GOLD n STOCK MARKET

click chart for better view

remember the apple chart [read this blog on apple], it forecasts apple falling to the range of 420-490, it just hit the low of 420 some days ago.

now look at the chart of gold, looks similar, isn't it. if it is to fall through the neckline of 1533, which is not so far off as the chart indicates, it will fall to the low range of 1100 although it is likely to struggle at the neckline for a while - falling through and bounces back up pretty soon after it is broken.

if this happens, what is likely to happen to the stock market? simple scenarios [up or down or down then up]:

1. a crisis hit and all assets class fall, so gold falls too like 2008; or
2. a stock market rally not seen in years as people dump gold for stocks or
3. a mini crisis hit follows by further QE.

these up down scenarios are never difficult to forecast but which one is more likely?

if you look at cad, it is already telling you that gold and oil price wont be doing good, it hits a high [to usd] of around 0.98 and is now at about 1.03. stocks perform well in a low inflation environment, any sign that oil prices fall below 80 [texas] or 100 [brent], you will soon see stocks flying sky high unless such falls happen in a dramatic way ie in a couple of days, then it becomes option 3.

the commodity bull run for the past few years could be in for a surprise hibernate. would food and fuel do the same? maybe! if they do, then the stock rally could last much longer as people have more in their pocket to spend.