Cut The Bull: Is Gold A Safe-Haven Or What? | Elliott Wave International

Cut The Bull: Is Gold A Safe-Haven Or What? | Elliott Wave International

Shared via AddThis

The Battle continues....now going for $10 ...from $20

Continued from the previous post.... the band for Gold is getting narrower... In the last three days prices have been moving in an extremely narrow range of 935-945.....

The move should resolve soon....We are watching patiently ...from sidelines..... popcorn bag..refilled... A lot will depend on how the USD moves from here ....

Would history repeat itself.....

After 5 months of a rebound move (of over 52% in S&P500), we are at the higher end of the range in the current cycle....

Here's a chart which compares the current move in S&P to previous bear markets ...as is evident the 1929-42 depression bear market, went through multiple waves of strong moves in either direction, till the final low which was 89% lower than the high....

After a huge move from Oct 07-March 09 (i.e High of 1561 to low of 666 on S&P - a fall of 57%), the rebound has swiftly retraced 52% of the move..... We think the current move is overdone and its time for the market to take a breather... We are entering one of the most bearish period of the year - Sept & Oct. If the past record is something to go by, we expect the correction coming in early fall to be sharp and advise caution as markets enter this period....

As the Cross goes.... so does the market.....

The EUR-JPY cross has been a leading indicator of the risk appetite in the markets for months now.... As investors & speculators warm up to Risk, Euro has been rising smoothly and swiftly against the yen.... and as the risk appetite moves out, risk aversion sets it the cross declines equally in a smooth fashion....

Lets look at the two charts.... At the end of first week in June and Aug, as the correction in EUR-JPY has set in, the stock markets have followed the cross lower....and example of S&P500 to demonstration purposes....

So where do we go from here... how deep is going to be the correction now....How long is the correlation going to be valid.... These are all million dollar questions....and the cross deserves huge attention as this juncture.... as a break of previous intermediate lows around 126-128....would trigger a reversal of the big move the markets have experienced since the march lows...

Dollar Wise .......

US Dollar has been on a decline ever since the Fed declared its QE program in March sparking a huge rally in Equities.....For Months now... the short dollar, long commodities - Copper, Oil, Aluminium, Steel, Aussie Dollar, Canadian Dollar trade has been working wonders.... Is it time now that the party is coming to an end now....

After a five wave decline in US Dollar, we think the Dollar is poised for a reversal....As everyone and their brother convinced that the Dollar is doomed and can give five good reasons they should be selling dollars now, is the boat too tilted in one direction.... What happens when everyone in the boat turn to one side...it topples over....

We want to do the hard trade here...as the hard trade is the right trade.....

Long USD with the dollar index at 78.81 keeping a stop of 77.00. and lets monitor the trade....

Watch a battle - $20 only...

Battlelines have been drawn .... months and years of preparations....it all comes down to this.... $20 ....

We are talking GOLD - the yellow metal....

Just look at the two charts below... after months of grinding in a wide range, the band has shrunk to $20.... Its going to be a battlefield now.... a war will be fought...fiercely....one side will lose...one side will win.... the gains will be huge for one... the losses will be huge for another....

Sir, What do you do now.... take a bag of popcorn and watch the tussle.... when the results becomes clear ...join that side....We preserve our capital - both mental and physical and put it to use, joining the winning team.....

Classic Triangle formations....

Sweet ! Sweet !! .... ahh... Too Sweet !!!

We am talking Sugar folks.....

Sugar has seen a parabolic rise this week. The media is gung ho with articles that this is the perfect setup for Sugar to go higher - below average rains in India, while Brazil seems maxed out on capacity.... Seems to be the perfect setup for higher prices..... and roping the crowd into the Long Sugar trade....A hedge fund manager, Michael Coleman was quoted Bloomberg - Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages.

We think its a perfect setup to take profits in Sugar if you were already long..... Else go short on Sugar Futures.... We think Sugar has seen the top and its time to take profits and move on to another table..... and seek a better risk-reward....

Trade Calls

Short SGG - Sugar ETN - @ 66.25, Stop @ 67.50
Buy Put Options - IPSU - Imperial Sugar - with $10 Strike, Sept09

We'll review this trade in the next few days....

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaiyLiFv.LM0