Did Donald Trump Just Ring the Bell at the Top for Gold?

So, it turns out “The Donald” is now accepting gold as a form of payment for his real estate properties partly in protest against Chairman Bernanke’s easy-as-can-be monetary policy.

I noted on Monday that the miners were putting in bearish reversals, and the silver miners especially seemed to be confirming that bearish evening star pattern, losing their respective 50 day moving average today on SIL (ETF for silver miners). Moreover, the junior gold miners have erased virtually all of the gains from late-August.

Now, I realize that the miners and the metals themselves often trade in separate worlds, but from a contrarian perspective, coupled with the sudden turn of events in the technicals, perhaps gold is putting in a more meaningful top than we think right now. To be sure, the bullion has been in a fierce, multi-year bull run. Bull markets of that magnitude tend go out with a bang rather than a whimper. I am not sure we have seen that big bang yet, but we must be getting closer when real estate tycoons accept gold as a legitimate form of payment. Note also we are seeing more liquidity enter global capital markets, yet gold is down today. When something starts going down on what is supposed to be bullish news, it often reinforces the “top” thesis.

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The 1200 level on the S&P 500, and to be more precise 1204, is shaping up to be the scene of a high stakes fight between bulls and bears. Besides he psychologically significant prospect of emerging victorious from a large round number like 1200, you will note that 1204 was firm resistance back in mid-August, as well as exact resistance last week before we turned back lower to 1136 (briefly) on Monday. Hence, the presumption is that there is a lot of pent-up demand for buyers looking to go long if, and only if, we can clear that level.

At the same time, the bears know that this is their opportunity to pounce on a rejection from well-defined resistance. The key issue now is analyzing the nature of the price action–Does it all fall apart quickly? Or do we simply digest the move higher and churn for a bit before eventually breaking out?

We know that over the past few days the technology and transportation stocks have been leading, while commodities have been somewhat lagging, especially my usual market “tell” Freeport McMoRan. I will be watching the energy/material complex in the coming days to see whether they are the canary in the coal mine, or whether they are simply poised to play catch-up.

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…check out these five trading ideas and explanations with triggers for tomorrow. Some of them are under the radar types of stocks, but well worth keeping on watch.

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Virtually the entire technology sector is leading the charge higher today, which to me is a welcome change from earlier this year when silver miners and other commodity stocks were jerking us around, albeit higher. The transportation stocks are also outperforming again, which is another positive sign for bulls. As you can plainly see this afternoon, the shorts are on the run and the bulls have done an excellent job of building on Monday’s downside rejection. From failed moves usually come aggressive moves in the other direction.

I am focusing on stocks that are well set up technically, and also have heavy short positions, so as to fully capitalize on this sudden change of events to catch bears off guard. As we have seen over the past month, the market can turn on a dime. So, I am still methodically legging back into the market as opposed to coming back all-in at once.

The bottom line is that tech and trannies are back with a vengeance, and I will be looking at even more of those charts for homework tonight and in the coming days.

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The market is off and running, and we are pretty busy inside the 12631 Trading Service within The PPT. On days like today, the way in which we use The PPT algorithm makes it quite easy to adjust to a market that seems to be changing in character. The issue now is how lasting this move higher is. When you look at a 30-minute chart of the SPY below, recall that I discussed the rejection of a breakdown on Monday, despite how dire things looked for the bulls.

Since that rejection of the downside, the market has seen a quick move higher, followed by a healthy consolidation and a breakout from a rising channel today, as you can see below. The daily timeframe tells us that we are still in a larger rising channel, but for now the bulls are doing what they need to be doing, and playing along one day at a time seems to be the correct strategy.

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