Leaving La La Land
Yesterday the market, basis the S&P, looked like it was packing up and trying to figure out where to go. The fact that the gold market is in a wait and see pattern suggests that there is no panic yet.
So investors are packed, sitting in their car in the driveway. Gas is cheap so they may idle away for some time.
The 2722 level of the S&P remains a big area as it has been during this whole decline from the 3393 highs. At this point it remains a psychological support level. Once breached this time, things will get dicey.
First, As things unfold no doubt FED actions will push long Bond prices up as a next stage reaction.
Second, Down the road the gold market will make its move, probably to areas above $ 3000 towards $ 5000 from the current $ 1700 area.
Third, looking ahead, bonds will decline and join stocks at much lower levels.