Today’s movements between stocks and gold provided an indication of divergence that may be encouraging to bulls. Despite relatively positive economic news, with the first expansion in the manufacturing sector in 18 months and a healthy pending home sales figure, traders sold into a brief opening rally and ended the day on the lows.This is a clear signal that stocks are headed for a correction, perhaps in the 8%-10% range.Stocks appeared to stall in during last week, being unable to push through to new highs, and today’s move was evident that the market needs to head lower in order to buy find fresh buying.Despite skeptics, bulls have been pushing the market higher for six months, and today’s ISM reading was solid evidence that the economy is recovering, and they sold that ‘fact’.
Despite the sell off in stocks, gold managed to find some buying support to end the day in positive territory, even in the face of the higher U.S. dollar index.It appears that whatever selling pressure has been holding back gold may give way in the near future.The best trading strategy should be wise though and note the large spiraling pattern which is squeezing prices tighter and tighter.If the market breaks out to the upside, traders should buy on a break above $975, while selling gold on a break below $935.Gold is engaged in some nasty trench warfare traders should simply want to be on the side of which ever emerges victorious.
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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