It’s Over… and the hedge funds will devour their young
As we used to say in the pits of Chicago, “This is going to get ugly.”
Today, we confirmed that “Ugly” has arrived.
Trade update: We exited long gold positions on the 18th at 990.2 basis spot.
Today (the 19th) we also had a major sell signal in spot gold. Very unusual that this happend so quickly after our exit signal. Like I said “Ugly” has arrived.
Downside targets (Fibonacci Retracements) for gold are:
1. $855
2. $800
3. $750
Stand aside and give these guys a lot of room as every hedge fund and commodity fund is bolting for the exit doors in all the commodity markets, including gold.
You have read on this blog before that the markets slide faster than they glide. Just look at Bear Stearns slide and several other recent meltdowns.
With the end of the month and the quarter fast approaching these hedge funds have got to have something to show for the month and the quarter. This slide may wipe out all their profits.
It all reminds me of what Bette Davis said in her 1950 movie, “All About Eve.”
“Fasten your seatbelts, it’s going to be a bumpy night”
Look for more bumpy markets and more volatility as the hedgies continue to bolt for the exit door that just got a whole lot smaller today.
Trade smart and trade to win.
Adam Hewison
President INO.com
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Taking Cues From Crude, Gold Closes Higher After Monday’s Late Pullback
March 18, 2008
U.S. gold futures finished slightly higher Tuesday on the back of inflation fears spurred by a bounce in crude oil prices, after heavy liquidation erased sharp initial gains that took the market to record highs on Monday.
Adam Hewison, president of INO.com in Annapolis, Md., said he would not be surprised to see some backing and filling in gold after the Monday pullback.
“Psychologically, the perception of the market has been somewhat dampened with the action yesterday,” Hewison said. “If we close lower than we did last Friday, then certainly there are going to be a lot of question marks since we might have seen a top on the gold.”
The active gold contract for April delivery on the Comex division of the New York Mercantile Exchange settled up $1.70 at $1,004.30 an ounce. It traded between a session high of $1,004.30 and a bottom of $994.80.
On Monday, panic buying amid turmoil in global financial markets due to a fire sale of Bear Stearns initially sent gold futures to a record high of $1,033.90. However, the April contract finished at $1,002.60 an ounce due to full-scale selling late in the session.
Hewison said that $960 an ounce would be a major support area for gold. But he expects gold to quite easily pull back below $1,000.
Rising crude oil prices also boosted gold, which is used as a hedge against inflation. U.S.
crude futures settled $3.74 higher at $109.42 a barrel after falling nearly $7 on Monday.
Comex estimated final gold futures volume at 161,956 contracts and gold options at 19,482 lots. Total turnover in Chicago Board of Trade electronic 100-ounce gold futures was 20,513 lots at 3:02 p.m.
After Tuesday’s pit trade session, the Federal Reserve slashed a key U.S. interest rate by three-quarters of a percentage point, a substantial cut but smaller than many in financial markets had expected, as part of an effort to hold off a deep recession and financial meltdown.
“The committee expects inflation to moderate in coming quarters, reflecting a projected leveling out of energy and other commodity prices and an easing of pressures on resource utilization,” the U.S. central bank said.
Comex May silver closed down 34.0 cents, or 1.7%, to $19.960 an ounce. It traded between a bottom of $19.850 and a high of $20.510.
The Nymex platinum contract for April delivery dropped $5.40 to close at 1,968.00 an ounce.
Reuters is a registered trademark of Reuters.
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