In today’s video, Chris Vermeulen of The Technical Traders talks with David Lin, anchor for Kitco News, about the recent price action of gold and the stock market.
Looking at the daily charts of Gold (GC=F), we can see gold has this big run-up when the news of war initially hit. Next, we saw gold pullback and sell-off. Since then, gold has stabilized and has flirted with both the resistance area of $2000 and the support area of $1890, indicating that it’s been trying to build a base and recover.
The quarterly chart of gold remains very bullish.
Overall, we are in a bearish or distribution phase in the stock markets. Though some sectors are doing well, most stocks are going down, creating a major divergence. We are in this phase where the market doesn’t know what it wants to do. The S&P 500 (SPX) is below the 50-day moving average and crossing down below the 200-day moving average, which is not a great sign. It is in this phase that the stock market is excellent at shaking people out.
As panic rises, people get spooked, sell their positions, and the downtrend continues. With all of this going on, The Technical Traders is in a full cash position.
After an upside run of over a year, the long-term investment strategy, based on technical indicators, moved to cash about six or seven weeks ago. The short-term swing trading strategy followed suit and closed out six winning trades in mid-April. Should we flip into a bear market, we will look into inverse ETFs to profit from the fall.
