Four Charts For Monday

OK, let's get the week started.

First up, the USDX continues its ugly ways. You can expect some buying to emerge somewhere down here which may cause a brief rally back up toward 77 and change. However, this chart looks to me like something that wants to accelerate to the downside. Below 76.18 you know there are a lot of stop orders so we could see 75 pretty frickin quick.

Overnight news that Saudi can pretty much replace every single barrel of lost Middle East production served to put a lid on the rally at about $100. Hmmm....makes you wonder what would/will happen if/when the revolutionary fervor takes hold there but I digress. For now, this chart makes me think that we will soon get a pretty stout move in either direction. Given all the turmoil, it will probably break higher as "War Breaks Out" is always a less more headline than "Peace Breaks Out".

Onto our precious precious metals. Conveniently, these two charts have begun to show a rather clear pattern. First, in gold, if you look closely you'll see that for the past 10 days or so, we've closed higher than where we've opened. This is gives us a very strong picture of real, significant demand. The EE has clearly decided that they'd like to keep things under 1420 as long as possible but such strong demand will, eventually, overwhelm them. Remember, Friday gave us the 2nd highest weekly close of all time. This is extremely significant, as well. I get the distinct impression that this is a market about to burst  back toward the alltime highs of early January and beyond.

Silver is equally compelling. Rarely have I seen such a sharp line of EE defense as is clear on this chart. Four times in the last three days we have tapped...and I mean tapped...33.75 and each time fresh selling has quickly emerged. The fun part is that Blythe has now set a trap for herself. Everybody and their brother can see the line at 33.75 so WHEN that level is finally breached, there will be lots of fresh buying and lots of shorts covering. Watch that level closely!

We're sitting at 1411 and 33.53 as I wrap this up. I've got a feeling that this is going to be a pretty interesting day so keep an eye on things. More later. TF

10:55 EST UPDATE:
Looks like there were, in fact, a few stops above 33.75 in silver. Now, where do we go from here? Probably higher still as Blythe finds herself in an increasingly tight position. All of the fresh paper that she issued last Thursday is now well under water. HAHAHAHAHA!