Our initial target at our October 16 sell signal on gold was $1,650 an ounce. The potential support there held for awhile, looking like gold might be building a base.
But our technical indicators remained on the sell signal, and gold has now broken to the downside from the symmetrical triangle formation within which it had been confined. As we have been noting the direction of such a breakout usually indicates the direction for awhile.
With the target of $1,650 having been reached and breached we told subscribers the next potential support is at $1,550, the level of its lows in December 2011, and June of last year.
Obviously many technicians were watching for the direction of the breakout from the triangle formation and jumped to the sell side with the breakout. Gold’s plunge has accelerated.
But it is already approaching our next target. It is again short-term oversold beneath its 30-day m.a., which will probably bring some buying from those again trying to catch the bottom.
If the next potential support level does not hold, at some point it will have to be considered whether this is just a prolonged correction, or if gold’s long bull market is coming to an end.
Subscribers to Street Smart Report: There is a hotline from last evening as well as an in-depth mid-week update on the U.S. market, gold, and bonds in your secure area of the Street Smart Report website.
Yesterday in the U.S. Market.
A quite negative day on a pick-up in trading volume. The Dow closed just about on its low of the day after an afternoon acceleration to the downside. The rest of the market was considerably weaker than the Dow. Trading volume on the NYSE was 0.8 billion shares traded.The Dow closed down 108 points, or 0.8%. The S&P 500 closed down 1.2%. The NYSE Composite closed down 1.3%. The Nasdaq closed down 1.5%. The Nasdaq 100 closed down 1.5%. The Russell 2000 closed down 2.0%. The DJ Transportation Avg. closed down 1.7%. The DJ Utilities Avg closed down 0.3%.
Gold plunged another $30 an ounce at $1,573.
Oil plunged $2.13 a barrel at $94.97.
The U.S. dollar etf UUP closed up 0.7%.
The U.S. Treasury bond etf TLT closed down 0.3%.
Yesterday in European Markets.
European markets mostly closed down yesterday. The overall Europe Dow closed down 0.5%. Among individual countries, the London FTSE closed up 0.3%. The German DAX closed down 0.3%. France’s CAC closed down 0.7%. Greece closed up 0.2%. Ireland closed down 0.2%. Italy closed down 0.8%. Spain closed down 0.8%. Russia closed down 0.4%.Asian Markets plunged sharply last night.
The Asia Dow plunged 1.6%.Among individual markets:
Australia closed down 2.3%. China closed down 3.0%. Hong Kong closed down 1.7%. India closed down 1.6%. Indonesia closed down 0.1%. Japan closed down 1.4%. Malaysia closed down 0.1%. New Zealand closed down 1.0%. Korea closed down 0.5%. Taiwan closed down 0.9%. Thailand closed down 1.2%.
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In the premium content area this morning: Gold signals. Stock market signals and recommendations.
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