Here below the bullion weekly technicals from the German team. They remain trapped in the range and therefore they are hedging their bets and staying neutral.
We have this on going price consolidation and pick up in day to day volatility for equity indexes that is normally associated with the build up of pressure needed for the next directional move. Within the consolidation range market internals of sector weakness and strength are normally the best judge of that direction rather than price. The internals, for the moment, are showing renewed weakness in the cyclical sectors that lead the recent bull leg higher. Some of the cheer leading cyclical stocks have already fallen by nearly 8% from their recent highs. Price wise we see the reluctance of participants to push the indexes higher on good news. I could go on but lets leave that to another post or better forum pages.
Back to the bullion. The positive correlation of recent years with the bullion asset class being lumped in with ‘risk on’ is continuing, for now. The bullion for moment remains trapped in her cyclical bear price range but this range is narrowing. Like equities she appears to building for breakout. The positive correlation of recent years implies a break downward but longer term correlation is a negative correlation not a positive one so the question remains when will the long term negative correlation reassert and when will the secular bullion bull re-emerge?
Near term, bullion priced in euros looks the most interesting long bet to me with bullion priced in jpy the most interesting short bet depending on which side you are swayed by.
Here the report:
BullionWeeklyTechnicals04022013
Andorra, by the way, is snowed in once again. Therefore all lifts shut and no skiing allowed as too much snow which is very annoying.
I’m reminded of the sailor lost at sea who said. “Water water everywhere but nothing to quench my thirst”.
All the best from a very frustrated skier.
Rich
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