Gold stocks so far out performing general stocks. SPX near mid-May lows while HUI well above. HUI currently at the .50 retrace as shown on the chart. A breakdown below the lows of May is not a given.

Return to the Lira so they can get their central bank to print (QE) their deficit spending like the UK is doing. Another game of bluff for the Germans. Finally approaching the end game?
debt crisis deepens

Thinking that the 1320-1327 area maybe where shorts will be booking some profits.
--
Consensus between traders and analysts a like on tuesday was that the USFed 'extending twist' equated with 'doing nothing'. Suggest closely monitoring economic indicators going forward for confirmation of continuing contraction/deflation.

The chart shows how a symmetrical running triangle may have developed last week completing the b-wave of an a-b-c countertrend move. c-wave has not yet reached .618 projection of a-wave.
--
Note: Could evolve into a 5 wave move depending on whether bullish expections of the FOMC meeting are met/exceeded.

We may have had a relief rally as private polling leaks out of Greece on Friday were indicating that the "accept bailout" parties were pulling away from the "reject bailout - repudiate debt" parties. If the Greek "reject bailout" parties win enough votes to form government then this will probably be seen by the markets as a negative surprise.
Polling revealed that younger voters were heavily favouring "reject bailout" while older voters were backing "accept bailout". Younger voters don't feel responsible for the blowout in public debt nor do they like the humiliating sight of their political elites begging for endless bailouts/handouts. This is generally the case throughout Europe where the young have taken the view that the oldies have screwed them.
--
Reading the trader blogs, stock bulls are strongly inclined to believe that the USFed will announce something significant (market positive) on 20 June given the spate of bad economic data since the last FOMC meeting. Since 2009 the USFed has not let them down and they see no reason to believe that 2012 will be any different.
If the USFed does nothing then the Apr 2 SPX high of 1422 could be significant market top.
--
If the USFed does nothing then it may indicate the US financial elites have decided that they favour increased deficit spending and the candidate with the best chances of carrying it through congress is Romney. Romney could count on Democratic support so he would only need to carry a minority of moderate Republicans to boost deficit spending to new highs. Prominent Keynesian economists such as Krugman have been stating for quite some time now that monetary policy has reached its limits and that Govt fiscal policy needs to be expanded inorder for the economy to recover.

ABX may support this view.
--
ABX appears to be forming a triangle at the .618 retrace on the 60min chart. Likely to be a b-wave as gold struggling to break downtrend from Feb-29.

I think we saw world markets taken up due to short covering on the back of the Spanish bailout news. The Spanish Govt played the EU for suckers as they deliberately timed their demands 1 week out from the Greek election/referendum on the Euro, and in the process extracted 100B euros with little or no strings attached.
--
Keeping eye on volume to confirm failed rally. Likelyhood of markets rallying into Greek election is low as prospects of +500B Euros Greek debt blowing up in the face of the European banking system is far too real.

The chart dates from Friday morning.
On Friday the rally broke the trendline but was stopped at the .38 retracement of the move down from the 29-Feb high. It's now fighting to hold the trendline. Bulls will want to see it break free of the trendline and put in a strong rally. The retracement levels are fairly important here in terms of determining whether the correction from the Sept-2011 high is over.

Friday's employment numbers and market action will be on the mind of many investors. Could see some serious dumping on Monday. Reading the trader blogs many longs are not too plussed as they believe shorts will get their comeupance June 20th FOMC meeting.
--
It's been a while since we've seen a trading day where gold has outperformed all other investments by such a big margin.
--
The stock market isn't the only only thing that investors will be pondering over the weekend. Doubts will exist on the credibility of the elites running the show.
obama = change you can believe in?
bernanke = recovery you can believe in?
Confidence is wanning.
----
The Irish voted in favour of adopting the EU fiscal pact yesterday. They chose to follow the path of fiscal responsibility being espoused by Germany within the EU.
Will the Greeks also come to the realisation that their own dire situation is due to the outright ineptitude and incompetency of their own home grown elites and not those in Brussels and Berlin.

Looks like there's potential for some more upside before the next leg down, however beware that the ECB may suprise with another LTRO print job.

The german Govt held its ground against pressure from Obama-Hollande-Cameron to loosen EU fiscal and monetary policy.

Merkel stands firm at G8 talks

I wonder if Merkel is trying to hold out for Mitt Romney. He talks up sound money issues but I doubt if anything will change if he becomes president. Dollar debasement has assisted US export industries however the US would be seeking a further boost from increased deficit spending and looser monetary policy (easy credit) by its trading partners.

At the meeting Obama would have argued, where would the world be without the $8T the USFed and US Govt has spent in bailouts and deficit spending - time for Europe do its bit and crank up the printing presses. There's no doubt that US spending has been beneficial to the Chinese and German export industries.

These expanding triangles can break either way, however it looks like the USD is forming a top at ~82 on the 60min chart.

Deflationary and inflationary forces are continuing to play havoc with investor sentiment. With the European banking system in crisis and on the ropes again, fears of a deflationary collapse are winning out for now. The real fear is that the debt servicing problems of Greece will playout on a much larger scale with Spain and Italy. Any major stress on the European banking system will be felt around the world.
--
At this point my personal view is that the major central banks will continue in their attempts to inflate away excessive public and private debt. The prevailing view at the moment amoung keynesian economists is that running 4-6% deficits (EU) is austere while 12% (US) is stimulating.
--
Gold and AUD continuing to track each other. Likely to be an a-b-c move down but could evolve into something more complex.
c-wave as shown on the AUD chart currently stopped at the .618 projection.