Gold and commodities wait on the dollar
By Colin Twiggs
October 11th, 2012 1:00 a.m. ET (4:00 p:m AET)
The Dollar Index rally recovered and is headed for a test of resistance at 81.00/81.50. Respect of resistance would confirm the primary down-trend. Reversal of 63-day Twiggs Momentum below zero also signals a primary down-trend; a peak below zero would strengthen the signal.
* Target calculation: 81 - ( 84 - 81 ) = 78
Gold and commodities await clear direction from the dollar which in turn is dependent on the inflation outlook. Spot Gold encountered strong resistance at $1800 per ounce*. A 63-day Twiggs Momentum trough above zero would signal a primary up-trend, while breakout above $1800 would confirm. Reversal below $1740 is unlikely but would warn of another correction.
* Target calculation: 1650 + ( 1650 - 1500 ) = 1800
The RJ-CRB Commodities Index has been de-listed so I am now using the DJ-UBS Commodity Index, which retraced to test support at 145/146. Respect would indicate another test of resistance at 150/152 — as suggested by recovery of 63-day Twiggs Momentum above zero — while failure would warn of another test of primary support at 125.
Brent Crude rallied off support at $108 per barrel and is headed for another test of $117. Breakout would advance to the 2012 high of $125/$126. The small 63-day Twiggs Momentum trough above zero suggests a primary up-trend.
* Target calculation: 117 + ( 117 - 108 ) = 126
I hope we once again have reminded people that man is not free unless government is limited. There's a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.
~ Ronald Reagan