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It's
been an interesting week with Spain being downgraded as Europe debt crisis
widens. This has investors looking at the US dollar in a new light thinking
that maybe it's not that bad of an investment after all. This sent the US
Dollar higher along with the price of gold so far this week.
The past 7 days
we have seen both the US Dollar and Gold rise together which is not something
that happens often. With financial crisis's popping up around the world I
think the US dollar and gold will continue to strengthen (with corrections
along the way). I think it will take another 12-24 months before another wave
if issues arise in the financial markets and until then we just continue to
focus mainly on buying the dips and corrections with the occasional short
play in the larger corrections.
USD, Gold
And SP500 - Daily Performance Chart
 
SP500 -
Daily Chart
On April 14th we
saw an extreme level of selling which sent the broad market sharply lower.
This sell off was followed by value buyers pushing the prices back up to new
2010 highs.
Well this week we
have seen the same extreme selling volume and the question we all want to
know is will there be buyers this time around?
Trading
Conclusion:
Gold is in a bull
market but it was setup for another round of selling but this Spain issue has
been a pain. If we had another downward word move on gold to the $1115 - 1120
area it would have washed out the majority of gold bulls resetting it's self
up for a big rally.
The Europe debt
crisis has thrown a twist into the picture helping boost the price of gold.
Gold could still head lower washing out the weak positions but the picture is
fuzzy. Silver did not react much to this news as it's not really seen as the
safe haven gold or the US Dollar are.
As for the stock
market, it looks and feels like we are about to start a correction. But this
week we saw fear in the market again with the VIX and selling volume surging
higher to levels which have triggered temporary bottoms in the past. The
problem I see here is that some key price levels have been taken out, so the
odds are pointing to lower prices in the near future. But Tuesdays panic
selling has pushed the market into an oversold condition so we should see a
drift upwards for 1-4 days before sellers get active again as they want to
sell and short the market at premium prices.
In short,
precious metals are not giving any clear price action to take advantage of
yet, and the SP500 looks like it's on its last legs before heading lower for
a meaningful correction which should provide a short setup and then a nice
long setup once it bottoms out.
If you would like
to receive my ETF Trading Signals check out my website: www.TheTechnicalTraders.com
Chris
Vermeulen
Editor, the Gold and Oil Guy
Chris Vermeulen
is a trader and newsletter writer specializing in the price of gold GLD ETF,
Junior Mining and Energy Stocks listed in the US, Canada and Australia.
Please visit his website for more information.
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