By Gareth Soloway on July 19th, 2010 12:25pm Eastern Time
The SPDR S&P 500 ETF (NYSE:SPY) is trading flat on the day at $106.66. After the massive drop on Friday, the markets seem to be taking a breather. This is often the case after an big move up or down and is called consolidation. In addition, the day after the weekend during the summer months is known for having some of the lightest trading volume of the year. Today is no different.
Gold, SPDR Gold Trust (ETF) (NYSE:GLD) is dropping sharply again. An in spirit of bear flag on the daily chart is playing out perfectly to the downside. After institutions got everyone so bullish on gold, it has now collapsed lower in dramatic fashion taking the small retail investors money with it. Essentially, after all the hype of massive short term inflation and running into safety as the Euro crashed, deflation is the real issue. I have been alerting to this deflationary issue for the last month. While the printing of money will cause long term inflation, assets are still being wiped out across the globe faster than the printing of money. Deflation in the short term is the higher risk, but not for the long term.
Short term gold may go a little lower although it does look semi attractive at the $114.50 level and then at the daily 200 moving average at $111.50 - $112.00.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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