Jumping on the dead cat today (with a new trade idea) ...

All of this adds to my expectations for the markets over the coming weeks - I think any potential follow-through from the bounce we saw yesterday cannot be sustained for very long. Investor optimism (perhaps more specifically their confidence in economic policy rather than their pure market sentiment) has reached its peak for the time being and there is no other way to go but down.

If commodities and foreign stocks are looking to US stocks for cues, then it makes sense to look at potential price action in the S&P 500. Either stocks have put in a sufficient correction and will resume the push higher from here, or we see a downturn that looks something like this ... soon:

Commodities Essential. 13 April 2012

Trade Essentials.

Based on the audio/visual technical analysis provided above and the general tone of the markets, I think it makes sense to get short gold ...

DZZ (Last Price: $4.67)

Buy shares of PowerShares DB Gold Double Short ETN, symbol DZZ, at the market. Then place an order to sell all your shares of PowerShares DB Gold Double Short ETN, symbol DZZ, at $4.37, STOP; this order is good till cancelled.

This idea is to target a breakdown in gold that happens very soon. Thus, I recommend a tight stop-loss since overall your one-way exposure to a downward move in commodities is growing.