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Gold Bounce Today, Signals Market Bounce Tomorrow: Pro

Gold bounced on Thursday, with the precious metal putting in its largest one-day gain since January.

The move is particularly noteworthy because gold had been flirting with bear market territory, down more than 20 percent from its September record high.

Looking at the bounce, trader Keith McCullough thinks a similar bounce could happen in the oil market and stock market on Friday.

“It’s a sneak preview,” says McCullough. Here's why.

“Gold had been highly correlated to the US dollar. And the dollar had been up 12 consecutive days but the dollar stopped going up on Thursday intra-day, and immediately gold turned higher.”

McCullough interprets the action as short sellers taking profits - thinking their catalyst had run its course.

“And the same could happen on Friday. I’d expect to see a similar short squeeze in oil and the S&P 500.”

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Posted by CNBC's Lee Brodie




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Trader disclosure: On May 17, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Mike Murphy is long TGT; Mike Murphy is long ANF; Mike Murphy is long SBUX; Mike Murphy is long FCX; Mike Murphy is long PEP; Mike Murphy is short GPS; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long HPQ; Joe Terranova is long LQD; Steve Grasso is long ASTM; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Jim Iuorio is long C; Jim Iuorio is long GLD; Jim Iuorio is short GS

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