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On Tuesday, gold dropped below $1,400 for the first time in a month. That aligns pretty well with what Fortress Investment Group President Michael Novogratz told "Squawk Box" on Tuesday morning: "Gold's bubble has burst," he said. "You've tried everything you can to make it go higher and it won't go higher. Therefore, it will go lower."
Is the market's run done, or is there 40% more upside from here?
According to RBC U.S. Market Technical Strategist Robert Sluymer, the answer is "both." It just depends on an investor's time frame.
Sluymer said the market is a bit overdone in the short-term, but over a three-to-five year horizon he sees the S&P 500 taking 2,300 to 2,400.
How does he arrive at that target? Simple math.
As we head into Memorial Day, drivers are experiencing the lowest gasoline prices since 2008. So what explains the weakness?
Refiners are running strong, strong demand for gas has yet to materialize, and supplies outside of the Northeast are good. Couple that with weak numbers out of China on Monday, and you can see why demand for crude will be lagging.
I do not foresee low prices all summer long. After all, demand is expected to increase, and refiner problems are always at risk of cropping up. But by the same token, I do not see $4 gas on the horizon. Sure, we might get a few pockets around the country, but overall, it looks like smooth sailing (or driving).
So what levels am I looking at?
On the downside, I would buy at the $2.75 to $2.70 level. Indeed, gasoline has found solid support here. And as far as the upside goes, I would sell out of my position at $2.90.
Gold bears want to see a close below $1,418 Monday.
Gold sold off on Friday, reaching the lowest level since April 24 ahead of May options expiration. All week, gold was hitting a wall just below $1,480, and after reaching stops below $1,455, it picked up momentum to the downside and broke the major $1,437.50 support level.
The low on Friday was $1,418.50; however, the market found support against a trend line and was able to rally into the close. Gold reached $1,436.60 upon the floor close, and surprisingly reached the major $1,447 pivot level upon the electronic close, putting shorts on edge as the market failed to follow through.
Gold dropped three percent Friday, suffering the worst decline of any widely followed commodity as it plunged to a two-week low.
Many experts blamed the weakness on the U.S. dollar. The Dollar Index, which compares the dollar to a basket of foreign currencies, has risen nearly two percent over two days, to levels it had not seen in over a month. A rising dollar tends to hurt gold, because it makes gold relatively less expensive in dollar terms.
That's how George Gero, precious metals strategist at RBC, explained it. "Dollar moves were attracting sellers to gold as a strong dollar priced gold higher," he said.
But Friday fear is also hurting the gold market, Gero said. "Short-term investors unwilling to hold positions over the weekend left sellers with few buyers, so support levels have been breached," he wrote in a Friday note.
On the other hand, Carter Worth, Oppenheimer's chief market technician, said the chart tells you all you need to know. "A multiyear bull market has transitioned to a bear market," he told CNBC.com. "The backing and filling of late is the normal setup for the next leg down."
In other words, the tight range that gold was trading in was a precursor to the selloff—and it's nothing he hasn't seen before, Worth said. "After an initial plunge, and then a partial snap-back, any instrument usual goes quiet ... only to drop again, resuming its downtrend," he said.
Friday's close will be critical for gold.
Although gold was able to recover from the lows it made toward the end of Thursday's session and into Friday's, the nearly $20 selloff took a lot of wind out of the sails for the bull camp. Gold has continued lower, as it tried to hold major support at $1,437.50 to $1,438.80 once again, but as the old saying goes, the third time's the charm.
After recovering above resistance to reach a trading high of $1,461.20 Thursday night into the pocket of that day's initial lows, outside markets helped to add to the downside pressure.
In the week since Friday's better-than-expected jobs numbers, the stock market has been buoyant. Oddly, the Treasury market has also stabilized, and has been able to attract buyers.
The return of this positive correlation between stocks and bonds is due to the realization that the Federal Reserve has no immediate intention of slowing Treasury note purchases, so stocks will continue to move higher along with bonds.
That being said, it's difficult to argue against the theory that the stock market rally is approaching its expiration date. In the last five years, the S&P futures have had five significant rallies before a correction. If we ignore the first rally, based on the highly unusual oversold condition in which it occurred, the remaining four rallies have seen gains of between 16 and 27 percent.
The current rally has brought us up 22.9 percent from November. From a technical standpoint I believe we are about to embark upon a down move that could easily turn into the correction we have been waiting for.
(Read More: Smartest Money in US Is Dumping Bonds)
I am adopting a bearish bias in the June S&P E-mini futures at current levels, with a downside objective of 1,606. If we see the market trade 1,637, I will throw in the towel.
In the event that this downtrend occurs, I believe that the June 10-year Treasury futures will shoot up to 133.10.
Don't let the recent slide in natural gas fool you. This is a strong market with dynamics that have changed immensely over the past year.
The main reason that the market has been strong is that the rig count for natural gas has hit an 18-year low. Now, plenty of fracking is going on around the country, but the oversupply that we enjoyed just a few months ago is gone. Blame that on a winter that never seemed to end.
The second reason is one that I am sure everyone is well aware of: There are more uses for natural gas: from cities converting their buses and utility vehicles, to truckers retooling their rigs to run on nat gas instead of diesel, to coal-fired electrical generating plants being converted to natural gas.
The recent slide is a result of us being between seasons. In this time of year, natural gas is not widely used for cooling or heating, so demand is lower. But make no mistake—as soon as the weather heats up, look for the natural gas market to do the same.
I am looking to buy nat gas at $3.88, and I would buy more at $3.75. On the upside, once we trade above $4.20 again, look for a move up to $4.50.
The crude oil market has been quiet—but expect black gold to get a move on soon.
Crude oil has been in a healthy consolidation over the past 24 hours, finding session highs at $95.98, and it has pulled back to just above $95.50 in the middle of the session's lows.
Better trade numbers out of China have helped support this market. Additionally, there is a lack of desire to sell this market given the current tension in the Middle East.
(Read More: Why Oil Isn't Sweating Syria: Traders React)
Traders will be looking to the Energy Information Administration inventory report Wednesday for a knee-jerk reaction, to either find a better buying opportunity or momentum to kick-start a bullish engine.
As mentioned Tuesday, resistance will be found at $96.16 to $96.39, and a close above here will be bullish. Only a close below our support at $95.15 will signal a consolidation lower.
The market has held above previous highs from April 29 and 30, and a sudden drop to $94.69 could bring a solid buying opportunity.
On the other hand, a close below $94.69 would allow the bear camp to take some control, and could lead to a consolidation down to the $93.30 to $93.50 range.
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