Gold should have a good future because there are a lot of financial concerns out there, and a lot of people will take advantage of gold for safety.

Gold markets went back and forth during the trading session on Monday, as the Americans were away celebrating Juneteenth. This pulled a lot of the volume out of the market, so therefore it looks as if it’s a day you can essentially write off. Nonetheless, the 200 Day EMA sits just above, and now it looks as if it’s going to offer a little bit of resistance. Furthermore, the 50 Day EMA is dropping down to perhaps cross underneath the 200 Day EMA, which is essentially the “death cross” that a lot of longer-term traders pay close attention to.

However, it’s very likely that we are going to be more range bound than anything else, because quite frankly the bond market is oversold, so if we see rates drop in that market, it’s likely that we will see gold take off. Furthermore, we formed a little bit of a “double bottom” down at the $1800 region, so as long as we can say above that can make an argument for support. If we were to break down below the $1800 level, then it’s likely that the $1750 level would be targeted. After that, then you are looking at a move to the $1700 level.

On the other hand, if we were to turn around and take out the $1850 level, it would wipe through a lot of resistance and therefore it opens up the possibility of reaching the $1900 level, and then possibly even the $2000 level. All things being equal, I think this market remains a bit of a “buy on the dip” type of situation, but if we do break down below that $1800 level, that would be a huge red flag. I think this continues to be a situation where the market is trying to build a bit of a base, perhaps to recover.

Gold should have a good future because there are a lot of financial concerns out there, and a lot of people will take advantage of gold for safety. That being said, we also have the US dollar strengthening overall, so that does work against the value of gold, but do not think that we can have both gold in the US dollar rights at the same time, because it has happened in the past. However, it does cause a lot of crosswinds and therefore you should be cautious with your position size.

 

There is no real reason to be a buyer of the S&P 500 at the moment because the entire fundamental outlook for earnings, inflation, and monetary policy all seem to be looking like they are going to work against higher movement to the upside

The S&P 500 futures markets had a bit of limited trading during the Monday session, as it was Juneteenth in the United States. Because of this, you can only read so much into the candle, but it’s probably worth noting that Friday was an attempt to stabilize the markets. The 3700 level is an area that seems to be important in general, as it is a large, round, psychologically significant figure, and an area where we had seen action previously.

However, any rally in this index is more likely than not going to end up being an opportunity to get short yet again. After all, the market is in a downtrend for multiple reasons. The first one of course is the Federal Reserve and its monetary policy, as they are going to get extraordinarily tight and are showing no signs of changing their attitude. Because of this, Wall Street will have to figure out how to swim on its own, something that they have not had to do for the last 14 years.

The 3800 level above is where we have seen lots of pressure previously, and therefore I would pay close attention to any rally in that area that shows signs of failure. Even if we break above there, the 50 Day EMA is racing to lower levels and should offer a significant amount of downward pressure. It is currently at 4050 and drifting much lower. The market is going to continue to see a lot of pressure, and of course risk aversion. Granted, we are oversold and we could get a little bit of a bounce, but that would be something that you would expect after this type of brutal selloff. In this environment, I do believe that it is only a matter of time before exhaustion kicks in, and you can start shorting again. On the other hand, if we were to break down below the bottom of the candlestick from the Friday session, then it’s likely that we simply drop further.

There is no real reason to be a buyer of the S&P 500 at the moment because the entire fundamental outlook for earnings, inflation, and monetary policy all seem to be looking like they are going to work against higher movement to the upside and therefore it’s likely that it’s only a matter of time before we fall apart again.