Stock Market Now Neutral; Gold In New Uptrend

In my weekend post I speculated how the stock market could start this week. I provided three options that seemed the most plausible to me. And, in context with the proverb that market always tricks you, the fourth option took place. I knew before it was possible, but it seemed such a low possibility to me, that I didn't mind to even mention it. Maybe a lesson to all of us.

Anyway, stock market issued two distribution days in a row, which effectively puts it in neutral position, as far as my market direction model is concerned. In neutral state I don't open any new positions until conditions improve. Now, this could happen as soon as today if we get a decent accumulation day, so stay sharp and focus on stocks in your watch list.

My next focus is gold. The yellow metal yesterday issued a breakout above the recent consolidation pattern high. What's more, the percentage increase and volume were high enough for a valid follow through day (FTD). For quite some time I was predicting that gold maight tag the 150 MA and then reverse, but today this idea seems pretty illogical to me from one single reason: everybody are expecting exactly that to happen! No, gold will not give as a logical entry point. Smart money wants hords to start chasing. The higher high and a FTD confirm this view.

Now, the problem with FTDs on gold, as with any other FTDs, is that they are usually followed by some more follow through (as they should be). Right now I guess the risk is on the upside, so I think I'll take some position in gold on today's open. I hope for a marginal gap down, of course.