Golden ratio proved bearish for gold, silver and oil, bullish for the dollar and bonds - does it last, or reverse?

Gold continued lower again from the "golden ratio" Fibonacci .618 retrace that I mentioned this morning - and interestingly, dropped to a .618 retrace to its most recent swing low! US bonds represented by TLT continued up out of their recent low which also represented a .618 retrace to their prior low. As for the dollar, if you've been reading here any length of time, or browse my prior posts (e.g., "US dollar" label), you know its move up is from a .618 retracement area on the monthly charts! I think we could find a few more examples, as the recent rallies in silver, oil, gasoline, and likely some other items, tested to their .618 retracements to prior swing highs ... before dropping smartly the past few days. The banking and financials have tried to break out these past two trading days, but are looking weak and making me wonder if they can drum up what's needed before the music winds down. What's next, where does all this lead?

First, recall all the analysis and table-pounding I was doing over the past 3 or 4 months, about the currencies charts, especially the dollar and euro, and gold. Also of course oil. In all these I showed the potential for the big picture to shift again to the deflationary themes suggested by the long-wave cycles. After all that, it got - er, frustrating? or at least boring - as the dollar, euro and gold meandered. But I hope my readers didn't forget. Since then, we saw oil and gasoline fall to that .382 retracement I showed, then bounce up, while we all went through the head-and-shoulders head-fake drama. Then this past weekend, I showed how the S&P 500 and Nasdaq Composite reached important Fibonacci levels, with the QQQQ's nearing one also (39.82 representing 50% back to their 2007 highs). As the Shanghai and some other indices appear to be doing similar ... And the DJIA, NYSE and - perhaps - the Dow Transports testing their January highs.

From the socionomic perspective, it's also interesting to note that the SPX and Dow Industrials are testing levels from November and January - times when the U.S. was going into the presidential elections, when Barack Obama was being sworn in, and now faces increasing tests with his health care initiative and other discussions sparked by his recent press conference remarks. Again - just a socionomic note, looking at price levels and the national scene.

These factors appeared to be converging in some ways in May/June, but now have heightened with some like the SPX having matured to that .382 retrace of 962. The dollar and gold are running out of "room" in price and time to strike out in a direction. Will it be up, or down? I don't know if the charts will provide answers this week. But readers know I generally believe we shouldn't assume the big direction isn't in the deflationary direction.

It remains possible for an equities market pullback to show up and provide simply a correction working off overbought conditions. I just believe we should position in order to avoid portfolio damage in case it turns out to become something more bearish.