Gold at a critical juncture

Scenario 1: Correction

If the current move is a final capitulation or downside exhaustion within a larger corrective Pattern then the following move should be explosive to the upside. The rationale lies in the dimension of the correction which indicates that the conclusion of this 2 yr correction could kick off the next phase of the bull market which would view 1999-2011 just as a warm up.

Sentiment, Momentum, Pattern, Seasonality support this view. 

Scenario 2:

The Gold market breaks down, then we should embrace the 1300 area as the next target with a 1450 stop in between.

Oil, Gold, DXY sing the bull song

Dollar could top here, but the neutral Sentiment should not allow to big a move.

The ducks are lining up for Gold: Seasonals, TimeCycles, Trend

 Oil looks also bullish.

We have added additional charts to 'SUSI CHARTS' link (see right)

One of our best Horses is still long OIL

The Public Opinion allows for more upside in OIL.

(source: http://www.sentimentrader.com)

The Seasonals for Crude are good up to September.

(source: http://www.sentimentrader.com)

Our  correlation/ Risk ON- Trading Model is bullish supported bei the VixOSC and our Trend Indicator.

Have we seen the Low for the year in Gold ??

Seasonality

We now enter into the high Volaltility season for the stock market. We are also in a post election year (US: Obama+1) which also comes with certain seasonal factors.

The Golden5: Context

Bear Market Rallies are steep and impulsive...and the current one fits the profile...

 Short covering Rallies focus on sectors that are economically weak (i.e. recession driven).......and this recession is about de-leveraging of banks and consumers and about weak production plans (materials and commodities), therefore those had to outperform the broad S&P500 (THE MARKET)

hat tip John  Mauldin

Sell in May in Bear Markets is obviously different than in bull markets. Pls see John's excellent post on this....

Bottom Line: Seasonal Factors supported by a short covering rally are lining up for a temporary seasonal TOP