Stock Market Stays Neutral; Gold Into New All Time Highs

Things are not looking good for the stock market. Nasdaq issued three distribution days in four days and, as we know, clusters of distribution days often precede a selloff. Friday actually closed pretty strong on average volume, but I wonder if this is not the start of a wedging rally. For now, the market is neutral by model, which means I'm sitting on my hands, waiting for confirmation of buy or sell signal. A buy signal would have to be supported by at least one strong accumulation day. However, I think more distribution is coming in the following days.

In my previous post I pointed out follow through day on gold and the yellow metal broke out into new all time highs soon after. I took a minor position in silver just in case precious metals follow through. And they did. I picked silver just because gold is now pretty extended and sentiment on silver is extremely bearish, but I think I'll sell my SLV shares on any minor climax top and convert it to DGP (double bullish gold ETF) on any correction.

Now, this move in gold seemed to surprise just about everyone. We all expected a tag of 150 MA and then a reversal. We got another lessons why a trader should always be nimble and unbiased. Frankly, I don't believe gold will give us a decent pullback anytime soon. That's the main reason I bought into extended conditions. Volume is still pretty modest as everyone waits for correction and both gold and silver could become very extended before herd starts to panic and chase the move. As I said, I will look for a mini climax top to get rid of my SLV (hopefully around 42) and buy gold on a pullback.