Gold’s a touchy subject in the blogosphere.  I have nothing against stacking.  Holding some of the shiny metal — whether for fun, inflation protection or the coming zombie apocalypse — probably makes sense.

But, it’s the GC futures we concern ourselves with, here. And, most serious gold bugs will tell you that the futures and ETFs are not the real thing.  I get it.

Central banks have been hammering it for years, trying to convince investors and preppers alike that it’s not worth holding and, in any case, is not a viable substitute for those pretty pieces of paper they print down in the basement.

It’s not hard to see when they came to realize that gold’s ascent was a problem.  The only challenge has been figuring out when and where it’s going to bounce along its path.

In our last update with GC at 1145, we noted it had the potential to break above a TL from last January and tag 1178 or 1198.  It did break out, reaching 1191.70 about two weeks later.

But, then it fell back through that TL to another in a long series of new lows — confirming what everyone who charts it suspected: it’s just as manipulated as everything else.  That doesn’t mean, however, that there aren’t some good trading opportunities ahead.

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I’m going to focus on updating a variety of charts today.  The first, of course, is SPX.  Like DJI, it is perched on the edge of important support — the loss of which portends significant losses in the next few days.

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In our October update on the Dow, I noted how the white .786 Fibonacci retracement at 17,712 represented not only a legitimate harmonic reversal point, but the intersection of rising and falling channels.

But, I also reminded members that:

…the Dow is one of the least reliable indices to forecast using patterns and Fibs.  It’s just too easily/heavily manipulated.

The reminder was timely.

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When we examined the likely outcomes of next week’s FOMC meeting yesterday [see: Now and Then] we devoted a couple of column inches to the possibility that Wall Street would throw a fit, much like it did in October 2014, January 2015 and August 2015, to demonstrate how sensitive it was to the taking away of the proverbial punch bowl.

Having said all that, there is one other possibility that shouldn’t be completely ignored.  As we’ve seen in the past, a sudden, severe plunge in stocks can be very effective in changing the FOMC’s plans.

Were SPX to drop to, say, 1920, 1856 or 1823 in the next several sessions (6.4, 9.6 or 11.2%), there’s a pretty good chance that the Fed would delay actual implementation of a rate hike.

The words seemed rather silly as I typed them, particularly since every tiny dip was immediately bought yesterday.  With another of those now-routine 1% pre-opening plunges  facing us this morning, they seem a little less silly.

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The headlines on June 29, 2006 were fairly unremarkable.  The House voted to end the offshore drilling ban.  The Devil Wears Prada was being released in theaters.  And, the Senate confirmed new Treasury Secretary Lord Voldemort Hank Paulson — who was paid $48 million to take the job and subsequently ushered in the worst financial crisis since the Great Depression.

It was also the last time the FOMC increased the Fed Funds rate (the 17th hike in a row, to 5.25%.)  I’ve scoured the news, and can’t find a single headline from back then warning of impending financial armageddon from the increase.

In fact, the market rallied 2.1% over the next several days — before shedding 4.4% a week later.  But, beyond the immediate effects, two things stand out from the historical data:

• the S&P 500 gained 26.5% over the next 16 months as the FOMC reversed course and lowered rates through the peak in Oct 2007 (and, of course, throughout the subsequent crash)
• the FOMC had no frikkin’ idea how to manage the economy via rate changes.

Now, 3,451 days later, we’re told the Fed might raise rates again.  How can we expect the “markets” to react?

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In our most recent update last week, we noted that NKD was approaching key support at its SMA200 and rising channel bottom.  It was an important line in the sand that, surprisingly, didn’t hold.

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Are The Powers That Be losing control, or are they merely fine tuning the “markets” in preparation for the Fed’s rate hike next week?  Conventional wisdom says equities won’t fare well in a rising rate environment.  But, how do the currency pairs figure into that assumption?

We’ll take a quick look at the big picture this morning, focusing in particular on currency pairs and oil.

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Anyone else getting tired of SPX being propped up all day long, only to tag our target on a gap down the following morning?

It’s great if you play the futures and can manage the overnight risk.  But, for cash investors, it’s just one more way that TPTB are preventing you from participating in the gains while sticking you with losses.

USDJPY and CL are leading the way this morning, with ES currently off 25 points — but, more importantly, one point below the daily SMA200.

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As the “markets” position themselves for the Fed’s rate hike on the 16th, one can only speculate as to which levers will be pulled in order to convince investors that higher interest rates are a good thing.

Oil, for instance, has undergone a massive slide since early October, and now sits at the lowest point possible for a potential rebound that wouldn’t break all the rules. As we’ve noted many times, it’s the overnight drop that sets up the bounce that helps stocks rise during the trading session.  The key is knowing when and where the bounce will occur.

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In our last update on COMP [see: Oct 28 Update] we pointed to 5124 as the next likely turning point.Sure enough, 4 sessions later COMP reached 5124 and…stopped.  Thanks to DX breaking out, it spent the next week criss-crossing 5124.  Finally, on Nov 9, it began a slide down to 4908 — a 4.2% drop.

In an unrigged market, there would have been more downside.  But, as we’ve seen countless times, COMP holds a special place in the hearts of market riggers.  Well, at least where their hearts would be if — you know — they had them.

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