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“All one market” concept – does gold lose its luster?

EURUSD Hourly: testing support at the 72-hour moving average after the 32.8% retrace.

S&P 500 (red) versus Financials Fund ETF XLF (black): Big divergence in the financials — not a sign of underlying economic strength for sure …

S&P Hourly Bar: A nasty break in store today?

We read Robert Prechter’s November Issue of The Elliott Wave Theorist with interest. He talked about the “all one market concept” we consistently see in the various correlations (as we are seeing today). The all one market concept, by viewing “tops” soon after the Fed officially announced QE2 on November 3rd, suggests that all good liquidity news was already in the price:

Gold: In Prechter’s monthly letter he showed a trend line on gold running back to 1932. Amazingly the trend line was near the exact monthly top of $850 back in the mid-70s and extending it produced a top resistance today that was a test of $1410 per ounce. If you are looking to hedge your gold holdings, we like long DZZ (PowerShares DB Gold Double Short) … not a bad risk:reward trade here. You know exactly where to exit this fund (low of $7.90); this fund trades inverse to gold.