August 23rd.

1) S&P 500: down 0.4%, 4.33 points.

I mentioned in another post that the triangle of the line, which connects the three bottoms and the line on the top of the current price action, is a pretty important, today all day the markets were holding that bottom line, about 30 minutes until close sell volume kicked in.  Markets closed below the line and lower than previous close.  What to look for now is this small head and shoulders pattern neckline (the light purple line) to break.  A break of that line based on the distance from the neckline to the head would make 1012 the target of this market.  There may be resistances along the way but this next big move could take the S&P down a solid 5% in a day or two.

The longer term chart doesn't look much better.

The next target if the sell pressure is still high, a test of the 1000 area would be expected (intersects with trendline as well).  If that breaks I have will still call the 950 level where support should be found.

I am trading HIU which is a beta pro ETF that tracks the inverse of S&P 500.

2) Gold correlation

First lets look at the Elliot wave count on a long term basis

The first impulse wave had an A wave retrace 61.8%  and the C wave retrace 50%, then the second started. The second A wave was a 61.8% retracement, and the second C wave retrace 50%.  The third impulse the A  wave seems to have retrace 50%, and the targets are the 50% again, or 38.2% retracement.

I think gold is still bullish but right now it has been trading lockstep with s&p 500 today.  With a drop down, then an attempted rally that failed the last 30 minutes of trading.

Typo on the 32.2% should be 38.2%

This is just two impulse waves.  The targets at the 50% and 38.2% would be approx 114 and 111 repectively.

The Elliot count looks like the B wave is ending and the last retracement (C wave)  before another impulse wave.
There is heavy support right now but could be tested or broken before the next impulse wave occurs.
The MACD has decreasing momentum for a few days.
the slow stoch is the most interesting.  For the last half of this rally gold has been in a locked in mode.  Pulling the market higher.  This occurs when the yellow and white line stay above the 80 line (bullish) or below the 20 line (bearish).

Today this has broke down, with the slow stoch at 79.57.

3) Economic news. http://www.bloomberg.com/markets/economic-calendar/

Tuesday: Existing home sales 10am
Wednesday: Durable goods 8:30 am and New home sales 10am
Thursday: Job loss claims 8:30 am
Friday: GDP revision 8:30 am consumer sentiment 9:55 am

Job loss claims were terrible last week, 500k.  If this weeks numbers come in lower than expected expect the markets to move.
GDP revision, I heard from an interview that the market has already discounted the Quarter 2 GDP to 1.4%. The original number reported i believe 2 weeks ago had the Quarter 2 GDP at 2.1%.  If this number comes in below the 1.4% the market will sell hard hard and fast.  If the number comes in higher than 1.4% the markets could bounce or travel sideways until more down arrives.


Silver postions:

I am currently out of all silver positions.  I ended a position today in FR on the TSX.  I ended up with a marginal profit but I didn't want to be long when I expect this week to be rocky.

The end of the day it was dragged down forming I would say a weak inverted hammer (sell signal)  I exited at $4.37

As you can see from a 10 minute chart after the open at $4.40, the price could never breach the $4.38.

A few other charts of mining companies had similar formations.  So confirmation on all this predictions is needed.  If the markets drop some more, this selling could kick in quickly.