Gold & Equities Going Into September

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Charting the course for what to expect in September, with Paul Hickey, of the Bespoke Investment Group.

Sentiment & Technical Indicators

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Technical and Sentiment indicators suggest a short term low is in place.

Silver Outlook

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Yesterday ITZ posted a chart of the Silver etf, SLV. Suggesting that a descending triangle pattern was developing. However, with today's breakout on silver that chart, which was borderline Symmetrical Triangle, has now given a different outlook.
The original thought was that since silver is not only a precious metal, but an industrial metal, a slowdown in the economy along with negative headwinds that silver would see some sort of pullback.
So what happened today?
Silver had a very powerful breakout today as investors are seeking assets that are safe and will retain value during a debt crisis and economic uncertainty.
Looking at the gold~silver ratio for the last 20 years it has been in a 50-80 range, currently around the 66 level. link
Silver is seeing demand at these price levels as it's historically cheap relative to gold. If the ratio came down to the levels it was in 2006 it would be close to $27 an ounce. Silver is soaring because investors are realizing this is a hard asset, it's money, and it's historically cheap compared to gold.
Recent price targets for gold by major brokerages have cited $1300. So, even if the gold/silver ratio remains at the 66 level, that would place silver at about $19.70...silver is currently at $18.92.
ITZ favorite stock in the silver & gold miner sector has been Silver Wheaton SLW. It's currently resting at major resistance $21.50. Technicals have an ascending triangle formation set up; more than likely if silver continues its breakout, SLW should follow & break over resistance. Upside PO $26, with the 120-ema providing advantageous entry points.

A look at gold and silver, with Dennis Gartman, The Gartman Letter.

Off The Chartz

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Insight on when the selling will stop, with Jeff DeGraaf, ISI Group chief technical analyst.

Downside Risks For Silver

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Silver (SLV) is setting up a possible Descending Triangle Formation.

Silver Wheaton (SLW) hit resistance at $21.50 level again and appears to want to retrace towards its 120-ema.

ITZ Morning Update

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Markets look ugly this morning, several concerns out of Europe of concerns. Britain faces a genuine risk of slipping back into recession and the Bank of England’s growth forecasts for the next two years could be too optimistic, a member of the central bank was quoted as saying on Tuesday.
Martin Weale, the newest member of the Bank of England’s Monetary Policy Committee, reportedly told the Times newspaper that rising unemployment, falling house prices and a banking crisis could push the U.K. economy into a double-dip. “I think it would be foolish to say that there’s no risk of [a double-dip],” he was quoted as saying.
Weale reportedly told the paper that the bank’s growth forecast for around 3.2% in 2012 may be too optimistic. He was also quoted as saying that we was “comfortable” with the Bank of England’s low interest rate policy.
Gold future are down about $15, unable to sustain upward momentum, as equity-market weakness and broad dollar gains fueled selling pressure.
Crude oil is also getting hit this morning, down $1.32 in futures. "Just when it seems oil is going to rally on strong economic optimism, it gets crushed with the realty of gluttonous supply," wrote Phil Flynn, analyst at PFG Best, in a note. "When it gets ready to fall apart, like in the emergence of the latest chapter in the economic crisis, some central bank supports it with a flood of printed money."
Itz highlights last week that gold would find near term support @ $1200, possibly testing the 150ma's. For crude oil $71 level was the downside objective. It appears that the S&P 500 is wanting to retest the recent lows 1,010. a break there and the Fibonacci Retracement levels come into play 945 & 878. Low market volume & a series of economic & data reports- headwinds over the next several days will pressure markets.

Weekend Review

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Several key geopolitical events this weekend that should move markets Monday morning. Iran activated it's long delayed nuclear power plant this weekend...expectation had been for some possible Israeli resistance that has not (yet) developed. But still most investors (oil traders) were somewhat nervous going into the weekend. Now Sudan has announced their plans for nuclear energy. >>LINK Also news of Iran unveiling an unmanned 'drone' the same weekend was timely...hmmm? >>LINK

Australian Elections: the opposition Liberal coalition has captured 72 seats in the 150-seat Australian parliament while the incumbents in Labor only have 70. However, with five seats going to smaller parties, it looks impossible for either Labor or the Liberals to form a majority government. Keep an eye on the Australian Dollar, but that said there could be a move on the mining tax.
The fate of a proposed mining tax in Australia, the world’s biggest exporter of coal and iron ore, remains in doubt after no clear winner emerged from the weekend’s election, heightening uncertainty for investors. >>LINK  ***Note, keep an eye on Itz Pix stock Walter Energy WLT, down from $80 resistance.



Bottom line, expect volatility in the Australian Dollar, also for gold, silver and the metal/ore miners over the next several days.

Interesting comments on Euro & gold from Ashraf Laidi, Chief Market Strategist at CMC Markets >>LINK

Week ahead for Oil & Gold

Crude Oil...Heading Lower

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Inventories are at 20-year highs, and the prospects for demand growth are fading. Prices are still too high given the fundamentals. Crude oil fell to a six-week low as rising U.S. jobless claims bolstered concern that the economic recovery in the biggest oil-consuming nation is faltering. Rising inventories and falling prices may increase pressure on members of the Organization of Petroleum Exporting Countries to stick to their production quotas. If prices go significantly below $70 with some momentum and stay there, then they take action. Somewhere in the $60 to $70 range is where they would start cutting real production.
One possibility that oil could go up near term is the pending supply of nuclear fuel to Iran's first atomic energy plant from Russia, geopolitical risks near term.

Bond Bubble?

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Jeremy Siegel, a professor at Wharton, tells CNBC why he thinks we're headed toward a bond bubble

Go to the 8 minute-30 second mark for Doug Kass' comments on bonds. He's been recommending averaging into the TBT etf which shorts treasuries.

Head & Shoulders Top?

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A look at the head and shoulders topping pattern, a classic bearish chart pattern created when the market puts in a series of lower highs and higher lows, with Brian Belski, of Oppenheimer & Co.

Cramer's Take On the Hindenburg Omen

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Itz Stock Chartz reported on Monday that the market had triggered an "unconfirmed" Hindenburg Omen signal. Now last night James Cramer on Mad Money was somewhat off on his reporting. He stated that the signal, August 12th 'confirmed' when in fact we have yet to see a confirmation. According to the omen, you need at least 1 or more subsequent same day signals within  a 36-day period of the first...which was last Thursday.
Now Cramer dismisses this fairly accurate signal, saying it doesn't tell you 'when' the sell-off will take place, true. Itz stated that one shouldn't dismiss the signal, but use it as a yellow flag warning and one should use other indicators to focus on a possible market decline. Its common sense that no trader or investor should rely on just one indicator.
Here's a recent up to date report from Robert McHugh Ph.D;President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania. The report provides some recent historical data & statistics.
>>LINK