With 920 SPX gap fill almost a done deal as I write this, it is worth taking a roll call. Normally there is little point in stating "FV" more than once intraday, but this is a pivot so I might as well and besides, it has moved enough to warrant it. "FV" ~875. The question now becomes one of the close, and it sets up probability distributions for the next few days. I would say a close below 920 continues the momentum down and we would be looking initially at 900 and then 878/872. A close above 925 or so leaves it 50/50, and a close above 928 or so creates doubt and probably tilts the probability that this selloff is a one day event. There are still many equities that are ripe for giving several dollars back.
Re gold: I don't know about "natural" buyers, but the whole dollar rally has an extremely artificial feel to it, with its having been based on first Japanese then Russian backing. Both countries are desperate: Russia is staring at collapsing into an abyss even deeper than the one they dug themselves into with their five year plans and then their total reliance on energy exports, and Japan? Well, its been 20 years since they had anything resembling a healthy economy. Pretty much as long as Russia, actually. Two basket cases trying to prop up their only hope. Rather a thin reed for the dollar, to put it mildly. Of course, my time horizon is about a day and a half, on average. And I'm long. OTOH, these kinds of comments by Russia and Japan, so obviously bent on extending what everyone knows is an artificial situation, have a half life approximating my time horizon.
I must be missing the point. What does Russia and Japan have to do with gold? Are you saying we are about to have another Asian and Russian currency crisis like in 1998? I am not impressed by this argument. That situation is a match stick compared to what we saw recently with the subprime/credit crisis, and if gold cannot break the all time high in that environment of near Armageddon, that thing is going _down_. For gold to break 1050, one of two things has to happen. A horrible terror type event has to happen, or b, Hyper-Inflation.
No, nothing like that. Remember my time horizon. The Japanese and Russian comments were meant to break the momentum of the downside in the dollar for a day or two, and they succeeded in that. They may have been hoping for more, but realistically they know better than to think they'd get it. For the next day or two, it's back to the downside in the dollar, and upside in gold. Past that, I have no opinion.
Well, in the short term anything can happen. But if you are so good at predicting the dollar, why not trade it (e.g., UUP) instead of worrying whether gold does or does not react to a dollar selloff? If you tell me you are trading the spread, then I concur. Otherwise, it seems to me you are trading the wrong instrument, imo.
Not enough volatility, quite honestly. Also, there's lots of info on gold; everyone has an opinion, as you know. I've traded gold and related stuff for a long time, so I'm pretty familiar with the drivers. In my experience, this is one of the easier setups, when some official or other tries to jawbone the markets into a different direction. You can pretty much count on it not lasting long. Of course, I'm probably jinxing myself...
"FV" ~890. News: ICSC store sales, Housing starts, PPI, Redbook, Industrial production. Best Buy earnings can move the market. In my area, these retail places are ghost towns. IRs: 4-week auction. Oil futures in military step with the dollar. Gold, see the last few posts in this thread. Imo gold purported correlation with the dollar is a hypotheses walking on a high wire with no net. Oil, wheat, copper, and a slew of other commodities imo are better suited for that. 920 gap fill has freed the market from that tyranny (if you are a bull). Do all gaps fill? No, some are runaway gaps, but did we really think this was one? Not in 100 million years. I have a feeling that when this market truly corrects, it will do so from an island top. Pure speculation. Lots of news today that can whip the market every which way. I think this is a high risk trading day unless the discipline and attention is flawless. There is a small mathematical edge to downside. A biased coin that will show heads 505 times and tails 495 times.