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Gold and Equty Futures Flip Amid Poor US Data


The S&P trims 36 points off the top; Gold adds 13.

Christopher-LemieuxSMBullion.Directory precious metals analysis 15 October, 2014
By Christopher Lemieux

Senior FX and Commodities Analyst at FX Analytics

US equities tanks amid horrible data. Core retail sales contract .2 percent, falling short of economist estimates of a gain of .2 percent. The Empire State Manufacturing collapses, falling from 27.5 to 6.2; and the producers price index (PPI) contracts .1 percent, missing forecasts of a .1 percent gain. The US 10-year treasury yield hits 1.91 percent, and the dollar down over one percent.

Just a day after I listened to talking heads on on CNBC say “now is the time to buy,” and “the economy is growing,” traders get another helping of economic crow pie.

This is what happens when margin debt reaches all-time highs, and the economic data continues to come in bad. Traders must unwind their leveraged positions to avoid (or because of) a margin call. The selling becomes a cascading waterfall that overtakes the markets.

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We are likely to see bottom feeders come out to buy some stocks, but keep in mind that the S&P is now negative on the year and has fallen from 2,019 to 1,839 since September 19.

Gold is pushing near $1,250 per ounce, while price action remains above key resistance of $1,236. A move to $1,252 is probable if new support holds.

The markets are losing faith in central banking, and for a while, I thought I was the only one invited to the party. Gold will shine as economic fundamentals weaken.


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