Yesterday’s BofA’s MacNeill Curry warned that once above $1270, gold becomes “explosive” as the squeeze trap slams shut, which explains why the shorts are desperately defending the critical resistance redline. Today, the chief technician of Bank of Countrywide Lynch looks at the two other key correlation pairs: the S&P500 (via the Emini ESH4) and the USDJPY, which by virtue of being the key funding pair determines the price of risk in virtually every corner of the globe. He is not too happy with what he sees.
Here are his thoughts:
On the S&P500: ESH4: From Bullish To Neutral
Anxiety across markets has reached a n/term extreme. The trends of the past few days/weeks are set to correct, but not turn… The break of 1809.50 has invalidated our bullish view, but we ARE NOT BEARISH, JUST NEUTRAL. Going forward, we expect an 1805.75/1846.50 range trade before an eventual resumption of the larger bull trend. Below 1805.75 spells trouble, but bears only gain control on a close below 1767.75. See the chart for equivalent cash levels.