Both US equities & gold have been going up in tandem of late & some have suggested this is a function of differing views on the tapering schedule by the Fed. One day the market will learn that its not all about the US. The US of course will be the last to learn this. There has been chatter that tapering may be eased, however there has been no indication from the Fed that this will be the case & I am of the opinion that the Fed knows they have to do away with QE full stop. Equity markets are rallying as the recent weak US data is being dismissed due to the weather. This is a fair assessment, although what I would say is that equities were struggling well before the severe weather hit & its likely severe weather patterns will become regular events. The market is also dismissing what is going on in Emerging Markets & Europe. Everything is alright Jake! Well it certainly isn't. I did see that Russia is looking to buy 2Bln of Ukrainian bonds & this is a positive, as one would have thought there will be more of the same from the likes of China. As the US pulls the liquidity plug, up steps Russia & perhaps China. Gold continues to rally because it has broken through technical levels. ETF selling at this point appears exhausted (about a month or two ahead of what I forecast). Shorts have had to cover. Gold is probably due for a pull back to $1300ish or perhaps even $1280, however imo this will represent opportunity. I don't think equity markets will stay in step with gold for long & I suspect have about run their course. The S&P has a major resistance level at 1850 & if fails one could argue it has formed a triple top. The DOW is trailing some 350 points off a similar resistance point. Obviously if the indices convincingly break these levels then it is game on.
I would be interested to hear from the tech analysis guys on their thoughts on the US equity markets on what the technical outlook is for the S&P & DOW.
