We’re looking for a few possible “tells” to give us indication of when to enter for a tradable rally. Here are some thoughts and possible action scenarios:
- Gold ($GC_F) keeps ripping, going through $2000 while equities hold stable. Gold then starts to reverse, market rallies. We want the gold/equities correlation to break-down. Today was a good start as market closed flat while gold again rallied hard.
- Is Gold $2000 like Silver $50? We were all over the silver short but don’t have strong feelings about a potential gold short. Not yet anyway.
- We sell off and take out the $SPY low of 110.27 but make a higher low over the overnight $ES_F low of 1077.
- There was whiffs of panic into the close as $GS got machine-gunned but we liked how tech held green and stable. That’s a good start. Small step, but in right direction.
- We would prefer an intraday reversal 10x over these gap ups that are so often faded in bear trends.
- We have a number of breakdown shorts on our list — we want them to all be taken out and THEN reverse. If they don’t trigger we think the pain will only be postponed.
- This action reminds us not of 2008 but of 2002 where we grinded down every day in a market that didn’t scare out the bulls, but wore them out.