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Looking for a 50-Day Average Test

Major indices sliced through their respective 20-day averages on Ireland default and Chinese rate hike fears yesterday. Today we may see a test of 50-day averages, which are not far below the averages. We are still in a bull market and thus far there has been no technical damage to the bull trend. Until we see major technical damage to this trend we will operate under the assumption that this is merely a correction and a buying opportunity.

In fact, we are already putting together a buy list and have a growing list of stocks that are nearing levels of support. If we start to see bases develop over the next few days we will begin to start rebuilding a long position in anticipation of a continuation of the bull trend that kicked off on the first of September.

Gold is now trading at its 50-day average support and silver at its 20-day average. If Chinese rate hikes continue to be an issue we may see these support levels give way, but right now we see no evidence that they will so we will be keeping a tight reign on our gold and silver shorts.

Disclosure: short gold and silver