The outcome of the Greek vote at the weekend was not favorable for the markets, or for Precious Metals in particular. This is because it did not precipitate an immediate worsening of the acute crisis in Europe, and thus did not create the pressure needed to bring forward the major QE that must eventually come in order to delay Europe’s eventual complete collapse. Why then have markets not caved in already? – because investors are “smoking the hopium pipe” and waiting for the Fed to pull a rabbit out of the hat at Wednesday’s FOMC meeting, by making positive noises to the effect that QE3 is ready to be rolled out. What is likely to happen instead is that they will come out with the same old line about “being ready to act when the SHTF” but other than that remain vague and non-commital. If this is what they do then markets are likely to throw a tantrum and sell off, and the charts are indicating that it could be hard.

The broad market is believed to be at a good point to short here, as its earlier oversold condition has been substantially unwound by the rally of the past week or two, which was fuelled by QE hopes related to the Greek vote and now the upcoming FOMC meeting. It has rallied into a falling 50-day moving average, which is usually a good point to short it, as even if a major downleg isn’t starting it would normally back and fill to give this average time to at least flatten out before a significant rally could start.

How does all this square with our bullish stance toward gold in the recent past?

…read more and view 3 more charts HERE