Gold – Is it Time for a Breather?

The rally off the January bottom has been exciting for the precious metals bulls (if there are any left) as it has climbed some 30% and confirmed its uptrend forming a series of higher highs and higher lows.  Combine that with price being above a rising 200 day moving average and momentum in the bullish zone.

Some may be asking why the reference to a breather?  While I don’t put an excess amount of validity into rising or falling trend lines when they come together in a confluence with other indicators, they I find them compelling. In this case gold is running into resistance provided by the falling (red) trend line right at the same time important overhead, horizontal resistance is coming into play.  Using the weight of evidence approach, this area is warning we should expect a consolidation at best or pullback at worst.

There is nothing for the bulls to be concerned with here (yet) as we are in a strong uptrend but to take a breather and unwind some of its newly formed overbought condition and refuel for the next leg up. Looking to the left this area has the potential to bring a very large amount of (“I want to get out of this position so I can break even”) sellers so it would not surprise me to the price of gold chop around for weeks and maybe months. On the flip side of that investments that are trending strongly have shown the ability to slice right through resistance zones so what it actually does will only be known in hindsight. In the meantime, and to set the expectation of potential upcoming weakness, gold bulls need to take a chill pill. Because once this is over and price moves above both resistance levels, it should be smooth sailing until $1580.

Risk Back On - Trifecta Finish

To close out the third of three posts on world equity markets breakouts the charts of Australia, and Canada and Singapore are presented below without commentary.

Have a great weekend.

Risk Back On - Part Deux

As a follow up to Monday’s post about what appears to be a global equity breakout, my next two charts are from Asia. Both Taiwan and Hong Kong look very strong. In both cases, price has broken above prior resistance and is above a rising 200 day moving average. RSI momentum is in the bullish zone, is rising but has more room to run before it reaches an overbought state.

Additionally, in both charts price is moving strongly higher on the breakout from the neckline of an inverse head and shoulders reversal (bottoming) pattern and have more room on the upside before their targets are hit.

While the timing is a little late to the party, it looks as if both of these opportunities could provide swing investors with additional upside potential with limited, known, downside risk.

Risk Back On - World Equity Markets Are Breaking Out

The post-Brexit vote equity selloff didn’t last long as most world markets have rebounded strongly and are breaking out. From a technical standpoint, it appears (for now) as if investors are favoring stocks. To illustrate this point, all my posts this week will focus on some interesting and exciting opportunities. 

The first being the emerging markets (using EEM as my proxy). As you can see in its chart below it peaked in mid-2014 and declined some 35+% bottoming in January of this year. It has since taken back 50% of that loss and has formed and broke out from an (in blue) inverse head and shoulders bottoming reversal pattern. If this pattern plays out to completion its upside target is some 20% higher. With RSI momentum in the bullish zone and rising and price above a rising 200 day moving average, you can’t ask for a nicer opportunity setup.

Just for the Smell of It

The Hard Rock Café Hotel in Orlando pumps out artificial scents of sugar cookies and waffle cones that act as “aroma billboards” to draw people to their ice cream shop in the basement (increasing sales by 45%). The marketing company ScentAndrea attached chocolate artificially-scented strips to some vending machines in California, tripling Hershey’s sales. The Hershey’s store in Times Square uses artificial scent machines that blow the scent of chocolate into their store. Disney reportedly applies an artificial “grilled scent” to their frozen burgers to make them smell fresh, along with strategically placed scent machines in the bushes that disperse scents of cotton candy, popcorn, or caramel apples. According to the Scent Marketing Institute, when the smell of fresh baked bread was pumped into a grocery store, sales in the bakery department tripled. A grocery chain in New York (Net Cost) admittedly places scent machines that release scents of chocolate and baking bread to make customers hungry, and sales jumped.

Even subtle changes in operations can trick our noses and make a big impact on increasing food sales. For instance, Panera Bread recently moved its baking time to daytime hours so that customers smell the bread all day long and their New Haven, Connecticut location has a small “show oven” without a hood, so the smells vent into the restaurant. This is the same reason that Subway places their bread ovens up front in their restaurants, so that smell hits you when you walk in the door. Starbucks has an “aroma task force” to make sure their stores smell like coffee and not the cheese from their breakfast items

So don’t be surprised the next time you drop into our office and feel rich as we are working with the SF Federal Reserve to capture a new, “crisply minted $100 bill” scent for use in our Glade “office fresh” dispensers.