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.”