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Precious Metals and Equity Prices

NEW YORK ( TheGoldAndOilGuy.com) -- The past couple of months have been a roller-coaster ride for investors and traders. Overseas headline news has made investing and trading more difficult than normal because of prices gaping up or down at the opening bell several times per week.

The next two weeks are going to be even crazier because of the Greek election and Spanish bank bailout.

It looks as though the Spanish banks are getting bailed out, which will be similar to the 2008-2009 bailout in the United States. This news marked up stocks and commodity prices during overnight trading Sunday. The major indexes were up 1% or 2% across the board.

Looking at the technical and sentiment, this is what I feel will take place and how it can be attacked.

Major stock indexes and commodities will be trading at resistance at the open on Monday.

The dollar, which was hit hard in overnight trading Sunday, is now trading at support. A bounce in the dollar and sellers stepping in at resistance could pull the market down for session or two.

The big question is what do traders do with this jump stocks and commodities?

The first 15 minutes of Monday's session short sellers will be panicking out of their positions and getting stopped out. Once the dust starts to settle, resistance and an oversold dollar may do their part and force the market lower later in the day.

If we add sentiment into this picture -- thinking of the masses covering their short positions in a big way -- we know from past events that when the masses all trade in the same direction the market quickly reverses in the short term for one to three days.

So what does investors do if they are short the market this week, as I am?

I would wait 15 to 30 minutes to let things unfold and see what the price, volume and sentiment is doing. Keep in mind morning trends tend to stall out and roll over at 10 a.m. or 11:30 a.m. ET.

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