Equities Explode; Gold Fails To Hold Big Gains
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On Monday, the equities exploded higher, tacking onto gains from last Wednesday and Thursday. The rally looked good except volume was missing in action, which indicates the rally is running out of steam and should fail. Gold, after opening much higher, spent Monday drifting lower and closed marginally higher.
The rallies in both equities and metals are meant to be sold for now. The up days are typically sharp moves on light volume, which suggest these rallies are not as powerful as they appear. On Monday, gold failed exactly from where it should have, and the equities are failing this morning
The keys for both are the same -- the dollar and the VIX. The dollar looks like itâ€™s trying to break out to the upside, which will put pressure on gold and equities. Mondayâ€™s failure at the tops indicates gold has a better chance to test the bottom end of the range at $1,300. We will continue to look for opportunities on the short side of gold and equities
Keep those stops tight.