Don't Trust Today's Upturn in Gold
In my last post I mentioned that JNUG performs better when it closes above the Hull Moving Average . Today it moved decisively above the Hull, which I'd usually take as a bullish indicator. However, on this occasion, I don't trust it.
The price of gold tends to move opposite the market. The market is down today for reasons of seasonality . Today (June 12) is what the Stock Trader's Almanac designates a "bear day"-- a day of the year on which the market has historically declined more than 60% of the time. However, it's an isolated bear day. Seasonality favors an upturn in the market tomorrow (June 13) and Friday (June 14). Friday is a "bull" day-- a day when the market has historically risen more than 60% of the time. There are several more bull days next week. I expect weakness in the price of gold as the market rebounds.
Gold also tends to move opposite the dollar. The dollar is showing weakness today, breaking downward through some critical support levels. But in my experience, market movements on isolated bear and bull days can't be trusted for purposes of charting. I usually ignore moves through support or resistance on these days. The dollar may rise back above its supports tomorrow.
If you're feeling lucky, you could even try shorting gold by buying the Junior Gold Miners' Bear fund (JDST). I'd only try a one-day short play, however, because even if the dollar does move upward tomorrow (an uncertain prospect), it may soon return to weakness ahead of the Fed meeting.
As always, this is just an idea and does not constitute investment advice.
The price of gold tends to move opposite the market. The market is down today for reasons of seasonality . Today (June 12) is what the Stock Trader's Almanac designates a "bear day"-- a day of the year on which the market has historically declined more than 60% of the time. However, it's an isolated bear day. Seasonality favors an upturn in the market tomorrow (June 13) and Friday (June 14). Friday is a "bull" day-- a day when the market has historically risen more than 60% of the time. There are several more bull days next week. I expect weakness in the price of gold as the market rebounds.
Gold also tends to move opposite the dollar. The dollar is showing weakness today, breaking downward through some critical support levels. But in my experience, market movements on isolated bear and bull days can't be trusted for purposes of charting. I usually ignore moves through support or resistance on these days. The dollar may rise back above its supports tomorrow.
If you're feeling lucky, you could even try shorting gold by buying the Junior Gold Miners' Bear fund (JDST). I'd only try a one-day short play, however, because even if the dollar does move upward tomorrow (an uncertain prospect), it may soon return to weakness ahead of the Fed meeting.
As always, this is just an idea and does not constitute investment advice.
Comment:
The dollar is trading quite a bit higher late in the day, whereas gold is fairly flat. I expect gold to take a hit tomorrow morning as gold prices catch up to the dollar's move. I took a small short position earlier today when JNUG reached its peak, and I'll short it a little more before market close.
Comment:
The dollar did rebound late yesterday, but had reversed course by market open, so JNUG opened slightly higher. I liquidated my short position and actually made a small profit because I picked my entry and exit points well. JNUG is looking like a good long bet right now. (It usually is, in June.)
