One asset that is fit to hedge against the dollar better than others is gold. Gold has seen some remarkable upside this year, but that does not mean that the run is over. With yields turning lower, the metal bounces off support on the 1D timeframe and is looking to push higher.
If interest rates are capped at 5.5%, gold could start to see even more demand from investors as it is now the most longed asset on COT data. A weaker JOLTS, ADP NFP, and NFP could spark the next move higher for the metal. -Frank
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The NAS has now dipped below the previous all time highs on the 1D timeframe. With about 2 hours left in the trading day, the candle still has potential to recover this morning's drop. The past week has been a quiet decline to the downside indicating a lack of buyers in this market. There will likely be more volatility next week, but the direction has yet to be decided. -Frank
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Читать полностью…The NIKKEI is now the most shorted asset from institutions, and the yen is just behind it. Interest around US indices is not as strong as it was earlier in the year. Meanwhile, NZD, GBP, AUD and EUR are the top buys from COT.
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Gold finds some good support around the rising trend line on the 1D timeframe. This bullish hammer candle suggests another turn to the upside if we can see a close like this. Gold seems to be reacting to the GDP number in a way that reflects worse economic conditions.
What we saw was a higher GDP than expected. However, GDP growth declined by 0.3% from last month. So investors may be weighing the impact as to what's more meaningful: a 0.1% beat in forecasts or a 0.3% miss from last month's report.
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Gold
The metal is still a strong bullish score on the EdgeFinder at +9 due to weakness in the latest economic readings. A general slowdown in US performance combined with growing COT sentiment now has gold at the top bought asset from smart money. Price is still in a strong uptrend, but is experiencing a period of consolidation. Tomorrow’s GDP number will impact gold’s score in a positive way if there is further slowdown in output this month. We need to continue to monitor how high interest rates impact the US economy for the rest of the year to understand if it is recession-prone and if gold is a strong hedge against the dollar/indices. -Frank
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Читать полностью…Gold
Gold us up today as consumer confidence is on the rise. Price is still above a rising trend line, but it may have entered a period of consolidation in the short run. The metal is now the most longed asset on the EdgeFinder as price slowly creeps higher in the last few trading days. Gold bulls would likely want to see a lower GDP number in the US.
- Frank (Im back!)
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Читать полностью…EURUSD is now a +13 on the EdgeFinder as most metrics point towards a weaker dollar and stronger euro. Sentiment shows COT buying EUR last week and an overall long position on the currency. ISM PMI has already come out at the time of writing this which was lower than expected.
The narrative for the dollar now could be that strength is limited. This is because the US has a Fed that doesn't want to raise interest rates any more, economic figures are not impressive and inflation is still stubborn. It seems like the Fed is more likely to cut rates than they are to raise them.
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Gold is still stubborn on the 1D timeframe after today's lower than expected PCE number. The stock market has been quietly retreating from the highs after falling consumer sentiment last Friday. PCE is a key gauge of inflation, so lower PCE is making the dollar seem weaker (bullish gold). Next week is going to be a heavy news week for gold and the USD. Investors are eyeing the potential slowdown in economic activity. -Frank
Читать полностью…GDP growth is a main concern among investors right now. This morning, numbers came out better than expected. However, we have seen a stark decline in growth since March. From 3.4% to now a mere 1.3%. This is not a good sign for the US economy despite how many forecasts we beat. As long as the trend continues downward, the dollar will likely weaken and it could take a toll on US stocks too.
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Retail is majority short on GER30, USDCAD, SPX and UK100. They still remain mostly long on metals, crypto, and the NASDAQ.
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EURUSD is now our strongest bullish thesis on the EdgeFinder. There is a lot of mixed sentiment around the markets right now, but one thing seems to be common: dollar bearishness. Even if the Fed decides to hold rates steady, it's still not great for dollar sentiment.
This is because there are almost no expectations of another hike. So, stubborn inflation and lower growth is just going to look weak on the dollar's front. -Frank
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The RUSSELL is now our strongest bearish reading on the EdgeFinder. At a -10, there are almost no bullish signals for the small cap index. This month is historically a positive month, and it is still up for the month. However, our scanner is telling us why the index could move lower.
For one, we are likely to have higher rates for longer which affects the small caps more than larger caps like the SPX, NAS or US30 indices. Slower economic growth is going to take a toll on the smaller companies as well. Although GDP beat expectations, we will take a look at what is really going on in the market soon.
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USD/CAD
This pair is now the strongest bearish setup on the EdgeFinder despite a bullish looking setup on the 1D timeframe. Price seems to be sandwiched between a wedge pattern while sitting on a significant level of support. If we see a higher GDP number on Thursday, it may even be bullish news for the dollar as the Fed may keep the sentiment for higher rates for longer.
-Frank
EUR/USD
EU is now a strong bullish score on the EdgeFinder at +13. Price is now at resistance level which is a double top. A higher GDP number may be bullish for the pair because EURUSD tends to be more correlated with the US indices. If price is able to break the double top on the 1D timeframe, it may be able to test a higher level around 1.0942. -Frank
Took profits on my Gold trade on Wednesday!
The fundamentals remain strong on Gold. I am currently still looking for setups.
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- Nick
NASDAQ, Daily Chart:
With cooling inflation, the market continues to look forward to rate cuts this year. Boosted by strong tech earnings (especially NVDA), the market looks short term a bit overbought, but longer term quite bullish at the time being.
I am looking for possible pullback entries to add longs.
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NVDA Daily Chart:
Nvidia is reminding us all today why it is still king of the AI rally.
In their earnings report yesterday, they saw a significant beat in both revenue & net income share price.
Share price continues to drive higher this morning!