Gold Alert: Time To Double Down
Summary
- “I have never seen this kind of volatility in the financial markets since 2008”.
- The coronavirus uncovered the stench beneath the bandage that was put on the financial markets since 2008.
- Of most concern is that we still don’t know how much damage has been done to the system.
- We are jumping into NUGT, which is a triple X velocity investment.
- Looking for a helping hand in the market? Members of Mean Reversion Trading get exclusive ideas and guidance to navigate any climate. Get started today »
Commentary
We use the proprietary artificial intelligence of the Variable Changing Price Momentum Indicator (VC PMI) to analyze the markets based on supply and demand. It is a time of major moves in the markets.
“I have never seen this kind of volatility in the financial markets since 2008,” Equity Management Academy CEO Patrick MontesDeOca said.
He compared the recent market moves to the 1929 crash in terms of the collapse over the near term in terms of magnitude.
Gold is trading last at $1600.60 as I write this report. It is up $31.60. Gold collapsed from $1691 on the 24th as we heard rumors that the coronavirus was spreading quickly and had moved beyond China. This was all the equity markets needed to break the back of the 11-year bull market. The coronavirus uncovered the stench beneath the bandage that was put on the financial markets since 2008, particularly in relation to record debt in the US and globally. Now, this black swan has changed the entire complexion of the economic system.
Of most concern is that we still don’t know how much damage has been done to the system. Last week’s historic reaction in the equity markets and in the US dollar, traders are realizing that this is not a good development for companies with an interest in China or who depend on products from China. Whether the virus is spreading out of control is irrelevant to the reaction that the financial markets are experiencing based on the fear that the world may be heading for a deep recession.
E-Mini S&P
Last week, opened up what I believe is a great opportunity in the precious metals markets. In relation to the equity markets, we see this down move as the first move of a new bear market. The extent of this move has put the market into an extremely oversold position and subject to swing rallies. It could bring the E-mini S&P 500 back up to the 3200 level. We’ll see what the market is as we look at the Sell 1 weekly level at 3224 and the Sell 2 at 3498. We are trading now at 2944. If we close above 3039, the weekly signal will activate 3224.
Gold
Courtesy: TDAmeritrade
Gold is trading last at $1599. The market is also approaching what appears to be a major level of support. The average price is $1594. Gold is trading above that daily average, so we have a bullish price momentum. Closing above $1608 brings in the weekly signal, which activates $1651 on the weekly basis. The short-term target is $1624. Under the market, we have support on the low of $1564, and right below that is $1537. If we come down into this level of $1537, we begin to link the daily and weekly numbers in a perfect alignment. We would be in a high probability area of finding demand. We are looking to add to our positions. We took an unexpected draw-down in our positions, but we are only subject to market fluctuations, not margin calls. We did not have a margin call. We are down in our positions, but it gave us an opportunity to add to our positions in this incredible opportunity in the metals.
NUGT
We are jumping into NUGT, which is a triple X velocity investment. It is a very volatile market. It fell about $14 this week and is in an extremely oversold position. When gold traded at about $1600, NUGT was at $33. We are now at $25.66, and I recommend to our traders to add to their positions in NUGT. I believe we are in a decade opportunity. NUGT is the best buy in a decade. Hold onto your position here as the market adjusts back up. We could see $1650 reached once again at the Sell 1 weekly level and the 50's target for NUGT. Then we can see where the market wants to go from there.
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
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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