I live in the Bahamas and just moved to Eleuthera. We’ve been battered by Hurricane Irene as it heads to the U.S. coastline.
I think the markets are in the eye of a hurricane, too.
My technical indicators are showing a very oversold stock market and I think we will see some stabilization in the markets in the coming weeks as the equity markets bounce.
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I would not be surprised to see the S&P 500 rally back above 1,200 into the 1,250 area. I am of the belief that this is only a bear market rally. However, if you are a short-term trader, it might be worth going long the stock market here for a few weeks as it enjoys its eye of the storm.
On the opposite side, I would expect a pullback in gold to continue. Gold has shot up in a flight to safety.
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Plus a lot of momentum players probably jumped in near the top. Therefore I expect a short sharp correction as the gold market in the short term has gotten a bit too frothy for my liking.
However, I would expect that after we get these counter trends into the fall. The market will resume downward and gold upward and the hurricane will start up again.
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