Top Trader: Get in Gold, Buy Stocks

Gold retreated back from Friday’s highs as Chinese manufacturing contracted for an 11th straight month.

Gold Bars
Gold Bars

The market has a quiet feel, but looking for gold to test support against $1,768 area ahead of the Institute for Supply Management's September manufacturing index, which came in better-than-expected.

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If gold can consolidate at the $1,768 level early in the week, I expect a retest of the highs.

Here's a closer look at key levels:

Pivot — $1,776, a close back above here to maintain momentum
Resistance — $1,783 - $1,785, $1,795 - $1,800**, $1,808
Support — $1,768.50 - $1,765***, $1,757, $1,753 - $1,750***, $1,743 - $1,745, $1,738***

Meanwhile, the S&P 500 index opened up the new month trading 12 points from the lows at 1,439. Resistance will come in at the 1,442 - 1,443 level.

Also, nonfarm payroll will be a large focus as later in the week. Bulls do have to like the recovery, but a retest into the mind 1,420s will hang very heavy. A close back above 1,442 - 1,443 will be bullish but only a close back above 1,449 will lead to a follow through rally.

Here's a look at some levels I'm watching:

Resistance — 1,442 - 1,443, 1,449**, 1,459.25**, 1,463.25, 1,468, 1,480***
Support — 1,433 - 1,434**, 1,424*, 1,415 - 1,418***

Finally, crude oil is trying to consolidate and build a base at the 91.07 level. With further trade at this level in the next 24 hours I would expect aggressive buying to test the 93.10 level. Only a breakout above the $94.28 - $94.69 will lead this market to further gains.

Key levels for oil:

Resistance — $93.10**, $94.28 - $94.69**
Support — $91.07, $89.75, $88.95*, $87.10***

S&P 500

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