The SPX lost $2 and some change after opening higher, likely due to a minor rally after the news that Osama Bin Laden had been killed. Perhaps 5 or more years ago this would have provided the market with more relief but with terror not in the headlines, most Americans digested this news without a second thought. It is fascinating how the nationalism that this country had post 9/11 has all but disappeared.
Most of the selling action took place around 3pm when major indices and commodities tumbled sharply and limped into the closing bell. The UUP engulfed friday’s candle and a very short term rally may be ahead. Regarding last week’s post, I don’t think that the dollar is ready to make a long term reversal quite yet, and as I have stated before, I expect the S&P to reach 1400 and gold to reach $1600 before that happens.
There is the potential for a rising wedge in the S&P. If the markets come down this week, that would make sense for the dollar to rally off of the lows but if this is in fact a wedge, then the dollar rally will be short lived and will have to wait until the S&P tests stronger resistance before it can make a true bottom.
Silver went down after the CME margin hike this morning and once again with the rest of the market as everything sold off heavily during the last hour. It was down over 8% on the day, but maintain its uptrend. I think it is likely to get another pop after testing the 20 MA today, but I cannot speculate further down the road as the price has been far too unpredictable as of late. I still believe that I have the fundamentals correct in the sense that it must correct for while, but that doesn’t always mean that it will.