DAN NORCINI'S TUESDAY COMMENTS

Hourly Action In Gold From Trader Dan

Posted: Mar 23 2010 By: Dan Norcini Post Edited: March 23, 2010 at 2:12 pm
Filed under: Trader Dan Norcini
Dear CIGAs,

A good commentary on the true state of the US economy is found in a quote by an executive of Home Depot. From Bloomberg:

“We are looking to continue to drive our traffic in the stores,” Craig Menear, executive vice president of merchandising, said in a telephone interview last week from Atlanta, where Home Depot is based. “Things are still difficult out there for customers.”

Wouldn’t know it listening to all the talk of “recovery” floating around out there. I still maintain that this so-called “jobless recovery” (by now I am nauseated every time I hear this oxymoronic term) is nothing more than an “L” shaped phenomenon, an economy that has reached a bottom but is crawling along sideways maintaining itself only by the continued infusion of massive amounts of liquidity. There is no sign of any serious job creation and as a result, retailers continue to slash prices in the hopes that they can attract the all-important but cash-strapped consumer into their stores.

I might add here that the continued growth in the size of Leviathan will suck in more and more capital that would otherwise be used for constructive purposes, furthering hampering growth in the private sector. This metastasizing tumor in Washington DC will be a drag on the economy for years unless the citizenry says, “Enough” and throws out those whose votes are feeding it.

As was the case yesterday, the Euro continues to hover precipitously above major chart support below the 13500 level. It has been holding with the result that the Dollar cannot muster enough upside strength to take out 81.50 on the USDX. This range bound activity in the Forex markets has been affecting gold which while higher today, is still effectively contained in a range as well.

It is a bit eerie seeing this sort of thing continuing day after day when the potential for a huge move in any of these markets exists at nearly any moment due to the tenuous condition of so many economies of the West. I am not sure what the catalyst might be but it is certain that there certainly is not lacking an abundance of possible events that could trigger a wave of buying or an avalanche of selling in the Forex arena that would impact the gold market. They have been relatively quiet as uncertainty and a lack of strong conviction hold sway but once a consensus is arrived at by the trading community, the next sharp trend will commence. For now, we wait and watch.

Euro gold remains very firm holding above the €800 level coming in at €814.177 for the afternoon Fix. Gold priced in British Pound terms is also strong holding above the €700 level coming in at £731.359 at the PM fix.

Copper cannot yet make it above $3.50 but does not want to stay down below $3.30 for any length of time either.

Crude oil is stuck between $83 on the upside and $79 on the downside.

These last two markets in particular should tell us quite a bit about where the consensus is shifting in regards to the overall economy. Lumber is also a key tell-tale market, but it too is in a range trade so it is not telling us anything either.

The HUI, while higher today, is still stuck in its range as well.

Even the Continuous Commodity Index, CCI, is mired in a trading range.

I am sure you are as tired of reading the word “range” as I am of writing it. What does all this mean – simple – uncertainty rules.

The only thing that does not seem to be in a range is the S&P 500. It is a mere 2 points from putting in another yearly high. Happy Days are apparently just around the corner for us all. With all the profits that the stock market has priced in for these companies, federal tax revenues should soon be soaring obliterating the deficit in record time. Before long the spending drunk politicians will be searching high and low for more ways to waste the new-found surplus.

DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/03/March2310Gold.pdf