Flash Update on SPX & Gold
Frank Barbera
We are issuing this brief flash update, as we see a great of evidence continuing to mount that both the S&P and the Gold market are near an important short term low. In the case of the S&P 500, prices spiked down violently yesterday morning marginally taking out the prior panic low. Importantly, prices then recovered off the token new low leaving a distinct positive divergence on the 5 minute chart. The subsequent recovery was strong enough to lift prices back up across the range testing some important price resistance at 1410.00. At this point in time, we still cannot altogether rule out a final retest of the 1390 level, however, the prospect of such a retest appears to be fading fast with the market trying to engineer a rally back into positive territory. Even if, on the long shot chance, that prices did retest 1390 again, the odds at this point favor a bottoming sequence and a lead into a powerful recovery rally. In our view, any move above yesterday’s highs by the S&P 500 at 1409.50 should trigger a very large stock market rally, which would complete this corrective bottom. Bottom Line for the stock market: prices have been basing, this is most likely positive action, and a break above 1410 should unleash the bull once again.
Turning to Gold prices, we just witness a similar style waterfall panic in gold this morning, very much along the lines of the sharp stabbing move down that was seen in the S&P yesterday AM. April Gold is presently fully oversold on both the Short Hourly RSI – 9 Hours – at +18.78, and the Long Hourly – 20 Hours, at +30.72 (where +32 is the oversold benchmark. In hour view, while Gold is not yet fully stable, the odds are very high that prices bottom in this $645 to $650 range and begin a rally back up toward $670.
