Signals: Neutral but Leaning Bearish

Posted by Mark Leibovit - VRTrader

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Stocks – NEUTRAL

Sure enough, we touched 1230 and the SPX immediately began to sell off. VR Platinum subscribers are short the S&P. Ahead is the long Labor Day weekend. A minor respite! Immediately following we will hear Obama’s new ‘gameplan’ for the economy and later on September 21 we’ll find out what Bernanke has up his sleeve. Will he QE3 or not? All along we cannot forget about the ever deteriorating Europe sovereign debt issue. I am NEUTRAL but leaning more and more bearish. Here, traders are short, especially since the S&P 500 rallied in a ‘textbook’ manner precisely up to my forecast 1230 target and has now begun to fail. I’m not so sure this sell-off will gain legs here, but ultimately a test or break of the August 9 low (1101 in the SPX) appears increasingly likely. Let’s see where we’re at after September 21 into early October.

Gold – BULL –

Gold has defined a trading range bounded by 1829 and 1782 over the past three days and beyond that 1906 to 1702. In my work, we saw negative volume post right off the top (1906), but we also saw volume decline into the low (1702). Since that low, we’ve seen gold creep higher touching 1841 on Tuesday. Next stop would be around 1880 and from there nirvana! As you know, my next objective whether we see it now or early 2012 is the 2200-2300 range. We could very likely see 2000 before year-end which many of you know I had been predicting well ahead of the ‘Street’. The mere fact the New York Times and the Wall Street Journal are presenting negative stories on gold is bullish from a contrarian’s perspective (please see comments in yesterday’s Closing comments).

Bonds – NEUTRAL –

Bonds remain extended continued their pullback earlier yesterday, until the market started to sell-off and found buyers. I am awaiting signs of renewed upside volume but continue to remain NEUTRAL. It is unclear whether the expected correction I’ve been talking about has run its course.