The was some follow-through on the stock indexes today. As was pointed out yesterday, there was a price rejection tail left on the charts on Wednesday. Although trends were, and are still down, momentum had kinked up from an oversold level. I suggested a move up into the area of the moving average lines. Today the high of the S&P came close to the faster line, but then sold off to leave a tail on the upper side of the candle. The sentiment has been so negative it would be unlikely to have a “V” shaped bottom. It is more likely to have some backing and filling and hopefully get some kind of momentum divergence, and that might indicate a more sustained rally. If the market goes up from here into the moving averages I would suspect it would represent a good area to go short. The session today was very nervous and erratic as Bernanke was speaking and news was released regarding Countrywide. It seems there is now perception of a larger round of interest rate cuts that what was previously priced in, which sparked the rally and helped to push the dollar down. Gold was sharply higher on the lower dollar. Everyone is calling for thousand dollar gold right away. If the breakout of the triangle (see previous posts on gold) has symmetry from the move prior to the triangle to the move coming out of it, then thousand dollar gold would be easily achieved. Many moves out of triangle do have a symmetrical length move. Just as many do not. It is purely random, despite what technical analysis books say. I’m skeptical of this move in gold. It is getting too much attention. Why wasn’t there this much attention when it was cheap and was a good buy? That’s when all the ads should have been aired about buying gold. The gold market has a way of humbling over exuberant traders. I know I stand the risk of saying this when it’s a hundred dollars higher. I’ve been thinking the dollar is going to rally soon. The perception of greater rate cuts may put that on hold for a bit. The dollar index looks like it is trying to roll back down. It will be interesting to see if the lows hold in the face of further rate cuts. If so that would be a good indication of a low in place for the dollar. If a rally mounts in the dollar I expect a good washout in gold. I don’t believe all the gold analysts on CNBC that say it is now a demand driven market. They’ve been saying the same thing for 20 years and just get put on TV when gold is in a rally. Gold is pure speculation.