As mentioned yesterday, gold has had support since early July along the 10 day moving average. (Technically, I am using the gold ETF in lieu of "gold"). Following yesterday's 3%+ drop, we are seeing 1% thus far this morning, and the SPDR Gold Trust (GLD) is now sitting right at that support.
At this moment, aside from worshiping at the alter of Ben Bernanke (I heard the first trader, repeat the David Tepper mantra this morning - either the market will go up due to a better economy, or Bernanke will make it go up), the market seems to be an inverse trade of gold the past week.
Now if a new round of monetary easing were to be unleashed, we should expect gold (and silver) to rally, not falter just ahead of the speech Friday. But this market was so overbought (and over owned) going into the meeting it throws some dust into that theory.
Unfortunately, we are simply hostage to the words of one man as we were through much of 2008 and 2009. Individual fundamentals and metrics mean little right now.
This morning we saw a better than expected durable goods order and much like in 2009 and 2010 we have the best of both worlds the past 2 days - when economic data is bad that is good because it means The Bernank will show up, and when economic data is good that is good because it means the economy is not as bad as we thought. It's the "have our cake and eat it too" market.
As an aside ZeroHedge reports that hedge funds are the most net short S&P 500 that they have been since 2008 - if you are a contrarian trader, that would be net bullish.
The S&P 500 quickly approaches that 1175 level oft mentioned of late...
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