I'm watching Gold this week as extreme negative sentiment could lead to a short-term bounce in the precious metal price. Net positioning in managed money (hedge funds and other professional investors) is at an all-time low in Gold, which means that short positions could start to unwind. Rising support from oversold levels were registered in small-cap gold miners (ETF: GDX), and Newmont Mining (NEM). Market uncertainty could trigger a safety bid this week, with the CBOE VIX Index still holding above 11.50 and the Japanese Yen (ETF: FXY) displaying a similar support pattern to gold ETFs. USD/JPY will need to confirm downside towards 110 to confirm support for the gold price.
The CBOE VIX Index, a measure of market volatility, found a base of support around the 11.40 level, which sets a bearish tone to start the week. Initial downside support for the S&P 500 is around 2,790, especially as overbought signals emerge for the Russell 2,000 Small-Cap Index. Downtrend resistance is apparent in the MSCI Emerging Market Equity ETF (EEM) and High Yield ETF (HYG). US Financials also look stretched, with overbought signals in Berkshire Hathaway (BERK.B), the Financial Sector ETF (XLF)'s second-highest weighting. Expect a drift lower in the US 10-year Treasury Yield, together with slowing momentum in the US Dollar.