Stocks mixed to down, gold down

q1002.pngStocks ended the session moderately lower on light volume. Only the small and mid-cap indexes ended with slight gains. The session had waves of rally attempts that failed, so there was a slight downward drift to the price action. The market rallied in face of worse than expected pending home sales, and some of the strongest gainers were the bashed down home-builders. Also, one large percent gainer was Ford, on a much worse than expected auto sales number, although that was pretty much discounted and the autos are moving more on union deals. Maybe the market is back to going up on bad news and going down on good news.
The Qs opened about even, went down to test the three day pivot, and rallied back to about where it opened. I’m sure the Qs didn’t know it was testing that pivot, that that point does give a good reference point, and does seem to attract and then repel prices. The double stochastic in the lower sub-graph still shows an overbought condition, and with the indicator rolling over. The three day pivot is overdue to roll over. This impulse seems a little too extended. It would be nice to see the double stochastic get under the lower reference line, with prices holding above the error band channel.
g1002.pngThe gold market finally had some good downside action, although prices rallied a bit off the low. It has been obvious that this was a very overcrowded trade on the long side. Yesterday I had the dollar index setting up as a possible warning that the gold market could come off. Prices are diverging against the double stochastic. The trend is still strongly up. There are very minor pivots I’ve drawn with the red and dark red lines. Just below the dark red line is the 50% retracement area, which would come in at 708. This might be a possible objective to re-enter longs. This market could easily have more tests to the upside, as many who missed the last leg of the move might try entering on this break, hence would be careful trying to short until there is more topping action. For those who thought this was a straight shot to $1000, read the article on the report last Friday on the bandwagon theory. Markets often need to shake out the perma-bulls before they can continue higher, and the gold market is quite good at sudden shake-outs.

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