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I suspect that this short term symmetrical triangle and intermediate "W formation" will show its hand when the US debt ceiling issue is resolved.
The fibo levels at 1307 and 1295 are powerful chart points, and the 1287 and 1322 indicators may be helpful in confirming any moves, sorting out the fakeouts.
Keep an eye on VIX and gold.
Gold and Silver have risen quickly to a very important resistance level. I do not yet consider this an achieved breakout.
There are strong cross currents in these markets, the global sovereign debt situation in Europe, and the less remarked situation in the domestic US, highlighted but not captured by the debt ceiling debate which is more of a showpiece than a serious change and prioritization.
I suspect that if the US comes to a resolution of its troubles, for a few days at least the markets will rally, and the metals and perhaps Treasuries will be beaten like rented mules.
However, the looming crisis in Europe, which has the banks salivating for cheap national assets, is going to continue to weigh on markets by posing systemic risk in the manner of Lehman Brothers.
And as a reminder, the August Comex Options Expiration is next week.
I thought it was interesting that the US dollar has failed to rally along with Gold and Silver, at least to the same extent of breaking out to new highs.
Robert Baer, a distinguished ex-CIA officer, published a warning from his own knowledge and sources about a regional conflict in the Mideast in September between Iran and Israel. For now I consider this 'sabre-rattling,' and if Baer had not chimed in I would not even bother to mention it.
I would keep an eye on any developments, although these concerns are not new. Such a conflict, if it occurs, would have some benefits to a powerful few, but pose a significant risk to the many. Macro events and crises such as war can be used to hide a multitude of sins, but like most deadly things involving the will to power, they sometimes are difficult to control for other ends.
The SP held the important support at 1295, and actually closed at the psychological number of 1300.
The sovereign debt situation around the world is hanging on the market, as well as the deteriorating domestic GDP fundamentals.
We are now well into earnings season, and we should find the push and pull of the short term and the macro to provide interesting cross currents.
In other words, this is a traders' market.
Gold and Silver are at heavy resistance, and on the verge of breaking out. More on this in the gold and silver commentary this evening.
The Sprott Physical Gold Trust continues to underperform a bit on premium because the market is still digesting its follow on offering at $14. The numbers have been updated to include the details on shares and ounces of gold release thus far.
Although priced at $14.00, the fund paid a commission to the underwriters amounting to about $10.6 million, or about .56 per new unit offered, roughly 4 percent. So the effective revenue to the fund is about $13.44. I assume this is the price that the underwriters, Morgan Stanley and RBC Capital Markets, will pay for any over allotments which they take.
"The Trust has granted the underwriters an option to purchase up to an additional 2,850,000 trust units at the public offering price, less underwriting commissions, within 30 days of the date of this prospectus supplement, to cover any over-allotments."
