Gold Daily and Silver Weekly Charts - Consolidation (With a Slight Return)

We had the expected consolidation in the metals today after a spectacular rally run off the artificial hammering they took in December.

Flat now in the trading books at least, and waiting to see what happens next. I would like to see another day or two of gains consolidation with a little retrace, and then a gap and a leg higher.

But let's see what happens first. The market will always be there.

SP 500 and NDX Futures Daily Charts - Said the Joker to the Thief

4Q 2011 Advance GDP is out tomorrow morning.

The selling today had little volume behind it, and it looked more like a consolidation than a top, at least so far.

I'm flat the market now, and waiting to see what happens next.

A Closer Look At the Gold Chart For a Break and Run Possibility

Keep an eye on gold for the next few days to see how it handles any consolidation here.

The formation, at least so far, is remniscent of the breakout that led gold to the all time high last year.

It could fail and retest some lower support level. We need to be aware of that possibility. But a consolidation with a subsequent gap higher and breakout run could be a wild ride.

Gold Daily and Silver Weekly Charts - Sharp Metals Rally Off the FOMC Policy Statement

The big news today was the FOMC's decision to set an explicit inflation target of 2% using the PCE indicator. Bernanke expressed some of the reasons for choosing PCE rather than the more popularly watched CPI.

Intraday commentary on the Fed's statement is here.

The metals, which had been depressed ahead of the announcement, took off like a rocket, reaching up to overhead resistance as the metal bears scrambled to cover their option expiration trade.

So what next? The rally may be a bit overdone in the short term, and now that the put buyers are washed out the trading desks may take aim at the call option holders in the 1680 to 1700 range.

The last time we had a major failed option expiration like this the metals went on a tear higher that led to the breakout from the infamous 'cup and handle' formation. Let's see if that happens again.

The move by the Fed is more of a stealth bailout of the banks and creditors in the financial sector than it is a remedy for the real economy. The markets are still not efficient or safe, and the economy is being managed for the benefit of the money masters.

So I expect this move by the Fed will merely serve to precipitate further economic damage that will eventually lead to a strong public reaction and constructive change, albeit via a highly troubled and sometimes dangerous path.

Keep an eye on stocks. I'll believe this rally is going to last if they decide to bring out the Facebook IPO which has been parked on the shelf for some time now. Otherwise just watch out for the next wash and rinse. There are few real investors in these markets anymore.