As we expected Monday brought a vigorous bounce from the chaos of last week. Tuesday, today, results in a neutral day. We may well see another attempt to take the market down and test Friday’s low. A test of Friday’s low is most unlikely unless the Texas chain saw sadist attacks the market. Regardless we think the wide stop we had (9729) is well placed and unlikely to be taken out.
Meantime, back at the gold rush, gold has awakened from its slumbers and looks primed to break above the previous high. Frankly we don’t trust it. Today there was a gap, which should be a buy (or add-on) signal. But lately there have been many false signals from gaps in this situation. If this is the famous bull-trap-snap we should see the gap closed quickly — even tomorrow. By the same token given the fear in the air we may see a little more upside. Traders would hedge or sell if it is a bull trap. Investors will ignore traders.
We will be watching all these issues closely for the near term, and probably writing letters during the day.