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Stock market reckoning ahead? Caution for traders in gold

Commentaries & Views

As I last wrote: "A weekly close below the $1935 spot would have me questioning the long side." The gold daily chart below is forcing me to consider a higher probability of that outcome manifesting this week.

That said, I also wrote: "If a dip to $1935 happens early next week but is immediately reversed, then I would turn the bullishness on gold up yet another notch." That also holds true today.

With momentum heading into oversold territory on the daily timeframe but the weekly uptrend well intact, I continue to give the bulls the benefit of the doubt for now.

An update of the S&P futures daily chart: I think a correction is in order, and continued over-exposure or leverage to the long side (for traders) may be just plain irresponsible here. I think the market is becoming complacent in the face of Jerome Powell, who has clearly signaled his willingness to hike harder. To me, this stock market now looks primed for an exaggerated move to the downside on any hint of change in future hike odds; In sum, I think the risk in indices is asymmetrical and to the downside.

However, entire sectors have been in a continuing bear market since their highs of last year, still hovering around 52-week lows (Canadian telecom, for example); contrarians may find this interesting.

Thanks, and good luck.

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