Well Defined DownTrends

Well it is the Monday after the big job report. By now I am sure I do not have to get much into the report other than the fact that it did not live up to expectations, coming in at 209,000 and the unemployment rate did pop up a notch coming in at 6.2%. Did the markets react the way I thought they were going to, yes but not much punch. The only market that I was surprised with was the stock markets, one would think that the bulls would have came back in with a full head of steam especially with the headline that this was the first time in 16 years that the US has had job growth of over 200,000 in 6 consecutive months.

As far the US stock markets go, we started the week with a rebound of 75 points up in the Dow and 14 points in the S&P. A dead cat bounce or are we ready to rally right back up to new highs, like we have seen so many times in the past couple of years. We shall have a better feel in the days ahead.

There are a few markets that have been trending lower over the past few weeks, OIL-Euro-Stocks and yes the METALS- GOLD and SILVER. First a few words and then a look at the daily charts on Gold and Silver. I have been mentioning or bringing to your attention the support level in Gold at 1280 and that if it does indeed break, there could be a larger move to the downside, possibly down to the double bottom near 1180. Being that the job number was not enough to propel Gold above 1300, that was disappointing to me, especially that we did not even touch the round number. Take a look at the 2 charts below and you can see what is developing on the daily charts by the lines drawn. We have been making a series of lower highs and lower lows ever since 1330 in Gold and 2150 in Silver.

I don't know about you, but these markets do not look good if you are long and looking for upside. A drop below 1280, 1240 may be next and Silver could see $19 or lower if the $20 level gives way.

As for the US Dollar, it did set back on Friday after the report but did not follow through to the downside and it consolidated today around the 8140 level. This action leads me to believe that if we get back above the 8150 level, we could be in store for a larger dollar rally in the near future and that would not be a good thing for Gold and Silver. Time will tell!

One last thing I want to leave you all with is a view of the US 10 Year Note. The lines drawn on the chart show the reaction from the job report. With all the hoopla about rising rates here in the US, the 10 Year was back below 2.50% after the report and looks to be challenging the lows of the year at 2.44% real soon.

I have been saying this for weeks, "something is going on that none of us know about". Be careful out there.

TraderMartin