Equities And Gold Rally
Equities had what's known in thebusiness as a rip-your-face-off rally Monday, exploding almost 500 points. Therally was no surprise; six ugly days in a row usually leads to a viciousshort-covering rally. That's exactly what we got -- a short squeeze in a marketthat has topped.
Gold also had a nice rally onMonday, not as powerful as equities but certainly based on the sameshort-covering set-up. After making highs at $1,365, gold has fallen on hardtimes and had been down nine out of the last 14 days. A short-covering rallywas imminent and there it was Monday.
The rally in gold is continuingTuesday while the equities are under a little pressure. The common thread hereis volume, as both rallies are on declining volume. Indications are both havemore room on the downside. We believe gold is a lot closer to a buyable bottomthan equities. Look for support in gold at $1,300 and equities to have a muchdeeper sell-off.
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