The lack of major economic reports seems to be limiting movement to the upside in U.S. equity futures this morning. Absent today is the driving force which helped boost prices higher on Friday.  We could be looking at a slow start to the week since the final reading of U.S. GDP on Thursday is likely to garner most of the attention.

Even without a strong overnight move, equity markets are poised to finish September with one of their best returns on record. With the markets at lofty levels to begin the week, don’t be surprised by an early morning set-back. Traders have become accustomed to buying dips rather than chasing rallies, so today is likely to be no different.

The December E-mini S&P continued its rally last week, bucking the seasonal tendency and pretty much assuring that September will be a positive month. This index was choppy early last week, but eventually bullish investors were paid off when the market rallied on Friday.

Last Tuesday’s Fed statement, hinting at more asset buying, should have been enough to launch a rally, but investors were nervous about buying strength, triggering violent swings. Eventually the bulls won the battle as buyers defended the low for the week twice before finally pressuring the shorts enough to give up their positions.

The charts are now indicating that 1154.50 to 1160.75 is the next upside target for the December E-mini S&P 500.  Based on the current short-term swing of 1117.25 to 1149.75, traders should watch for a pull-back to 1133.00 to 1129.75.

December Gold traded through $1300.00 last Friday for the first time in history without much fanfare. There is really not much to talk about until Gold does something to catch my eye. Currently the rally looks pretty normal. I’m looking for either a spike up to indicate exhaustion or a dramatic closing price reversal top. The swing chart indicates that $1318.10 is the next upside target on October 4. A move to this price on this date will mean the market is balanced. There is nothing exciting about that.

This morning a news report was released stating that Europe’s central banks have all but halted sales of their gold reserves. This ended a run of large sales each year for more than 10-years.

The recent rush into gold over the past few weeks may have been in anticipation of this event. What it essentially means is that a significant source of supply has been withdrawn from the market. In addition, it has given psychological support to the gold price. In other words, supply will be tight and a major seller is gone.

Traders may not react to this news instantly because it may have already been factored into the market, but it will play a significant role during the next financial crisis. Gold is likely to continue to move higher especially if the central banks turn into buyers.
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