I went back to May of 2006, the first time gold pulled back from its run that began in 2000, and between May and June of 2006, it dropped 19.71%. Then, between March of 2008 and October of 2008, it corrected 27% before continuing its meteoric rise. Then, between August of 2011 and July of 2012, it corrected again and gave back 15% from its new high, and recently, between October of last year and May of this year, it gave back 23%. So, clearly nothing extraordinary or unbelievable has occurred in this recent pullback even though the media would like to make you believe that it has. Gold’s recent trading pattern is definitely getting my attention, in a good way, because of the possibility of the coveted triple bottom that traders dream about as one of the most powerful buying signals there is. If you look at the 3 month chart on GLD, you’ll see where it fell from 151 down to 131, then bounced up to 142, then touched 131 again about 10 days ago, and is now heading north currently at 136. We may never see that triple bottom, and GLD might just take off again like it has done in the past, but if we do see it around that 131 number again, and it holds, that would be a very strong technical buy signal for all of you traders out there. So, keep an eye on the charts, whether you are looking to buy gold or trying to decide if it’s time to sell some.
Is the S&P500 setting itself up for a summer rally or a good old fashion summer crash? From a technical perspective, currently the S&P500 sits around 1657, after breaking out above the 1550 resistance level. This break-out signaled the next and possible final phase of a four year cyclical bull rally. According to the technical experts over at UBS, who I’ve personally known for over 22 years, the resistance levels to watch here are between 1650-1660, which is where we are sitting right this very moment. If this recent speculation continues, we could maybe see 1710, or another 3 % on the upside, but not much more room is left in this rally if you look at the charts. On the downside there is some decent support around 1474 and then at 1400 below that, so from what I can see, this stock market offers much more short term downside risk than upside reward, so be careful and think about taking some chips off the stock table for the summer.
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