Gold and silver collapsed in epic fashion as the Dollar had a rare sharp spike intra-day. This was just one of the reasons for the market fall off new 52 week highs. In this article, I will show you why the markets are ready to fall and on the verge of a steep correction.

The collapse in gold and silver must be mentioned first. The SPDR Gold Trust (ETF) (NYSEARCA:GLD) is trading at $167.10, -6.39 (-3.68%) and the iShares Silver Trust (ETF) (NYSEARCA:SLV) is trading at $33.82, -2.01 (-5.61%). The reason for this massive drop is two pronged. First, gold and silver have been ripping higher for the last two months. The GLD bottomed on December 29th, 2011 at $148.00. Yesterday, it hit a high of $174.00. This massive move created a major overbought scenario and was due for a correction. Secondly, the Dollar had a major spike higher intra-day. This is rare but as it happened, traders ran for the exits. As they dumped, more investors sold creating a domino effect. This drop on gold is one of the biggest one day drops ever..

Next, the Dow Jones Industrial Average closed above 13,000 yesterday. This was significant on a psychological level. As the media pumped this level yesterday, the average investor reacts by getting coaxed into the markets, thinking all is safe. They also feel they are missing out on making money, a powerful emotion called greed. As amateur retail money flows in, history has shown us the top is in or near. Sure enough, early upside gave way to selling.

In addition to the 13,000 level on the Dow Jones Industrial Average, the NASDAQ hit 3,000 for the first time since the year 2000. This is another psychological barrier. Is the market really at technology bubble levels from 2000? If so, that is a scary thought when one connects the bubble dots. No sooner did the NASDAQ break 3,000, the markets dropped.

Lastly, Apple Inc. (NASDAQ:AAPL) hit the amazing market capitalization of half-a-trillion Dollars. This puts the worth of Apple on par with the 20th biggest economy in the world. Psychologically, that is a hard apple to chew and something that must make investors slightly wary.

All these factors are mixing with an overbought market. Downside is close at hand regardless of Federal Reserve and European Central Bank continued intervention. While the markets find themselves in another bubble, the pop is not far away.

Gareth Soloway
InTheMoneyStocks.com