17 May 2012

A Quick Look At the Market Technicals: SP500, Gold, Silver, VIX

The gold and silver charts have not been updated for today's rally.

As is clear from the metals charts, gold and silver were DEEPLY oversold short term. So this *could* be a relief rally. The talking heads say it was because of the weak leading indicators this morning with overtones of QE3, but I think it is more likely that the momentum traders took it as low as it would go without hitting the physical markets and threatening a major divergence.

We will know if this is a new bull leg in the metals if they can take out and hold their exponential moving averages on the charts below decisively.

You cannot see it on this chart, but on my daily charts it appears that gold and silver are in a trading range, with the triangles being negated.

Stocks are also short term oversold. I hear that Facebook will go out at $38 per share tonight, and will likely color the market action tomorrow. The SP may tip its hand in the last hour of trading into the weekend.

It appears that tomorrow is the option expiration for May in stocks, and so I suspect that the selling today are the usual animal spirits one sees around such expirations, and tomorrow there will be quite a bit of pressure to maintain a 'stable market' for the secondary shenanigans on Facebook.

So I have taken off all stock short hedges and am letting the bullion run. I *might* put them on into the close before the weekend depending on what I see on the tape.