Negative Divergence On The SPY

As everybody has suddenly a positive view on the "mild but sustainable" recovery of the US economy, it would be wise to take some chips of the table. The SPY got rejected at gap resistance, and the momentum is slowly fading away. It will probably take some time until the negative divergence puts in a real sell signal, but the short term upside looks very limited from here. Traders who have bought the market on a contrarian basis at the beginning of the week probably have no problems with selling ahead of a long week-end.

SPY, hourly with MACD

Gold Gets Hammered After Non Farm Payroll Data

Gold broke support at USD 1244 after the release of the U.S. non farm payroll data. The MACD is showing an impressive new momentum low, suggesting that the correction could last a little bit longer. The 20 Day moving average rises at USD 1228, next support is 1218.5. A break out in Gold occurs when it moves above USD 1269; the Bull Market in Gold is over if it falls below USD 1150. To find a good risk reward here is difficult. I still believe in a break out to the upside but there is no reason to get overly bullish or bearish here. Having a look at the daily chart, we have a negative divergence developing on the MACD, but the long term trend is intact. There could be some back and forth action between USD 1217 & 1244 until Gold decides which way to go.

Gold Remains In Break Out Territory

The Chart below plots the hourly price structure of Gold over the last 14 trading days. After breaking resistance at USD 1244, the metal now consolidates above that important level, forming a consolidation triangle. A break out of this triangle to the upside would be firmly bullish and a clear sign that Gold is challenging its all time high of USD 1265. Long positions will only pose a problem if Gold falls below 1244 again. But for now, the set-up looks firmly bullish.