U.S. stock markets surged higher today in the wake of election results in India, that sent their main stock market higher by 17%.The victory of capitalist Congress Party in India helped spark optimism in the world’s second-most populated nation that better economic conditions could be created by the government.Prime Minister Manmohan Singh’s party no longer needs support from the communist party and hopefully can implement more open-market policies.
Also propelling U.S. stocks higher was an early earnings report by Lowe’s which came in better than expected. Traders and analysts are expecting that a bottom in the housing market will cement a bottom in this recession, so the initial reaction to the Lowe’s earnings was positive. However, it is also very possible that people are simply upgrading their existing homes since they’ll be staying in for longer than expected.
The impact on gold today was negative.General upbeat news sent the yellow metal into a slide that would not recover.It was not overly surprising to see gold fall back as the market never really appeared to gather much momentum over the past two weeks despite gaining about $20 an ounce having bucking the downtrend. Until inflation starts to kick up, it is possible that gold will be a secondary market. Some well-known investors are even selling gold against other commodities as they want to buy cheaper markets relative to a fairly expensive gold market.
Look for more consolidation in gold, perhaps another $10-20 lower to $910-900 before finding better support. If being long is the position one must be in, then it is advised to sell calls against the futures position and trade in and out of the call.
Review charts on these markets here www.britefutures.com. Remember that futures and options can be used for bullish or bearish positions; feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use our online paper trading service BriteTrak,contact me attom@altavest.com. Visit www.altavest.com to request a FreeTrading Kit. Keep in mind that there is risk of loss in all trading.
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