Watch Gold

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With asset correlation nearly 1.0 across the board, it hardly matters what you watch for guidance as to the market's general direction……….the Dow, the S&P, the Russell, crude oil, gold, silver, kitty litter……if one moves down, they all move down, with rare exceptions. (The only consistent odd-man-out, of course, is bonds, which have been strong all year and move inversely to equities).

Gold, I think, is a particularly good guide right now. It used to have this freakish property of being in a world unto itself, but I think it has basically decided to become the stock market. All assets are moving together, so watch gold – – if we get a path like the one below, the bears are going to have a medium-sized victory across the board.