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Markets at a Red Light in a Big Intersection

|Includes: SPDR Gold Trust ETF (GLD), XLY

The rally is at a critical turn point having just made it through the 100 dma a month or so ago and now struggling to break and hold the 200.  This wouldn't be such a sticky wicket if the leader groups the broad market has been following were not at turn points themselves.  These groups, like retail and consumer discretionary, have already successfully forged through the 200 dma and accomplished a 50/200 dma crossover (the S&P 500 has not), but now these generals are at this juncture:

The RLX Retail Index is in pretty much the same condition.  This triangle consolidation typically breaks sharply one way or the other.  A break to the downside out of the formation is also a break of the 50 dma and would likely pull the S&P 500 back from its attempt to take up residence back above the 200 dma and force some more bear shenanigans.  The volume pattern is perhaps more disturbing than the formation with a very clear bias to selling.

Over at Marty Chenard has an article and chart showing a RSI indicator that stalled at the top of each rally during the 2000-2003 market and was breached only when the 2003 bull began.  Where are we now on the chart?  Right at the same level as the rally tops in the previous bear.  So we are at a turn point by this indicator as well.

Gold is also at a technical intersection:

The GLD is approaching a bull/bear turn point at around 90.  Like the XLY, a break of the formationto the downside is also a break of the 50 dma.  If you go strictly by the big volume days indication, you would expect the stock market to turn down and gold to turn up, acting like they're supposed to (inversely correlated).  But not so fast. There are many cases of both gold and the stock market making big moves together.  You need to look no further than the last bear-to-bull transition of 2001-2004 to see an example of this. 

I suspect that, after the big run from the low,  the indexes are just doing a natural consolidation before continuing the bull move.  But putting a lot of new money to work right now is a little dangerous.  I raised some cash this week and will refrain from redeploying untill I see how these turns play out.