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Gold Stumbles This Week, After Bulls See Hope

December Futures Forecast

Economic Reports and Expiration Notices

December 3rd, 2008 - Issue #457

Gold Stumbles This Week, After Bulls See Hope

by Jim Wyckoff

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February gold futures prices this week have seen strong selling pressure to thwart what was a promising technical "set up" that formed last week. Monday's big losses dashed bulls' hopes that prices were poised to press higher in the near term. Last week, February gold posted a bullish upside "breakout" from a three-week-old trading range on the daily bar chart, culminating with a five week high of $834.50 on Nov. 25. Price action then saw a "pause" to then form a bullish pennant pattern on the daily chart. Those technical developments had the gold bulls licking their chops and eyeing major psychological resistance at $900.00 an ounce. Then came Monday's big downside price action that negated the aforementioned near-term bullish technical developments. The next downside technical objective for the recharged gold bears is producing a close below strong chart support at $740.00 an ounce. Below that lies chart support at $730.00 and then at $720.00. On the upside, chart resistance is located at Tuesday's high of $788.20 and then major psychological resistance is seen at $800.00 an ounce. It would take multiple closes back above $800.00 to provide the gold bulls with some fresh upside near-term technical momentum.

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Monthly Futures Forecast: DecembArrrr

by Trade the News staff

Arrrrr! The month of November was even more blustery than the rough seas seen in October. With no one able to avoid the recessionary wave (with the possible exception of East African pirates), corporate results are expected to be ugly this quarter, as heralded by the monthly same-store sales due out in early December. Economic data is also expected to continue to plumb the murky depths, most likely prompting central bank chiefs to hack away at interest rates.

Setting Sales

The fortunes of equity markets may rest on the early returns for what most analysts are predicting will be one of the weakest holiday shopping seasons in years. November same-store sales, including the heavily hyped Black Friday, will be disclosed early this month. If retail sales manage to hold up reasonably well (as early Black Friday tallies indicate), it may raise thoughts of a Santa Claus rally in the minds of traders. Another indicator for holiday shopping traffic will be the quarterly results from FedEx on December 18. The package delivery giant's results and guidance will give some sign of how much holiday related shipping we can expect.

One other earnings report that will be of great interest: Goldman Sachs, whose estimated reporting date is December 16. With the unprecedented moves in financial stocks, including Goldman's plunge to its 1999 IPO price, the newly minted bank holding company may need to provide a brimming horde of earnings to placate nervous investors. However, consensus estimates predict that Goldman will report its first net loss since going public.

The US automakers will once again stand at the eye of the storm this month. On December 2, they will announce another dramatic round of declines in monthly vehicle sales, with year-over-year declines of over 30% expected. That same day, executives from the Big Three are expected to present the restructuring plans requested by Congress in exchange for government bridge loans. Congress will begin a fresh debate over whether to bailout the auto industry starting on December 5 with a hearing before the House Financial Service Committee.

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The monthly forecast covers important economic events for the month, thoughts on the recession, crude oil, central banks, economic data, the treasuries, and more.

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Economic Reports and Expiration Notices

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!