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I, SUMIT KUMAR WAGHMARE, AM WORKING AS A SENIOR RESEARCH TECHNICAL ANALYST IN A RENOWNED FINANCIAL ADVISORY COMPANY. I AM HAVING AN EXPERIENCE OF 3 YEARS IN MARKET ANALYSIS WITH MAJOR FOCUS ON TECHNICAL ANALYSIS. I HAVE AN EXPERIENCE OF WORKING IN USA STOCK MARKET, FOREX MARKET, COMEX MARKET AND... More
  • COMEX GOLD: 1450 ??

    GOLD REPORT

    Fundamentals:

    COMEX Gold finished lower this week (07/18/2014) from the first time in continuous rally in past six weeks. Gold dropped 1.68% to close at 1310.40 backed by an overall improved labor market report released on Thursday supported with an improved manufacturing report.

    The most important part of an economy is simply employment. The unemployment statistic is one of the most important numbers being studied by the Federal Reserve Bank. Their attempt to influence growth in the economy can only be proven out by growth in employment. This is because a growing economy means the need to produce more and in all cases increase hiring. But all the liquidity that is being added by the Federal Reserve Bank, even though it has plainly worked to boost the gold price over time, has had little effect on unemployment. Because most of the money is not reaching the economy, or the people in the private sector.

    Often times we read that the unemployment rate has dropped. But unfortunately it is the Labor Force Participation Rate that has dropped at a greater rate. So the real unemployment rate is higher than what is reported. Because the participation rate is the barometer that shows how many people looking for work have lost faith that they can find full-time employment.

    The Unemployment claims for the next week is expected to increase which would have a direct impact to the price rise in Gold. The unemployment claims may rise from 302k to 315k i.e. more than 4% increase is expected.

    Technical Report:

    GOLD COMEX CHART

    (click to enlarge)

    Gold is in consolidation phase for more than last one year between the range of 1170-1450. It is sustaining above 50% retracement level 1310 and also taking support at the 50 week exponential moving average at the same.

    Gold is expected to bounce from the retracement level of 1310 up to the level of 1375 which is the 200 week exponential moving average level. Later if it is able to sustain above the level of 1375 Gold might test the 61.8% retracement level of 1450.

    RSI of Gold is also trading with positive bias at 50 and is expected to further move to its resistance level of 70.

    Stochastic is also indicating bullish trend in Gold as %K(50) has crossed over %D(200) level.

    Overall COMEX Gold is looking bullish on chart with positive fundamentals. It is sustaining above 1310 level and is expected to test the level of 1375. Further breaching this level with positive sentiment it might test the level of 1450.

    Jul 21 6:55 PM | Link | Comment!
  • US Pending Home Sales

    Pending Home Sales is an index created by the National Association of Realtors (NAR) which track the homes sales in which a contract is signed but the sale has been

    not yet made. Released during the first week of each month, the index is based on signed real estate contracts for existing single-family homes, condos and co-ops. A

    pending sale is not counted as a sale until the transaction is closed. Hence, one must understand that pending home sales index is a leading indicator for existing

    home sales, not new home sales. It only helps to predict actual home sales activity as pending home sales generally become existing home sales one to two months later.

    The index not only provides a gauge for housing demand, but also economic strength. An increase in new and pending home sales would imply that demand for housing is

    increasing. Other factors remaining constant, this would imply that the economy is recovering as people would purchase homes only when they are confident about their

    prospects and the country's economic prospects in general. So, housing is a very important consumer confidence indicator.

    An increase in home sales shows that the economy is growing, and other things remaining constant, the Fed would curtail its economic stimulus program. This would mean,

    other factors remaining constant, there would be lower liquidity in the financial markets, interest rates would rise, and bond prices would fall.

    Housing also impacts several other sectors as an increase/decrease in demand would impact construction companies, home furnishing and appliance firms, would create

    jobs in other sectors or otherwise, effectively creating a multiplier effect throughout the economy.

    Increase in the index shows that people are in good financial positions to purchase new homes. Furthermore, the multiplier effect can be seen from the realtor's point

    of view and also from the home buyer's point of view. Each time a home is resold, it will generate income for the realtors. Increase in income will lead to more

    consumption opportunities. As for the home buyers, consumer spending will also increase since they will have to purchase furniture and electrical appliances to furnish

    the new home. Trends in the pending sales data also has direct influence on stocks of home builders, mortgage lenders, and home furnishing companies.

    A number of studies have attempted to quantify the "multiplier effect" housing has on the broader economy. The National Association of Realtors (NAR) estimates the

    multiplier effect to be between 1.34 and 1.62 in the first year or two after the initial housing purchase. This means that each dollar increase in direct housing

    activity will increase the overall GDP by $1.34 to $1.62.

    Pending home sales rose sharply in May, with lower mortgage rates and increased inventory accelerating the market, according to the National Association of Realtors.

    All four regions of the country saw increases in pending sales, with the Northeast and West experiencing the largest gains.

    The Pending Home Sales Index,increased 6.1 percent to 103.9 in May from 97.9 in April, but still remains 5.2 percent below May 2013 (109.6). May's 6.1 percent increase

    was the largest month-over-month gain since April 2010 (9.6 percent), when first-time home buyers rushed to sign purchase contracts before a popular tax credit program

    ended.

    Despite the positive gains in signed contracts last month, the affordability and access to credit is still an area of concern for first-time home buyers, who accounted

    for only 27 percent of existing-home sales in May and typically carry student loan debt and lower credit scores.

    The next Pending Home Sales Index will be on July 28, which would provide a broader picture as to increase or decrease of overall sentiment in Housing Market.

    Jun 30 5:41 PM | Link | Comment!
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