A reverse Head and shoulders pattern is almost done forming in Gold. We are currently seeing the right shoulder form.
Left shoulder low in early October, Head low in late December, right shoulder low developing now.
In GLD terms we could see an advance from here ($160) up to $180 and retest the August 2011 highs. Now is the time to start a position in Gold, preferably through the ETF GLD.
Industrials have begun their decline which could see the rest of the market now starting to follow them down. Both Germany and China continue to show weakness in manufacturing.
Volume is still extremely low and cash is still staying on the sidelines. With no big earnings left we are entering a period where there won’t be a lot of news to drive markets up.
The only thing left to really drive up the markets is that we are coming to the end of the quarter and funds need to boost their numbers – but come April there is nothing to boost markets and only headwinds to bring them down.
A worry developing now is that when we start the next earnings season companies won’t be reporting as robust earnings as the street wants to see.
Its a stock pickers market – so don’t get caught with thrash in hand.