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Is The Market Bi-Polar?

Published 06/08/2012, 08:19 AM
Updated 07/09/2023, 06:31 AM
EUR/USD
0.12%
GC
0.39%

The market, today, displayed its bi-polar nature ending the day with something like a bearish reversal candle. And that's why I say that if you are in investor and not a day trader, you are well advised to give the rally a miss. Again, this behavior is completely expected because it's a counter-trend rally and it's bound to fail anytime. It reached my first target, which is 1330 then reversed from there. Is the rally over? Somehow I do not think so. Rather, I believe it has few more days of fuel left and we may see the uptrend resumed Monday.

Gold...$2,500 Target
I am holding QQQ, Crude and Gold ETFs and I do not like the price action in Gold one bit. As I wrote yesterday, we'll see where it goes for few more days then get out. However, intraday, it touched $1580 and bounced from there. On a weekly chart of GLD, we see that while it is below the long-term trend line, it has, for last three weeks, touched three standard deviations on the lower end. The rubber band is stretched far too thin and it may snap back any day.
GOLD CHART
So I'll hold til early next week to see where it goes. I have a longer-term target of $2500/oz for gold but a good entry will be very helpful.

Crude
Crude on the other hand is a different story. My longer-term target is $70, so this is just a counter-trend play from an oversold position. It saw $87 intraday, today, at which point I should have sold. Let's see what happens Monday.

Euro and SPX is moving hand-in-hand like a love-struck couple.
Euro Spx
But the short position in Euro is humongous and a contrarian indicator. The Speculative Sentiment Index (SSI) of FXCM shows the crowd remains net short in EUR/USD as further gains in Euro is likely.
SSI
That is one reason I think we will see more highs in equities, at least in the short term.

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