THE MARKET IS NOT TOPPING

Stocks may move down into an intermediate cycle low over the next 15 trading days. If they do we will again hear the perma bears calling a new bear market. They will be wrong again as they continue to be wrong over and over. 

The S&P has tested the 2100 level 9 times. There is no such thing as nonuple top. Heck there’s really no such thing as a triple top. When a resistance zone gets tested this many times it’s a consolidation before a breakout, not a top.

9 tests

CHART OF THE DAY – GOLD AND ITS 200 WEEK MOVING AVERAGE

Gold and its 200 Week Moving Average

I think we can safely assume the Brexit vote is going to fail. This should be bullish for stocks and bearish for the dollar. A falling dollar should be good for gold. However, with stocks and oil moving higher it’s likely to take some focus off gold.

200 week moving average

I’m expecting the metals to be volatile for a couple of weeks as they build up the energy to break through the 200 week moving average. I do think gold will ultimately break through once the market recognizes the dollar is in trouble.

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CHART OF THE DAY – $GOLD vs. Brexit

CHART OF THE DAY – GOLD vs. Brexit

I see traders everywhere worrying about how the Brexit vote will effect gold. Folks, forget about the Brexit. By this time next week the Brexit will already be fading into memory and the market will go back to doing what it was doing before the vote.
gold vs. brexit

Gold is rallying out of an intermediate cycle low. Gold has completed its bear market and is starting a new bull. Intermediate cycles in bull markets don’t top for at least 14-18 weeks. So quit worrying about a top in gold until August or September ad quit paying attention to the clueless analysts trying to tell you otherwise.

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CHART OF THE DAY – $SPX/XBI (S&P 500/Biotech ETF)

Chart of the Day – $SPX/XBI (S&P 500/Biotech ETF)
cotd

If Friday produces a swing in the S&P 500 then the odds are probably good that the market has completed the half cycle low and will now make another run at trying to break out to new all-time highs.

If this happens then I want to focus even more heavily on biotech as it held up remarkably well during the correction.

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