Why You Should Not Pile Back Into Stocks Just Yet
Both the S&P 500 and the NASDAQ have broken the downward channels (blue lines) established by the recent correction. However, thus far only the S&P 500 has broken above resistance (red line). So, this is something of a tossup.
The above chart tells us that there was little if any real organic buying yesterday. If real buyers had stepped in, tech stocks should have taken out resistance with little issue. The fact they didn’t tell us that day traders came in and then were forced to unload their longs before the session ended, hence why the NASDAQ put in those two weak candles in the last half of the session.
Based on this alone, we need to see some follow through to the upside today to issue an “all clear” for a significant bounce. Again, I’d not pile into stocks just yet.
Having said that, there are some interesting developments in gold.
Gold has held up remarkably well while stocks plunged 10% in just three days. Normally you’d expect to see gold liquidated. Instead, it’s actually fallen LESS than stocks!
The chart shows a clear formation with support holding multiple times.
This suggests pressure is building to the upside. Gold may be ready for its next leg up.
Best Regards,
Graham Summers
Editor, Money & Crisis
