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S&P strengthening; gold bulls step in; palladium bulls step out

Commentaries & Views

Gold bulls got their dip down into the yellow zone and touched the bottom band; updated daily chart below. Prices also quickly followed through $20 higher yesterday as $1950 was put to the test.

As I noted last week, the probability of a quick V reversal back to all-time highs is increasingly improbable. I expect gold to continue to meander sideways going into the holidays, which, in my base case, is a bullish consolidation. Should gold put in a daily close below $1930, that sideways action would likely test $1900, in my opinion. A close above $1950 and continuation to $1985 comes into view.

I still do not see a reason to sell any longs in stocks. The weekly chart of S&P, updated below, still has plenty of fuel as far as momentum, and the top range of the Bollinger band looks like it's also starting to pull prices up.

Another note on Palladium: when prices came down to test the first major support at the early '00s peak, I suggested it was worth a look. Now that Palladium is trading under $1000, it still deserves a look. The chart below shows the metal's quarterly price action; momentum is in a rare, deeply oversold condition. I don't know whether prices will get all the way down to the bottom trendline (from 2008), but I am licking my contrarian chops. Of course – any expectations of returns on a palladium investment should be tempered by the prospect of risk in both time, and further decline.

Thanks and good luck,

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