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Fitzpatrick - Despite Pullback, Gold to Hit New All-Time Highs
Today Citibank analyst, Tom Fitzpatrick, told King World News that despite the recent pullback, gold is headed to new all-time highs. Fitzpatrick, a 28 year veteran and top analyst at Citibank, which has $1.3 trillion in assets, also said that stock markets will continue to head lower in the coming weeks. But first, here is what Fitzpatrick had to say about the volatility index: “We’ve broken above that resistance level at 21% on the VIX, completing what is a very clear inverted head and shoulders within the daily chart. That suggests we could easily get a move that could take us up to something in the region of 27% to 28% (on the VIX).”
Tom Fitzpatrick continues:
“The longer-term chart might even suggest a little bit more than that (27% to 28% target) on the VIX, but for the moment that is the interim target. So we are very closely focused on that and the fact that we’ve made a very significant break. By definition it suggest we’re going to continue to see a lower move in the equity markets in the weeks ahead.
To get the VIX moving to those levels, we’ve got to think we could be making a push on the S&P that is going to take us down close to the 200 day moving average. Now the 200 day is currently at 1,278 on the S&P, so it’s a good 40 points lower than current levels. We should at least see a move to those levels to get the VIX in the initial target range.”
Fitzpatrick also had this to say about the critical 10-Year Note: “We’ve had the break below (the 1.80% level on the 10-Year Note), but we haven’t had the actual weekly close. At the moment we are watching it closely to see if we get that this week. We’ve already had a lot of multi-day bases and it looks fairly well set up for that move.
If we do get that weekly close, it suggests a target in the region of 1.18%. This fits very closely with the base of the long-term channel that we’re looking at, which is coming in around 1.15%.
So it really is, for us, the most important pivot right now along with the move in the yield curve, which suggests we are going to get a further downside move in terms of yield.”
Fitzpatrick is also bullish on gold: “Gold went a little bit further to the downside than anticipated. We were looking for gold to hold the area just below $1,600. But really, despite the move lower, in the overall pattern it didn’t really do any damage.
This still looks like a consolidation triangle pattern. It still looks like the choppy price action we saw in 2006 and into 2007. This ultimately resulted in a breakout to the topside and a move higher in gold.
So, despite the bigger downdraft which we feel probably comes from a lot of short-term positions getting squeezed in a mini version of 2008, our belief is the setup here looks like a consolidation correction, not a reversal. We continue to retain our view that the next trending move in gold is going to be higher and ultimately to new all-time highs.”
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Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
May 17, 2012
