Now This is Bull Market Action
The nearly 4% sell off in the SPDR Gold Trust (symbol: GLD) will likely have the gold bears cheerleading from the sidelines, and once again, we will hear how the bull market in gold is over.
I contend that these periodic sell offs are solid bull market action that is meant to clear the weak hands. This is how bull markets work and how prices stair step higher.
By contrast, we have an equity market that has failed to register a single over sold reading on a daily chart in over 3 months. The equity market only knows one direction and that is up. I don’t believe that this kind of price action is very sustainable. I have written about the distortions in these liquidity fueled rallies. I contend that the only way for the equity market to go higher is for it to go lower first. But that seems impossible.
If only the equity market would learn from the gold market, we might be able to have a lasting, durable price advance.
