Memorial Day Weekend begins after the close of the market today. The origin of the holiday is to honor the men and women that made the ultimate sacrifice to defend our freedoms around the world. For that lest’s salute them. To many it also means barbecues with friends, a trip to the pool and parades. For Wall Street it means the start the Hampton’s season. Managing Directors are already there or planning how to leave at 11 this morning to beat the traffic.
The children will be in charge of the market today as even the junior officers on Wall Street will have lunch plans that take up the entire afternoon. Volume will be light. But that does not mean it will not count. One thing that I will be watching today is Gold. The shiny rock with no real purpose or intrinsic value that has mesmerized people for thousands of years. Why? Because the price is testing a critical level.
The chart above shows Gold had traded in a channel from about 1310 to 1365 for all of 2018 until it broke down 2 weeks ago. That drop took it below the 200 day SMA and under 1300 for the first time since December 2017. Thursday it bounced though. And it is now back testing the breakdown area from below. It often happens that a breakdown retests before continuation much lower. Will this be the case this time? A push over 1315 would suggest a failed breakdown and then over 1325, making a higher high, would offer confirmation. Failure to push over 1310 and a reversal lower would indicate more downside with the next critical support around December 2017’s low at 1240.
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