Friday, October 8, 2010

S&P500 vs Gold vs Treasury Bond, get ready for explosion!

S&P500 vs Gold vs Treasury Bond Chart Since Jan-2010: S&P500 vs Gold vs Treasury Bond Chart (Oct-2007 to Oct-2010):
It is very rare that equities, gold and bonds all climb strongly (see the chart), but this unusual synchronicity is being driven by expectations of another round of quantitative easing by the US Federal Reserve. There is no way these 3 are going to rally together for a long time. One of them is going to blow up. I warns that now it's up to the Federal Reserve to meet those expectations or the upward momentum could be reversed very soon.

On technical aspect, we are extremely overbought. In my September 19th post I talked about possible rally with out any meaningful pullback. I was looking for S&P500 to rally to 1170 to complete the sub-wave (2). We are getting close to my target, today high was 1167.73 ; from now on earrings are going to move the market. Please note sub-wave (2) could ended anywhere from 1170-1180.

Please pay attention to 1150 support , it must not get violated if big institutions want to send the market higher.

Related topics:
S&P500 Technical Analysis (09/19/2010)