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Gold Triggers A Buy Signal



  • This leads me to believe that the market has once again taken the position that central banks will save the day, regardless of the crisis.
  • This crisis pretty much puts the US central bank under pressure to potentially be ready to lower interest rates if things deteriorate further.
  • Gold triggered a buy signal for the weekly when it closed at $1,558.
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Looking at the market's response to the coronavirus this past week, I can't help but see that the outbreak in China has exposed a seeming disconnect between the financial markets and science. We don't know how bad the crisis will get or how bad economically it will affect the world. However, stocks have figured out that, regardless of any unprecedented economic catastrophe or epidemic, the central banks can cap the economic impact by simply lowering interest rates in any type of crisis. That is pretty much what the S&P 500 and stock indices discounted these past few days, given this massive rally in the face of this developing global pandemic.

Courtesy: TDAmeritrade

The market, after making a low of 3,222 on the E-mini S&P, is currently trading at 3,349. This leads me to believe that the market has once again taken the position that central banks will save the day, regardless of the crisis. That is concerning, since there is only so much the federal reserve banks can do as we approach zero or negative interest rates. Not knowing the full extent of the damage economically, there is a very high risk in being complacent about the economic indicators, especially since we have never seen this kind of crisis develop before. SARS, for example, was smaller and had less of an effect already. Investors have been too complacent about the economic effects of the coronavirus. After initial fears about a big blow to the second largest economy, China, with 1.4 billion people, investors have taken the better-than-expected reports from various big companies, which came out before the coronavirus and assumed that all is going to be well. The market seems to be discounting the virus, assuming that it is under control, and even if it spreads further, that central banks will be able to cut interest rates and save the global economy. They have done so repeatedly since the 2008 financial crisis. Earlier this

To learn more about how the VC PMI works and receive weekly reports on the E-mini, gold and silver, check out our Marketplace service, Mean Reversion Trading.

This article was written by

Equity Management Academy is a team led by CEO Patrick MontesDeOca, a seasoned trader with over 30 years of experience. The team uses a proprietary AI system to identify investment opportunities and provide weekly reports for day, swing and long-term trades with precise entry and exit points. They lead the investing group Mean Reversion Trading. The group features reports and alerts from the AI Variable Changing Price Momentum Indicator. Features include: Weekly reports with actionable entry/exit points, research for trading futures, options, ETFs, indices and stocks, Early Bird Reports keeping the group ahead of market opportunities, and chat to discuss ideas. Learn more.

Analyst’s Disclosure: I am/we are long NUGT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

thank you I appreciate the insight, made money last month following your insight...
necto profile picture
I am ready for your jerk upstairs. If the price rises to 1600, then I will be very happy. my NUGT for 29.3 500 pcs. and if tomorrow rolls back again to 29.8-30.5 then I will double the position.
How can you have a weekly buy signal when the week isn't even over? Aren't you front running the trade?
Equity Management Academy profile picture
Yo franky!

No. That is called forecasting!

The VC PMI on gold may be signaling a buy but the chart suggests pros are taking money off the table here, so be cautious. For all we know, VC PMI stands for Venture Capital Problematic Misinformation Instigator and is yet another way the home team plays the trick, trap, fool and frustrate game with the general public. Be cautious here with your spec positions in gold.

Bottom line, gold and gold miners, from a technical standpoint are bias down, trendless, marking time, and still overbought.
askip3 profile picture
Fed injecting 50-100 billion/day to keep the charade going...that’s the real “trick/trap/fool/frustrate” you need to be prepared for
I heard the same from this 'genius' when gold was around 1,200 oohh 3,2,1, franky!!. And here's he again and always be bashing gold stating how 'the chart suggests pros are taking money off the table here, so be cautious.'. Same bearish argument. . . Yawnnn.
Wiekierc profile picture
I'm bullish on PM long term but doesn't the NUGT chart show it breaking below a rising trend line?
Equity Management Academy profile picture

That was negated.

Wiekierc profile picture
When and how? Even with today's rise I see it below that rising trend line.
Equity Management Academy profile picture

Can't you see it's breaking out to the upside?

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