Today we had an expected pullback after an amazing advance last week. A correction and consolidation is a necessary and natural element in any bull market.
As you may recall I mentioned last week that I had expected at least one retest of the neckline after the breakout. That expectation remains valid. This sets a near term target for gold in the 1450-55 range. I could even imagine a deeper dip intraday to shake out the weak hands.
If today caused you some anxiety you are probably either holding too much leverage or an overly large position. You may wish to scale back to something you can hold more comfortably.
Silver dropped on a big bearish bet according to some reports.
If you want to see an analog of what this pullback in the 4-5 area *might* look like, please review the correction that silver had in the 2-3 leg of its rally. I am thinking 37ish as a worst case downside estimate unless the equity market liquidates, but given the volatile nature of the squeeze silver may not provide such an obvious buying opportunity.
So a more modest target of 40 may be more consistent with the expected pullback in gold, but I try not underestimate the power of paper in the short term. I am sitting largely in cash for the trading account and would not mind a chance to take on positions at the right support prices.
I added these details on targets by popular request (nagging) from 'The Coupon Guy.'
