Gold and the SP 500 Charts

The SP is looking a little 'heavy' going into a holiday short weekend in the States. This is where the bulls need to hold the trend.



Here is where we find out if the Fed and Treasury effort to reflate the financial asset sector will 'stick' or not. Their approach to the bailouts was a political policy error of the first order, almost shockingly naive to see from an Administration headed by skilled politicians. One has to think that Timmy will be a fall guy at some point, with Larry Summers tossing him under a bus.



Watch the lower trend line because if it gets broken and confirmed we could go down for a 50% retracement of this rally, and perhaps further to set a new low. As it is, a 5% corrective in a short holiday week looks likely.



Gold is performing an 'in your face' breakout and holding its gains into an option expiry next week which is wildly bullish. The target on the weekly is 1240ish, and one has to wonder if there will be enough of a pullback to allow the bears to cover their shorts before they are taken out on stretchers. It will take a severe correction in stocks to do it I suspect. But let's see.