Home > Commodities and Rates, Short-Term Trader > S&P 500 Due For A Rest, Pattern In Gold Could Spell Trouble

S&P 500 Due For A Rest, Pattern In Gold Could Spell Trouble

Today's gap-n-crap action should not come a surprise as the S&P 500 just rallied 90 handles with little interruption. Today's gap took the S&P slightly over its 50% retracement level from the April peak. I expect the upside to be muted in the short-term. Trade could get choppy for a few days as there may be attempts to push the market higher, however; the risk has become skewed to the downside. It's possible we may soon be looking at the beginning of a new leg lower if this recent rally turns out to be the right shoulder of a head-and-shoulders pattern.

S&P 500

Gold (GLD) is close to failing last week's breakout from a triangle pattern. If the underside of the triangle is undercut this could turn into an excellent short trade. The concept behind this trade is that the ascending wedge has shown increasingly bullish interest with the higher lows and flat top. This pent up buying pressure should result in an upside breakout given that the prevailing trend is up. However, when the pattern fails to bring fresh buying interest in upon the breakout, a sharp reversal can take place. Today's reversal, if the underside of the triangle is not held, could mark the beginning of a rush for the exits by the bulls.  

Gold failure

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: