It looks like stocks and commodities may have shaken the weak positions out of the market during the recent pullback. Gold is also poised to trade at higher levels.
Equities and precious metals are on the edge of another rally and it could start as early as today (Thursday).
On March 13th, I posted some of my analysis online, showing how the market was trading at a key pivot point and that a sharp price movement was about to unfold
As of today, we are getting the same setup that I saw on March 13th, but this time it is pointing to higher prices. Take a quick look at the charts I was looking at for both the SP500 and gold and you will notice that the SP500 and gold both moved to the support levels before starting to bounce:
While we caught the move down on the SP500, playing the SDS Double leveraged inverse fund, we did not take part in falling gold prices. The reason is simple.
There is so much fear in the market, and with the amount of surprising news popping up each week I don’t think shorting precious metals is a safe call. Rather I am looking for a pullback to cleanse the holders of the commodity, then I will buy once the price confirms that the continuation pattern has completed.
Now, stepping forward to this week’s price action
SPY Daily Chart
We can see in the chart below that the price is currently testing a key resistance level. Before the week is over, we could see some big price movement equities. I need to see what happens tomorrow. But I have a feeling we could see a breakout to the upside for a long position.
Gold Miners Fund Daily Chart
Gold stocks have been under-performing the price of bullion for a few months but it looks as though they could be starting a sizable rally. If gold stocks continue to move sharply higher out of this pattern, then it’s a positive sign that gold and silver bullion will both continue to move up.
Gold Daily Chart
Gold is testing a key resistance level and if it breaks above this pattern, then expect much higher prices. I can see GLD (NYSE: GLD, Stock Forum) moving up $5 from this level and gold futures moving up $60 per ounce fairly quickly.
Mid-Week Trend Report:
In short, stocks and commodities may have shaken the weak positions out of the market during the recent pullback in price. Things could be ready to start another multi-month rally and trade setups. Keep your eyes on the charts
