Monday, February 28, 2011
Gold This Morning: Shut It Down --Jonathan
Sunday night opened up robustly to the upside and given the size of the offers there were some serious players hanging around deplorably making very large offers above the market...do they really think they can still fade us? Having failed on that attempt to ruffle buyers, around 0300 this morning the order came in to run the stops and indeed they did taking prices down ~$10 bucks...Boo! On to the facts...GSR ~42.10 tells us the liquidity remains in force particularly as silver survived the dreaded options expirations last week. RSI at ~68 while hardly as muscular as we found it last week is now in the phase where staying power takes over; we are in a long race. Gold open interest as of Thursday is ~510,000 leaving still significant headroom. The COT report for last week continues to have net buying by large specs offset by commercial selling, no surprise; small specs were active net buyers. Gold option volatilities remain very cheap here and if you are directional, call spreads remain compelling. Today: We have recovered almost all of the early morning breach, so let's set our target now for new contract highs in the mid $1420s.