Sometimes traders just have to tune all the noise out, and look at charts to see the message. As the matter of fact, when noise gets really loud, like it did the last few days, this is the only thing I can do to gauge where the markets are going.
1. Gold is not on "treasure stop hunt", it is on demolition derby assignment. This latest stop scoop is going to test a resolve of quite a few bulls. There was really no major resistance at 1800, but this thing just became weak and weaker. I am going to say this - if you are a bull, you better have a helmet on if we get a daily close below 1730. In reality, it has broken out of symmetrical triangle to the upside and is now backtesting the apex. Remember what I said earlier in the week? Symmetrical triangles are the biggest fakes lately. Thought to be a trend continuation, they sometimes lure the bulls in, only to dump on them on breakout and reverse hard below the apex. Watch it!!
2. Copper is having a bit of a tough time last few sessions. Not sure if this is China related or overall world growth slowdown weighing on the Ph. D. metal. Now that bull flag and 3.46 support is broken, it has about 6% to fall from here (3.35 as I type) before the trendline and lower BB @ 3.15, where the next support comes in. This will not sit well with equity and FX bulls.
3. So due to copper and risk-off environment, AUD is very weak. Yesterday it broke below the box, and on confirmation bears jumped in. I have a projected 0.9970 target, sorry mate.
4. I have a theory how this pullback in equities may end. Let me spell this one out. Technology has become the laggard here. It is definitely not acting well and the "generals" are leading the underperformance. So I will use the tech to see where possible bottom of this p/b comes in.
Lets look at the generals and where their supports are. I have a strong feeling that gaps below are the "unfinished business" magnets, and once filled, may provide support and reignite new bulls' interest. What is even more interesting is that those gaps are laminated with major daily moving averages.
Here they are:
AAPL - 369.80 (trendline and 7 points above 200 dsma)
AMZN - 198.40 (200 dsma)
GOOG - 577.20, 558.99 (50/200 dsma), and a "scary" gap @ 515.12
IBM - 177.24 (50 dsma)
5. So what gets us to those levels? Now that it looks like EZ debt problem is subsiding somewhat (on technocrat govts in Greece and Italy), I think it will be home-grown problem that takes us to 50 dsma on SPX. Super Committee is about to decide what we need to do not to become Greece and Italy (I am exaggerating). But really, this is one of the biggest reasons why we took a dive in August.
Let this not escape your radar. Only days left before the crunch time for them.
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