The financial media loves to explain market moves with news events. While it's true that news can be a catalyst, it is also true that markets are often already 'positioned' for the move ahead of time and it doesn't take much to set them into motion.
Equities were positioned for a big upside rip after 9 straight down days in the S&P and word from the FBI that Hillary has been "cleared" was just enough to send futures soaring. However, one must realize that the market was only able to move to such a large magnitude because it was positioned for such a move. The FBI/Hillary stuff is simply an excuse to send the market moving the way it already wanted to.
I want to spend some time on gold. Gold rallied last week and made it as high as $1309. This is an important level because there is a tremendous amount of price memory in the $1307-$1310 area. When a market is not in a clear and powerful trend it is usually most helpful to think of which scenario would confound the largest group of market participants. I believe the recent action in gold is a perfect example of this concept; after getting a large group of market participants bullish on the yellow metal the rug was pulled out to the tune of a ~$80 drop to the $1240s, then once sentiment had turned sufficiently bearish gold posted a $60+ rally over a roughly one month time period, finally just when everyone thought the coast was clear as we had returned above the $1300 level we get a large gap lower over the weekend.
Just like with equities gold was positioned for this move. The retest of the breakdown level and an important area of support/resistance over the last few years was simply too much:
Fibonaccis are an art, not a science. Drawing the Fib retracement from the level in which the 2013 crash began (~$1570) to the ultimate low at $1045 we can see that last week's high reached the midpoint of the entire move. $1308 was also the early 2015 peak from which gold launched into what I believe to be the final leg of a nearly 5-year cyclical bear market.
One doesn't have to be too fancy to use charts effectively. $1310 was support for several months and then that support finally broke. It is normal for markets to retest levels of support after breakdowns occur:
Simpler analysis is more effective. Gold is a range-bound mess until proven otherwise, however, nimble traders can do very well by being disciplined and waiting for the fat-pitches to arrive.
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