A little Calm, What is Next ?
The US employment numbers this morning point to a little better situation and verify that things have improved since February 2010 when the Great Recession seemed to end. Greece is stumbling to a resolution and the revolt by the population is put on hold. Gold approached major technical resistance levels in terms of both the dollar and the euro with 60 percent plus bounces from the fall lows. Stocks and oil have continued their correlation with gold and moved higher on currency valuation terms.
So what is next?
1) I look for stocks basis the S&P to run into resistance a little higher in the 1270-1275 area and trader types can probably short the market for a test of support in the 1130 to 1170 area over the next 30 days.
2) The dollar is in a retreat mode but basis the DX should find support in the 75.80 area and continue its move higher.
3) T-Bond prices will decline a little more here but this is not the start of a big decline yet, that will come later. I would take profits on the TBT (short bond ETF) trade put on at 19.80 recently, probably around 20.50.
4) Gold is in its own world, it is sitting on a 10 year rally and its owners see no reason to get out as there seems to be no end to bad news. Technically, however, the market topped in September and is headed lower with the bounce about or maybe over.
5) The biggest market mover looking forward is the deficit reduction factors looming, ie the Super Committee and whether they institute balanced or unbalanced programs. Time will tell on how a move towards austerity works out.
6) In the meantime price distribution of assets, stocks, commodities, and gold will continue.