Founders Note: Buy Season Warm up (NO CLASS TODAY)
Gold, Silver, and Copper CTA Data
***NO SUNDAY DISCUSSION***
Guys,
Am very behind on other endeavors and cannot make it for a discussion.
But want to share some metals thoughts. Obviously the market is now in short covering mode. Pls excuse the rough flow.
Gold:
Micheal Moor’s $1687 level that served so well is now lower. And we are above it
Translation:
Bullish here for a $50 move over the next week or so.
Buy pullbacks that do not trade below $1657.80 or settle below $1667.80
Below $1657.80 bearish.
Between the 2 numbers, neutral.
Remember, it is not buy season. So if it does rally, be grateful as it is against the odds…
Silver Notes:
The EFP is now normal again, implying this is short covering by funds ( China and US) once again. All that means is the market is not having a physical short squeeze. It does mean the banks are starting to make some serious money playing the long side against the funds. EXACTLY LIKE THEY USED TO ON THE SHORT SIDE.
The CTAs were the previous shorts getting killed. Now it is the Shanghai trader types, which are a little bigger. The fish getting reeled in are growing a little.
Which in turn means this can go higher before lower. It also means historically that the market will experience bigger ranges in both directions. The last 4 price spikes like this were funds getting hammered. We discussed several of these CTA short covering rallies. No real news, no events, no nothing to trigger it except nervous shorts.
Right now there are still almost no funds long metals compared to historical positions. BUT it is end of year, and allocations for the long side are not coming in yet.
Little plays like this attract bigger players.. and if it keeps up you start to get real longer moves. The best most recent analog I can give you is XOM .
Look at a chart from last year around mid 2021.. Constant spikes and washouts. Big rollercoaster ranges that eventually show accumulation on dips. Then a bigger rally. Players do not just come in and buy. They massage their buying. an algo buys, then stops. A market gets comfy in a range, then it breaks out. Silver is still in a range.
Also: do not get attached to silver vault data anymore. you could see silver rally as metals makes its way back into the vault. What’s it mean? It means that fundamentals do not take hold when you want them to.
Copper Instead of Silver:
Right now I’m just telling you a story, but this is on my radar for trading bias
The first thing with a real physical problem, if one comes, will be copper, especially with China possibly reopening. But Silver will move more. Remember, Goldman is all over this physical thing.. they use code words like “supply deficit” to mean short squeeze. If Oil goes up, Copper will be next on their list to press people with. Here’s them setting the table 3 months ago.
Buy Season
Take this to the bank. With China possibly reopening and the Fed maybe backing off hikes, the commodity banks are drooling. Right now Goldman, JPM, and others like them are getting ready to do a full court marketing press on their client base to put them into oil, copper, and then Silver and Gold.
IF their client book shows interest, you can bet the banks will then start buying ahead of client orders. If the clients do not bite, then the buy season will be tepid outside of short covering rallies
That is how it works every year. And here is their first warning shot…