I think a lot of people took profits on the last highs & will be kicking themselves if gold moves up strongly from here.

Think about this - gold put it's lows in last December. We have just had the first top put in with the new bull market. We are now getting the retracement that most would consider to buy with both hands - but they expected gold to move lower.

Many longs took their profits & the shorts were riding it down. Then we got this reversal on Friday - if that was the bottom last week & gold moves up from here then that means all the longs who were out of the market have short footed themselves.

If gold moves up from here then last week was the bottom that you buy with both hands. And most people who want to be long for the next rally are not in.

It's this sort of action that creates a short squeeze.

A lot of shorts will be feeling the pressure - do they buy back their positions or stay hoping for lower prices. A lot of gold stock traders are regretting getting out.

The intriguing aspect is it now appears gold stock indices are going to hit new highs. Will gold hit new highs & if so then how far will it run.

The FEDs next meeting is on the 23rd - it's now expected that they won't put rates up. If so then the loose credibility as well as admit the US Markets are too weak. In this case gold will probably soar.

So we now have the set up that in the next two weeks that all the longs & shorts will be pondering. And if gold moves up then they will be most edgy.

A short squeeze can be explosive & here we have the stage set for it to unfold.

Today is not a good day to re-enter but perhaps later in this week will be opportune.

I think that now is the time to be long & holding....