Securities Research Services

Monday, June 30, 2008

Gold and the Deteriorating Dollar

Gold and the deteriorating dollar is the story of the week. The Fed sat on their hands last week, triggering a strong breakout in gold and further weakness in the dollar. The Fed was so intent on bailing out the banks that they are sticking it to everyone else as they allow inflation to run rampantly out of control.

Stocks got hit hard as oil spiked over $140 and the gold found a serious bid to the upside.

Stocks may head a bit lower here, but they are due for some sort of a bounce, which could occur any day now. Depending on the character of the bounce, it's likely that it should be used as a selling opportunity.

We have a huge list of stocks on our shorting watch list that we are looking to enter under the right circumstances.

The SPY is likely doomed to take out $125 eventually and this bear market is likely to head much lower as the Fed finds itself stuck between a rock and a hard place.

Strangely enough, sentiment didn't budge on Friday even as stocks washed out throughout the week. Without fear there is just no way this market is going to offer a tradable bounce. It's likely we will see a waterfall-like decline before fear actually spikes enough to create another buying opportunity.

This market is setting up for a trader's paradise.

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Juxtapose the 50-week average and B Band price today against recent reports. You will notice that the 50-week is turning lower and the lower B Band is spreading out to lower prices. This is a strong weekly sell signal. Again though, this market is due for some type of bounce before prices head significantly lower.

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