if not years. Greece at less than 3% of Euro GDP is a drop in the bucket compared to Spain (12%) or France (21%). This could be the beginning of the end for the Euro. Near term as I've been saying, we'll see a bounce in the Euro/ pullback in Dollar...but longer term the Euro has quite a drop if things fall apart. 135/136 has presented support, there maybe a bounce to 139/140, the next support is around 125.

Since 2003 the $SPX & $XEU have risen and fallen together. A rise in the Euro often tells us that a rise in the stock market is coming. Similarly, falls in the Euro is bearish for US stocks. But if you measure gold in euros, it has broken out to all-time highs and now costs more than €800 an ounce.
One has to think of gold not as a commodity but as another currency. Given the financial stresses in the eurozone, is it any wonder that gold has been rising against the Euro? Most traders think of the price of gold in US dollars...gold is a global currency and is relative as to what you buy it in. Whether you live in Europe or the U.S., gold is your hedge against the fiscal irresponsibility of your own government

Weekend Review RIG SU FCX GOOG

CNBC Fast Money comments: >>READ

Suncor putting in a bullish divergent chart pattern. Itz continues to over weight energy (oil) over precious metals (gold/silver).

Freeport McMoran (FCX) & Google (GOOG), two Itz Pix Portfolio stocks mentioned on CNBC Fast Money Chartology, worth a listen.

A Look @ Gold/Currency Performance

$1200 Gold

A report that China's central bank will buy another $7 billion of gold bullion from the IMF, which has been periodically raising funds by the sale of its precious metals reserves, has been touted as helping to put a floor under the price of gold at around $1,100 an ounce Wednesday.>>READ FULL STORY If a central bank buyer for the IMF gold is announced, I continue to believe, as I posted on Wednesday, that gold is set to run back to $1200. Todays actions will mark the beginning of the end of this minor correction.

From CNBC Fast Money:I just can’t feel bullish, says Dennis Gartman. I think Europe’s problems are long-term and in fact, I think it’s possible the EU could ultimately dissolve. But whatever the outcome, the troubles in Europe are likely to hang over markets for a long time and that’s bearish.
Considering the economic and political circumstances in Europe I’d get long gold.

S&P500 & Dollar

New claims for unemployment benefits jumped unexpectedly last week, mostly because state agencies processed a backlog of claims caused by snowstorms the previous week.News from the Health Summit & Bernanke's testimony are weighing on the markets today. In the chart below the downside to the S&P500 is around 1065. For the dollar, it is still finding the 81 level tough resistance.

Euro/Gold 2 Hour Charts

Several key levels to watch on 2 hour Euro & Gold charts.

Expecting Gold Rally To $1200

Global Consumer Confidence Takes A Toll On Markets:
The Ifo business climate index fell for the first time in eleven months, to 95.2 from 95.8 in January, below economists' forecast of 96.4. >>READ

Consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy, the Conference Board reported. Just a month after touching a 16-month high, the board's Consumer Confidence index sank 11 points to 46.0 from an upwardly revised 56.5 in January. It's the lowest reading since April 2009. Economists surveyed by MarketWatch, who were looking for a slight drop to 55.5 points from the previously reported January level of 55.9. >>READ

Itz Stock Chartz continues to see a possible 'Relief' rally in the Euro by 3% taking gold to $1,200. Since Feb 5th one has to ask whay has gold rallied while the Euro has declined? This is unusual and since gold bounced off the 200ma tells me that the Euro is way oversold and a relief rally is coming. What could spark that, well Greece is bringing some bonds to auction next week and that could turn out to be a positive. Or if EU bails them out, but there will be a catalyst and that should take both Gold/Euro higher.
Longer term the charts are setting up a 'Bull Flag' formation.

Gold Charts & Videos

The recent IMF announcement of 191 tonnes gold sales in the open market, shouldn't cause alarm. IMF gold sales are just an attempt to manipulate the gold market. Gold is hitting record highs in Euro and UK pound. We'll see the samething we did back in the '70s...gold will rise because of IMF selling. Soros has doubled his bet in gold despite saying gold is the ultimate asset bubble and Paulson has started a gold fund. Gold has rallied strongly despite of the strong manipulation. China got caught off guard last year as India purchased gold. Lets face it, central banks don't announce when they plan on buying gold and don't when trhe sell either. Time and time again we have seen that the CBs buy gold during episodes of price weakness. Any Asian Central Bank that missed buying the gold as a result is certainly not going to panic and rush into the market to obtain it. >>READ & >>READ

Gold rose 2.4% for the week and moved out of the triangle formation which has been constraining it since December. It is trading over it's 50 day moving average. Stochastic is into overbought territory where it can remain for a long time. MACD has broken downtrend, also a 'Bullish Divergence' pattern is in. Technicals all point to a substantial rally, taking gold to retest the $1,200 level. Below chart has gold in Indian Rupee. Go to this link to see how gold is performing in other global currencies >>CHART

Silver rose 5% for the week and repaired some technical damage by moving back above the 200 ma. My upside target for silver is $17, which coincides with retracement levels and the 50ma. Stochastics also give silver plenty of room to run higher.

 

Weekly Report

          What a day today was, we had the after shock of the Federal Reserve hiking the 'Discount Rate' along with option expiration. Crude oil ($WTIC) rallied and the drillers Transocean (RIG) & Pride Int'l (PDE) moved on the Smith International (SII) news that it was being bought by Schlumberger (SLB). A few months ago BJ Services (BJS) was bought by Baker Hughes (BHI).
The Euro ($XEU) again rallied even as the dollar hit the 81+ level. The debate continues as some see further strength in the dollar and the Euro heading to 128. Maybe so, but I continue to see a bounce in the Euro near term and the dollar to pullback toward the 78 level. Gold in Euros has been trading at new highs, perhaps as investors shy away from the currency and seek safety in gold. Several weeks ago I highlighted that Itz Pix traders lighten up on the metals and increase their weighting in energy (oil). For the week the dollar moved up 0.24 to 80.54; the S&P was up 34 points, gold +$29, silver +85cents and crude oil +5.78 to $79.91!!! I continue to target $90 plus for $WTIC.

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Market Glance

As I expected the move in the Discount Rate would be a 'knee jerk' reaction. The dollar spiked about the 81 level, I expect it to pullback next week and for the Euro to rise. Commodities are reflecting that outlook.
MARKET GLANCE CHART

Surprise...Fed Takes Away The Punchbowl

After the close tonight, the Federal Reserve announced that it would raise the Discount Rate to 0.75% from 0.50%. You know... I found it suspicious today when the Euro rallied off the rumor that the Swiss National Bank was buying...hmmm?.. wonder if they knew what the Fed was planning to do? Expect a knee jerk reaction in trading tomorrow. The dollar is; as I type trading around 81 and the Euro just under 135...could tomorrow be a capitulation bottom for the Euro? Below is a CNBC video clip from Fast Money and chartologist Carter Worth's take on the S&P500, Gold & the Dollar.

Euro, Dollar, Crude Oil, PDE & RIG

The last several days have been choppy for commodity prices. In part due to the Euro and concerns with Greece. One tries to position and set some future direction and I have suggested that the Euro would bounce near term and have targeted the 1.39/1.40 level and the 78 level on the US Dollar ($USD). I have also been bullish on energy (crude oil/$WTIC) as well as gold, silver and copper (GDX,SLW,FXC).
Below is a seasonal chart of crude oil, historically it has risen from March thru October.

In the Itz Pix portfolio I have suggested 2 drillers- Pride International (PDE) and Transocean (RIG), I have also suggested gas LP's PGH & PWE as well as Suncor Energy (SU). Today PDE reported earnings and the report was negative >> READ

It is testing recent lows and close to it's 200-ma. If you were to pull up a chart of RIG it to is near it's 200ma. The last time RIG tested the 200-ma was July of 2009, where Itz Pix suggested entry. *NOTE: OIH is trading slightly above it's 50-ma (Bullish). So my outlook is that a near term rally in the Euro (weakness in dollar), seasonally favorable chart for crude oil and the technical support levels for the drillers...is keeping my bias to the upside. I've suggested setting a STOP on PDE @ $28. I continue to see oil rallying to $90.

Dollar - Euro - Gold

Gold in Euro's makes new high. Investors in Europe, and for that matter, Britain (where gold is back above the 700 level in British Pound terms), are buying gold at a torrid pace because they are afraid!

It is really that simple. One can argue that their fears are misguided, exaggerated, overblown, or whatever expression that they might choose to employ but no one can argue against the fact that there is palpable fear in Europe right now. Gold is doing what it always does at such times and always will as long as confidence in paper money evaporates.

Mid Day Update On Euro

Euro is rallying after bouncing off of the 136 level, dollar is around 79.7. Meanwhile the commodities are back oil @ $77, gold 1,119 and silver 16.12. RIMM is down today as is RIG...take advantage of these lower prices. JPM up, GDX & SLW are up huge. I still see some more upside on the commodity trades, my upside target on the Euro is 140 and on the dollar 78 on the downside. Follow me on Twitter for more upto date info...

RIMM Up - Markets Down

Research In Motion (RIMM) continues to be strong today, hitting $70 resistance, the Bull Flag pattern should carry it to $72.50. Consider writing calls against position. Entered Itz Pix Oct 9th @ $69.50.
Near term $72.50, Itz Pix longer term Price Target $100. See previous posts >read   >>read
Wedbush Morgan Started At Outperform Price Target $90---
RBC Raised To Top Pick From Outperform Price Target $120

Interesting Commentary

Tony Dwyer makes some compelling points on the S&P500 valuation and Greece.


Investment advice, with Joe Terranova, Virtus Investment Partners, I agree with his outlook on commodities. He likes the OIH, whereas I've been suggesting Transocean (RIG) & Pride Int'l (PDE).

Euro Testing 136 Level

Consider reducing exposure on $AUY $FCX $PDE $RIG $PGH $PWE $RIG $SLW $SU as Euro breaches 136 level Chart
EU approves deal on Greece debt will finalize next week...basically offering moral support, but no details. Euro selling off. >>READ
Keep up to date on my Twitter posts link

Euro - Dollar - Impact On Markets

Federal Reserve Chairman Ben Bernanke spoke on his long term stimulus exit strategy Wednesday mentioning the eventual “need to tighten financial conditions” by raising short-term interest rates.
Keep an eye on the Euro if European Central Bank disappoints tonight and tomorrow, you have a much stronger move higher on the dollar. $XEU SUPPORT 136...suggest paring back commodity positions on break below. Financials strong today...as I noted yesterday...BUY JPM!!! currently up 2.6% intraday.

Update: JP Morgan (JPM)

Nice chart on JP Morgan Chase (JPM)-- S&P gives JPM a very positive 5 STAR (out of 5) STRONG BUY rating. I suggested a buy last week and continue on JPM.

Ut Ohh?!.... $SPXA200R

One of the indicators I use that has provided a fairly accurate signal for overbought/oversold conditions on the S&P500 has been the percentage of stocks trading over their respective 50, 150 & 200 day moving averages. In this chart I've annotated, note the overbought (SELL) conditions back in 2007 and then the extremely oversold 'Trifeca' BUY signal March of 2009. This week we got a break of the 75% level on the $SPXA200R a SELL. The $SPXA150R has already been several days in Sell mode...however the 50 day percentage ($SPXA50R) is now in oversold, a shorter term signal. What does this all mean? The $SPX should see a short term reversal soon, perhaps a bounce off of the 200-ma around 1020/1025. Watch to see if the 200 percentage gets back above the 75% level, if that occurs. All in all the markets are more likely going to be choppy and see side ways to lower trending direction. Obviously the weaker dollar rally has ended (for now) as the weaker Euro has hurt equities. I'm watching the 136 level and for a bounce along with the 81 level as resistance near term on the dollar. This week should bring more clarity & direction as to the markets uncertainty.

Dow Jones US Platinum & Precious Metals Index

The Dow Jones US Platinum & Precious Metals Index is finding support around the 200-ma. While the Euro ($XEU) is holding above support around 136 level.
$DJUSPT Info: link link

Gold, Silver, Copper & Oil

I've posted several charts today using the Gold/Silver Ratio (GSR) along with a few short term and longer term inflection points and the returns of Gold, silver & copper. Also, a chart I've used several few times comparing the move in gold against crude oil and a 4 month lag period.
Gold / Silver Ratio (GSR): When a ratio is increasing, it means that the numerator is increasing faster than the denominator OR the numerator is not dropping as fast as the denominator. Outperformance means either moving up faster or not dropping as quickly. This is why I included Gold and Silver price history at the bottom of the chart so you can see the relative movement.

Gold for most investors equates to 'safety' in times of uncertainty, Silver straddles the line between a currency and a commodity since it has more of an industrial use than gold. Copper is the most industrial of the metals.
Silver is much more correlated to positive economic activity (where we have sustainable growth in commodities as fuel for productive economic endeavors). This optimism typically occurs during times of leverage and liquidity. My call for 2010 has been that silver will outperform gold. However, in the shorter term the weakness in the Euro and rally in the Dollar has made traders back off of the 'carry trade'... I believe that we'll see this reverse course very soon.

Weekly Market Wrap

For those that not only follow me on my blog, but also on Twitter know I also Tweet with one of my favorite market traders-- Doug Kass of Seabreeze Partners. Earlier today he posted this on Twitter and I agree 100%!

Doug Kass said, "I AM NET LONG FOR THE FIRST TIME IN MONTHS, COMING UP... it MIGHT BE TIME TO BE GREEDY AGAIN ON THESTREET.COM."  link

I'd written in yesterday's blog post that we would see a selloff early and a closing rally. Question now is will this carry into Mondays trading? Below I posted several annotated charts and expectations going forward. Suncor Energy (SU) entered the Itz Pix portfolio and I've also posted the current portfolio and to date returns. FYI going with the Saints in the Super Bowl...always picking the underdog...have a nice weekend!

In this CNBC video clip go to the 11 minute mark and see what Doug Kass had to say...

Suncor Energy (SU) Enters Itz Pix Portfolio

As per yesterdays blog on Suncor Energy (SU) it enters the Itz Pix Portfolio today @ $29. Suggest taking a partial position and watching how the markets play out over the next week or so.

Update On Dollar, Gold, Oil & S&P500.....

Below are several updated charts  to those of last week (1/28) of the dollar, gold, crude oil & the S&P500 index. Today's market reaction to the PIIGS CDS problems caused the Euro to fall and the US Dollar to rally. I've been stating for several weeks now that the dollar was in a short term rally phase and would more than likely run to the 81 level. I'd been looking for gold to find support at the $1075 level which it did and then to pull back to the $1025 level, with a pause at $1050. Crude oil is still managing to hold within that trendline. The S&P 500 ($SPX) is also close to my 1050 target. Tomorrow we get the monthly Jobs Report prior to the open, so far with the ADP Report and weekly claims numbers look like weakness should prevail. I'm expecting the markets to continue to sell and rally later in the day. Bottom line this is Fear dejavu and I would suggest investors not panic and sell. Rather use this weakness to add or buy. This correction since the March bottom is welcome, as a matter of fact, I see close similarities to recent market selling to that of July 2009. This is FEAR and as we witnessed last year, sound minds and fundamental sense will comeback... take advantage of this opportunity. One of those opportunities maybe Suncor Energy (SU) which is on the Itz Pix Radar...more to follow!