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Gold and Treasury alert!

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Traders need to be alert here as bond prices have started to surge and yields are dropping rather noticeably. While this activity may seem encouraging to some the activity we're seeing in the Gold/Silver Index has us a little on edge. Be alert!

30-year Treasury Bond Yield - 60-minute interval.

Yields continue their downward ascent on the 30-year Treasury bond (TYX.X). They either believe Mr. Greenspan will cut interest rates soon, or it is still seeking out perceived safety.

Gold/Silver Index Chart - 60-minute interval.

The XAU.X recently triggered an upside alert and last time bond yields started dropping and this index started moving higher stocks ended up suffering the consequences. If we start seeing some weakness in stocks, traders will have a heads up as to what type of action to be taking.

Dow Industrials Chart - 60-minute interval.

The Dow Industrials (INDU) have fallen back below our downward trend of resistance and this is a short-term negative. The 200- period MA (thin red) and 50-period MA (thin blue) are trending higher and should offer support. MACD on this time frame is starting to roll and should be monitored closely.

S&P 500 Index Chart - 60-minute interval.

Yesterday, the "fighter pilot"/trader had a target of 1,360 and the 200-period MA (thin red) as their target when we started getting upside alerts triggered. That target has been achieved and some profits taken. While some may not have "appreciated" that type of scenario we made the point for a reason. If fuel is running low on yesterday's rally, traders need to be at the ready to cut and run with profits booked. Traders should always be willing to re-establish positions even at higher prices. It's the pilot that tries to squeeze every ounce of fuel out of his/her plane that usually ends up doing a nosedive into the ground.

-Staff Analyst

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