For the first week in a while, there is a clear shift away from stocks last week. SPX is the top seller at -7.09%, and the rest of the indices were sold as well. Just about everything saw a negative net positional change except, AUD, ZAR, EUR, GBP and NIKKEI.
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Gold Daily Chart:
I'm watching cautiously here... The post election selloff in gold seems to be trying to find a bounce at these levels.
However, we recently saw a similar attempt to bounce, that was met with a strong bearish move lower.
The US dollar's recent strength, due to a robust US economy, is a major headwind I see for gold at this time.
Unless inflation begins to cool again, and US economic data slows, I remain neutral / slightly bearish on this one.
- Nick
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NASDAQ Daily Chart:
Sharp reversal here today, drastically changing this week's stock market performance.
The selloff is led lower by the technology sector and specifically the semiconductor industry stocks.
Powell's commentary yesterday seems to be spooking stock investors, who may have been hopeful for a more dovish outlook / more rate cuts next year.
Overall, I remain bullish on indices, but taking profits for the week ahead of the weekend.
- Nick
A higher CPI reading was expected and became the outcome on Wednesday. As long as CPI can stay below 3%, there might not be any fears of rate hikes in the future. We still have December's number to suggest where the trend could be heading for 2025.
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A drop is not the best word to describe pre-market activity today as the S&P is only down 0.10% after PPI numbers came out. The index is now only a +2 on the EdgeFinder after all the indices were up at the top of the list earlier this week and last week. When Powell speaks today, we will likely hear him remain cautious towards inflation and may anticipate growth in the economy and jobs going into the end of the year. If we do not hear any key hawkish words from him, the market may consolidate or move higher.
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CPI came in line with expectations today at 2.6% which is slightly higher than last month's number. I think a consequence of better earnings, economic growth and jobs growth, there will likely be higher inflation. This problem will likely not be a major factor going into year end, but the inflationary fears could creep back into the Fed's view which was so adamant about saving the jobs market. Further interest rate cuts are not going to help inflation either.
With a republican presidential win, the US is likely to drill and produce domestically which will probably drive oil prices down further on an increase in supply. So if oil prices remain lower, inflation may slowly rise or stay put which is what investors want. CPI over 3% will reintroduce the rate hike idea, so we need to be cautious of that. Without the Fed fears, the market has the green light to run higher in 2025
- Frank
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Gold
Gold drops to a key support level on the 1D timeframe around $2,600. This spot is the second key level after breaking under the trend line. Gold’s score is now a -3 on the EF to suggest it is no longer a bullish trade. Today’s CPI data came in as expected which is pretty much in line with the Fed’s stance and projections. It would not be surprising to see price break under this level of support with this news.
- Frank
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DXY Daily Chart:
The dollar continues to look strong amongst its peers. With decently strong economic data, and expectations for a potential uptick in inflation, the fed may slow their pace of rate cuts.
I maintain a bullish outlook for the time being.
- Nick
Crypto Could Be the Trade of 2025
Bitcoin hit another very important milestone after surpassing the all time highs from 2021. Analysts might be thinking that the crypto market is overvalued now, but I think there is a lot more room to run. On the technical side, price could come up to test the $90,000 range, but the psychological price of $100K seems likely.
My reasons for being bullish on crypto comes from the very obvious risk-on sentiment in the market. What kept price at bay for so long was the fear of wars continuing to place pressure on market bulls while gold was able to thrive. If money continues to flush out of metals and into more risk assets, bitcoin will likely outperform the S&P and NASDAQ as it acts like a leveraged version of the stock market. Today, SPX is down after open, but bitcoin is up 3% today, Ethereum is up 1%.
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Tomorrow Chris Pulver & I will be conducting a free to attend webinar, discussing our Top Trading Setups for 2025.
This is going to be one of the most important events of the year - as we prep for some very big stories developing next year.
Here's a teaser list:
- What does a return of Donald Trump in the White House mean for markets?
- Is the fed going to pause rate cuts? What would that do?
- Is the AI trade a bubble, or just getting started?
- Is the USD going to continue its rally?
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- Nick
Nick's S&P500 Trade Breakdown
August - September 2024
🟢 Entry Price: 5237.13
🔴 Exit Price: 5506.00
Trade Result: $25,882.39 (5.23%)
Technical Analysis:
Key level of support, strong upward trend on the weekly chart, rejection wick forming at structure. Stop loss placed below initially, but Nick was able to trail his stop loss into profit until eventually being taken out for a profit.
Fundamental Analysis:
A strong reported services PMI report indicates strength in the economy, while the fed still seems poised to cut this year. Additionally, corporate earnings remain strong and I believe that the AI tech trade still has legs this year. Additionally, COT data shows institutional money is still buying the S&P500.
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Gold caught a swing back to the upside this morning which could break the 6 day losing streak falling 8% off the highs. Price came down to a significant trend line on the 1D timeframe and is now up 1.79% today. This could be a good entry for buyers this week, but we will have to see if the metal can stay above the $2,600s level. This could be a short term swing from being oversold.
-Frank
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🚨 My Trading Strategy Revealed 🚨
My strategy starts with the fundamentals. I use the EdgeFinder to analyze economic data and score assets, which helps me identify which ones have the strongest setups. When the EdgeFinder scores an asset as highly bullish or bearish, that’s my cue to prioritize that trade.
🔍 Aligning with Technicals
Once I’ve got my fundamental direction, I look for technical setups that confirm the move. For example, if the EdgeFinder shows a bullish asset, I look for a pullback or key support level to enter. If it’s bearish, I search for resistance or price rejection to confirm the trend.
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- Nick
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The dollar has seen an overall decline in bullish sentiment since September. Still, it continues to climb towards last year's highs in October. What we can interpret from dollar strength is that output, jobs and inflation could rise as a response to the change in presidency and risk-on appetite. Usually the dollar is a risk-off indicator, but it also rises on growth especially if it will hold more value than other major countries that are struggling economically.
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Gold did end up falling after breaking key support around $2,600 and is now testing support in the mid $2,500s. The metal has now closed the gap from the September highs which was the first month the Fed cut rates in this cycle. Gold might have found a bottom here if investors find this a fair level for gold's value to be. Although upside doesn't seem very optimistic, it wouldn't make much sense to see price fall back to the June lows. Additional support around $2,480 which may be the last line of defense.
-Frank
NASDAQ
The tech market is struggling at these new historic highs on the 1D timeframe. There is a chance price could retest the $20,700s level in which the index has previously broken. The put/call ratio is now the lowest it’s been in a month at 0.79 meaning there is more bullish leaning sentiment. We should keep in mind that we are also coming off an extreme fear reading from the gauge. Although a retracement could happen, it would seem like another buying opportunity based on this uptrend.
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Update on the BTCUSD trade... (I have a position on $IBIT)
Today I'm trailing my stop behind Tuesday's swing low, where we found fresh buying strength. Securing a bit more profit in case we see a sharp reversal + break of structure.
Fundamentals look intact, with the Trump administration seemingly favorable towards crypto. Additionally, we're seeing a continued bull run in risk assets due to interest rates coming down, labor data holding up decent, and inflation less threatening than it has been in recent years.
Trailing stops to stay disciplined & avoid greed!
- Nick
Bitcoin 🚀 to the🌛
Locking in more profit on my position. What a meteoric move. This quickly became one of the biggest floating winners I've had all year...
Trailing my stop behind support + behind 61.8% retracement. The move is so violent, I am going to adjust stops slightly to secure a bit more profit should we see a sharp reversal.
- Nick
The indices are now back at the top most bought assets on the list of smart money positions. Surprisingly, oil is up 4.55% from last week's institutional ownership. The dollar and yen are getting sold with metals including gold by a slight margin. We have yet to see more participation on bitcoin, but it seems like the trend will start moving up as the coin hits new all time highs.
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Gold prices fell another 2% this morning due to the heavy risk-on sentiment circulating the US markets and economy. Fears of geopolitical issues have dwindled, and the Fed remains dovish. The only factor that could influence price action now is CPI.
If inflation comes in higher than expected, it may boost gold's price on the support level of $2,600. Any kind of news to change from risk-on is a good sign for the metal. Gold was the trade of the year until this month. There is a new contender now.
- Frank
Want to see an example of a trade we shared this year in the A1 Trading Community? 😏👀
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