Sulaman Chaudhry and Andy Cole send: Well, after a somewhat extended vacation, we are back at it again. Let’s take a look at the market:

The S&P made a run at 800 last week and was rejected by the 50-day moving average. Getting short at the 50-day has been a great trade over the past few months and it looks as though that will continue into the remainder of the year. Also, volume was somewhat light last week, so we’d like to see an increase in volume to confirm the trend change to the downside.

Looking at an hourly chart of the S&P, we definitely put in a double top at 800. From there, we broke trend-line support and managed to put in a lower high. The selling should continue Monday unless something crazy happens. We’ll be watching that 760 area for a break of support.

With regards to Gold (ETF: GLD), any regular readers of this blog will know that we love this chart from a technical perspective and even more so from a fundamental perspective. To provide greater support to mortgage lending and housing markets, the Federal Reserve announced last week that it will be increasing its balance sheet by purchasing an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year. Also, to help improve conditions in private credit markets, the Federal Reserve will purchase up to $300 billion of longer-term Treasury securities over the next six months.

In other words, the Federal Reserve is going to printing a lot of money over the next few months and gold is looking like a better and better place to put money these days.

Here is a yearly chart of the GLD showing that inverse head and shoulders we mentioned a few months ago. Obviously that right shoulder still needs to form, but last week was a good start.

The Financials ETF (XLF) actually managed to break through that downtrend that had been intact since October of last year only to be rejected at the 50-day. A break below $8 could lead us to a retest of the lows at $5.88.

Oil (ETF: USO) is beginning to show some signs of life as the USO actually pushed through the 50-day last week. If we break above $40, we’ll be taking a shot on the long side. Otherwise, we’ll be trading other charts.

Anyways, it’s good to be back.

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