Author Archive: Dan Norcini

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Silver Tacks on the “30” Handle

Silver Tacks on the “30” Handle

Short Covering from panicked speculators has led to a sharp rise in silver prices that is also drawing in new buyers who chase momentum. Note that hedge funds while remaining net longs, had also begun playing silver from the short side as the European sovereign debt crisis had most investors looking at the slowing economic growth environment as one in which to short both copper and silver.  Yesterday’s change of wording in the FOMC Statement sent shock waves through the shorts who ran like hell setting the stage for a signficant amount of technically related buying in today’s session which commenced in Asian trade last evening. I am expecting the […]

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Stealth Mode Rally in Silver Maybe not so Stealthy Anymore

Stealth Mode Rally in Silver Maybe not so Stealthy Anymore

I remarked last week that silver had been slyly working its way higher in very quiet fashion but was knocking on the door of overhead resistance. Today it broke that resistance and so far is doing it in convincing fashion. Based purely on technical factors, it should try to make a run at $29 where heavier supply awaits. That stands between it and a handle of “30” which will most certainly catch the attention of the momentum crowd. Take a look at the shorter term moving averages (not labelled). These are the 10 day and 20 day respectively. Notice that late last week BOTH MOVING AVERAGES crossed above the longer […]

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Silver Quietly Sneaking Higher

Silver Quietly Sneaking Higher

Silver has managed to rally right to the top of its consolidation pattern without any fanfare and I should add, the participation of a great deal of managed money flows. In other words, without the benefit of the momentum crowd. Call it a type of stealth rally. I find this very interesting as it is occuring against the backdrop of rising Treasury yields and a rising equity market. Clearly, for whatever the reason, something seems to be occurring on this inflation front that is moving below the radar screen of many investors. Could silver be sniffing out the first whiff of an inflation play? Take a look at the following […]

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HUI Chart – August 16, 2012

HUI Chart – August 16, 2012

The Mining Sector shares have shown some strong performance over the past three weeks having solidly rebounced from down near 390 moving up through several overhead resistance levels. A push through overhead resistance near 440 sets up a run towards a major resistance level centered near 460, which is the point that needs to be bested for a trending move to the upside to develop.

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Gold Retreats from the Top of its Trading Range

Gold Retreats from the Top of its Trading Range

Nothing doing on gold being able to break out from its consolidation pattern. Last week I showed a chart with gold right at the very top of that range and working into a heavy resistance level. Today it failed to better that resistance and was shoved back lower meaning that the odds favor it working lower within that range from here as we wait for the next round of buying support to surface. It should be able to garner buying near $1600 initially on down towards $1585 should that not hold it. Keep in mind that this market must have a spark to take it up and out of this […]

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Gold right at the Top of its Recent Trading Range

Gold right at the Top of its Recent Trading Range

Gold has pushed to the very top of its recent trading range as it works within the confines of its consolidation pattern noted on the chart below. It either mounts a solid breakout this time around or it will fall back towards $1600 and slightly below once again. I have noted that for the last 5 weeks or so, the lows have been slowly creeping higher hinting at market strength. It simply needs a spark, something to ignite it and push it past the strong selling pressure emerging between $1620 – $1630. Today’s strength is predicated on news out of China showing its economy slowing also. Traders are expecting the […]

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Gold and Silver Continue Marking Time

Gold and Silver Continue Marking Time

Both Gold and Silver remain in consolidation patterns with tightening ranges as speculative HOT money flows which are exiting are being met by value-based buying and accumulation by stronger hands. The loss of speculative interest in the precious metals over the last few months can be seen by the steady decline in overall open interest (the number of contracts open). Generally speaking, whenever speculators are interested in establishing positions in a particular market, the open interest will rise. When they are not, the open interest will fall. Look at the following open interest chart of gold and tell me which of the two above-mentioned possibilities is occuring? Answer – speculative […]

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Caution ahead of the Fed

Caution ahead of the Fed

With all the hype preceding this week’s Fed meeting, not to mention the usual circus atmosphere surrounding some potential action from the ECB, my advice to both gold and silver traders is to be EXTREMELY CAUTIOUS. The market has worked itself into a tizzy in my view as it salivates at the further prospect of additional liquidity measures being undertaken by both Central Banks. When markets are in this state of mind, you will end up either being a HERO or a ZERO. In other words, you are now in the precarious position of having your fate determined by the roll of the dice. If you get it right, and […]

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Gold Clears $1600 – Psychological Boost to Bulls

The ability of the gold market to push a “16” handle on the price can be considered a minor victory for the bulls. You can see from the chart below, that within its broader consolidation pattern, gold had been experiencing a somewhat tightening or constricting of its range. The upper boundary of that “mini-pattern” has been the $1600 level. The ability of the bulls to take it through this region gives them a very slight advantage over the bears in the immediate term and provides the possibility of a push towards more stubborn resistance beginning near the $1620 level. Keep in mind that every bit of today’s move higher was predicated […]

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Precious Metals Succumbing to Deflationary Forces Today

Precious Metals Succumbing to Deflationary Forces Today

Both Gold and Silver are under selling pressure today as the sell off in the grains seems to have pushed a large amount of hot money out of the commodity sector. Soybeans are currently locked at limit down as is the front month corn contract. Talk that Smithfield is importing corn from Brazil has sent supply side bulls scurrying for cover and demand side bears are pressing their case. The pool in the July was 112K at one time and is now down to 26K currently. In the November Beans, the pool is at 37K as I write this. Traders had been bidding up commodities in general of late as […]

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HUI to Gold Ratio Dipping Down Towards Undervaluation Levels Once Again

HUI to Gold Ratio Dipping Down Towards Undervaluation Levels Once Again

he breech of the 400 level in the HUI has brought out some further stop-loss related selling as well as fresh shorting by hungry bears in the sector. GoldCorp’s news from yesterday is still impacting the miners in general. That being said, the underperformance of the mining shares against the price of Gold is dropping this important ratio down toward those levels which have been considered as “undervalued” once again. While it is small consolation to mining equity bulls to see the value of their holdings being diminished once again, it does appear that we are entering a region that should engender value based accumulation sooner rather than later. In one […]

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US Dollar Looks Strong

US Dollar Looks Strong

The rally in the US Dollar continues not out of any particular set of strong fundamentals in the US but rather out of a general aversion to the Euro and by consequence, to the European currencies. While the Fed seems to be basically standing pat for the immediate moment, the Bank of England has announced another round of its bond buying program while the ECB has lowered rates. Given that backdrop and the lingering fears and uncertainty over the bailout mechanism put in place by the European finance ministers and political leaders, traders continue to bid up the Dollar. This buying is a reflection of the unease among traders over current […]

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MidWest US Drought Fueling Talk of Soaring Food Prices

The fierce drought that has gripped the lower section of the US corn belt and has been ravaging both corn and soybeans in the region has sent corn futures limit up today and soybeans for the front month July contract to a new all time high. That has sent shudders through the minds of some traders who are convinced that it is only a matter of time before all of this feeds through to the supply chain. REsult – higher grain prices meaning higher food prices in general. This phenomenon has gotten hedge funds back to buying commodities across the board this morning even with the equity markets careening lower. […]

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Payrolls Number Disappoints – Risk Off

Payrolls Number Disappoints – Risk Off

If you recall one month ago, when we got that abysmal jobs number, gold initially moved lower, only to then rebound with a ferocity that caught market watchers and traders completely off guard. Risk off trades were being slammed on as longs bailed out and bears began pressing the downside. Literally, on the drop of a dime, the entire complexion of the market reversed with the bears running for their lives as new longs entered the fray. The reason – the number was so crappy that everyone just “knew” that the Fed was going to immediately launch the next round of QE. In other words, the more rotten the economic […]

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