It is hard to be a technical analyst or chartist these days. What are you going to do with the still evolving figures about what happened last Thursday? Louise Yamada has a bit of advice to her TA colleagues: “just put your thumb over it” the price blip, she reportedly has said. (I learned this from McClellan Market Report group, a chartist outfit, whose Tom McClellan in the MCOscillator raised the question of what to do with May 56 data)
He notes that actually working out how to do this thumb covering mathematically is not so easy. What will you do with the busted trades? what will you do with the trades which wrre out of line but not off by a full 60%?
It is not too surprising that a woman TA has taken the lead in sorting out the chartists’ dilemma. Women are ultimately not as purely mathematical as men. They have differently-wired brains, although I am not sure I have any more right to say this than Larry Summers did. Women don’t as well in advanced mathermatical theory because they are not as autistic or prone to Alsperger’s Syndrome. Women don’t collect and remember baseball statistics.
Having gone to the Bronx High School of Science, and uncertain of what I wanted to major in when I arrived as a freshman at Harvard, I enrolled in a course in three-dimensional trigonometry. Oy vey. There were no other women in the class and I was in over my head big-time. I quickly switched to a course in astronomy taught by the only female full professor at Harvard at the time, Cecilia Helena Payne-Gaposhkin. She taught cosmology which while a “hard” science is also intuitive and surprisingly unmathematical.
Now here are some numbers, just to show that I am not really a softie. The price of gold hit $1249.40 before falling back. That means either that this is a barrier to further rises or a trace to be kicked over en route to $1250. As already noted, my TA newsletters (one noted above) are in disagreement about the future trend of the yellow metal. The American one is bearish and the European one bullish. That may have to do with the currency they price gold in on their charts. It has fallen back but very modestly.
The Euro meanwhile fell below $1.25 before recoving. Again, is this a hurdle or a straw? No idea.
Indian inflation hit 9.59% last month. Will it hit 10%? My guess is yes, but I may be wrong. If this continues you can see lots of gold trading but I am not sure if the bracelets will be bought or sold.
China’s market is now off 20% from its high last autumn, formally in a bear market according to the rules. Is it time to buy, as Mark Mobius told Bloomberg? Or is the trend your friend? Will Chinese buy gold too? Who knows?
Meanwhile the markets went to ground last week, showing flight to quality (or perceived quality) according EPFR fund flow trackers.
As Greece became a Cassandra, “investors sold perceived riskier asset classes during the second week of May,“ the Cambridge MA service wrote.
“Outflows from High Yield Bond Funds hit a 5-yr high while Emerging Market Equity Funds suffered their 2nd straight week of net outflows. Global Bond Funds saw their 54-week inflow streak come to an end while flows into US Equity Funds hit a 19-week high, nudging year to date flows into positive territory. Commodity Sector Funds set their second consecutive inflow record, with a gold ETFs again driving investor interest, and bringing the 3-wk inflow total for commodity funds to nearly $6 bn.”
It added: “Money Market Funds attracted a year-to-date high of $23.5 bn. It was the 1st weekly inflow into these low yielding and ultra-safe funds since the week [one] of 2010, which [has] seen $388.5 bn of outflows year to date.“
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