Gold finally breaks up to the rising trend line on the 1D timeframe. The metal might have found strength from today's unemployment claims which came in a little higher than expected. Either way, gold will need to close above this level of resistance to retest the $2,387 level.
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Читать полностью…Off to a nice start on USDCHF!
Looking for a break of the lows in order to trail stops. I will keep an eye on it. -Nick
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Staying long! SPX500
The S&P500 has broken new highs recently, with the cool inflation data this week.
While I remain cautious about how much upside I think there is left, I continue to hold my long position.
I have also sold covered calls against my position to capture a bit of extra premium, and hedge a bit in case the market pulls back.
SPX500 position was shared inside of our VIP room. - Nick
Smart money is also decreasing its long stake in the S&P 500 as with retail. This mass exiting of the stock market could signify lower volume in the summer months, but it could also suggest that we are running out of buyers.
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Regardless, the NAS is still a bullish signal on the EdgeFinder. This is because higher NFP and lower CPI are bullish scores. But we have to keep in mind that the unemployment rate is still on the rise, at 4%. JOLTS has been on a steady decline for a year. If the trend of our labor market continues to decline and interest rates won't budge, it's only going to hurt the bulls more when the market corrects.
I'm not certain of the magnitude of this looming correction, but I know the market is due to give back some of its gains thus far. Earnings season is done in the US, the hype is over with, and we are left with only one expected rate cut this year. The projected rates were revised from 3 cuts to 1. So who's to say that it won't be revised again to zero cuts this year?
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Stocks may run out of steam...
I have reason to believe that the Fed will not cut at all this year due to our sticky inflationary environment. Rates should remain elevated until CPI can dip under 3% and we see a promising trend lower to 2%. If they continue to stay above 3%, rates should stay above 5%.
This will continue to put pressure on earnings, jobs, mortgage rates, spending, etc. And eventually, something will crack. The US is in the middle of a race to see which cracks first: inflation or the economy. Large pools of money are already exiting the market while the US indices remain at all time highs. I don't think this is sustainable, and that the price of stocks should not be this high. The market may continue to run for now, but higher rates are going to catch up to us. And you don't want to be on the top floor when the building collapses. -Frank
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Yields seem to be capped now that we are looking for that September rate cut to happen. Lower CPI is a good indication that today's FOMC will lean dovish as higher rate fears are subsiding. Despite a slowing job market, a cooler inflation number is what investors are looking for. In other words, as long as CPI is coming down with labor, it's a good sign. Stagflation is not a concern right now. -Frank
Читать полностью…The pound is extremely weak against the Franc. GBPCHF is at a -10. CHF saw a rate cut this week which may suggest weakness in the currency. Meanwhile, Governor Bailey from BoE said that waiting to cut is the right move to make sure inflation stays where it is at.
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$TLT long signal update:
Giving back some gains today, market pulling back.
As this is a position trade, I am fine holding it as long as labor data continues to slow. This is a bet that benifits from potential rate cuts.
- Nick
Gold, 4H Chart:
It looks like the daily level of support found at 2300 may help us to breakout of this 4H chart downwards channel.
Looking very strong, I am staying long with a full sized position.
Will trail stops if we continue to break resistance!
- Nick
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job openings report, showing consistent decline. Meanwhile, CPI is at roughly the same level as it was a year ago...
Yes this week showed some progress in inflation from CPI/PPI, but we're a ways a way from victory.
Could this be stagflation...?
I am long gold personally, with stops below 2300. - Nick
Stocks are a little stuck today post FOMC as investors aren't giving a directional bias. It appears that we are seeing some low volume trading in the summer months, so it's possible that the market drifts one way or the other. We are still in a strong uptrend, however, and price action still favors the upside. The choppiness could be caused by uncertainty in the Fed's decision to cut rates this year. As long as investor sentiment leans towards one this year (September for now), we may continue to see a slow chug higher.
- Frank
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Last June was 3% inflation. Since then, we've been up and down elevated above 3. If you look at this chart, you can see that we really haven't moved anywhere or seen any progression to lower CPI. People want to see the Fed cut so bad, but they don't realize the damage that could cause to what's already looking like a problem in the US economy.
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For once, retail might actually have it right. Not being bullish on stocks at all time highs is generally a good rule of thumb as they are probably waiting for a pullback. However, they could be too early in the trade, and stocks could continue to defy gravity.
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One reason that CPI did not really give us a clear indication of decline is because we are pretty much at the same spot we were in last year in June. Inflation has remained elevated above 3% for a year. This should be enough to tell us that cuts are not necessary and could actually cause more damage if we see one this year.
Gold is still bullish despite a steady jobs market. Keeping rates higher for longer is not a good sign for gold either, but the metal may be a hedge against the market and the dollar. The good news is the Fed will have to cut at some point, and either way, the dollar will weaken. Which is why gold remains strong.
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The Fed's latest dot plot suggests lower interest rates by next year. However, we are expecting to be at 5.1% this first year. The problem still lies with the Fed's lack of confidence towards their inflation goal to justify three rate cuts. When comparing the Fed's initial projections in March, we have seen a shift to higher interest rates for longer based on this image. We are still expecting one cut this year, but that's far different from the three we thought was going to happen. So, the question remains as to whether the Fed will actually cut this year, or will it get re-forecasted to no cuts this year. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240612.pdf
https://finance.yahoo.com/news/fed-dot-plot-suggests-central-bank-will-cut-interest-rates-one-time-in-2024-down-from-three-cuts-in-march-180721564.html
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Gold is still a bullish score on the EdgeFinder and for good reason. CPI numbers came in cooler across the board which will signify a rate cut at some point this year. The September rate cut confidence is looking more probable now that the inflation concerns show a further trend lower. Gold is up against a strong upward trend line on the 1D timeframe. The metal is likely to see some upside from here now that concerns have subsided.
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