In our regular gold trading alerts, we focus on the short- and medium-term outlook and we rarely discuss the very long-term issues or price targets. The reason is simple – the long-term issues and price targets don’t change often, so usually, there’s little new to say about them. Consequently, it’s been a long time since we last discussed our view on gold’s explosive upside potential. In fact, it’s been so long that those who do not take the time to read our analyses thoroughly and those who have been reading them for only a short while may think that we are bearish on gold in the long run. Or that we’re perma-bears.
Once again, the market is taking it personally. How many times have come here in the past year and a half playing Lord Rothschild to warn you we are dealing with a similar market from the late 30’s? What happened was I’ve been talking about it a lot longer but Rothschild went public so it gave the rest of us who are awake a lot of credibility. Still, the market went higher.
Time window season came and went. Then there was Facebook, which got clobbered just as markets hit 618 days off the February 2016 bottom. This was one of the tougher windows the market has encountered this century. There was plenty of reason to believe the 610 would sustain and in certain instances, it has. But for the most part, markets have been higher than they were in the middle of July.
Yesterday was a mixed yet disappointing session with all major indices finishing well from their highs. Though the S&P 500 and Dow held green, the Nasdaq settled down 14.25 points and 1% from a new record high while the Russell 2000 lost 1.2% on the session.
Last week at this time we were working on a high that hit at the beginning of the window and, indeed, patterns started to roll over. NFLX had a terrible earnings report and got crushed in the aftermarket last Monday night. That’s fair enough. But on Tuesday it put in what is called a bullish belt hold. That’s where it gaps down but the end of the gap turns out to be the low for the day. Lots of stocks put in green bars that day. In terms of psychology, bears had to wonder if they’d ever get a break.
Have we reached the zero hour? Time windows don’t have to validate although much of the time they do. I can tell you one thing, we have a very interesting news event at day 610 off the February 2016 bottom. U.S. President Donald Trump and Russian president Vladimir Putin are meeting as I’m writing this. In any era, when the two superpowers meet face to face it’s a big deal. Given everything, we’ve been through the past couple of years its an even bigger deal.
We are coming to the next phase of the divergence. I woke up this morning, turned on the box and first commentator I saw said we’ve started the next leg up in the bull market. Some of these people take it for granted the market is going up again. Has anyone noticed the Dow and SPX peaked in January?
MODERN TRADER explores the effect of a potential trade war on U.S. equity markets. Will it end the bull run or will low interest rates allow U.S. equities to maintain its momentum? Read on. We also attempt to identify the key drivers of active equity hedge funds.
After Monday’s price action, you'd be excused to think that today would have been a “risk-on” day. After all, the major stock averages ended Monday with relatively large green candles and there was some bullish follow-through at the European open. That’s why we thought gold’s earlier rally looked suspicious and that the metal could weaken again.
This is supposed to be a seasonally bullish period. From the end of quarter window dressing through the July 4 holiday the stock market tilts to the bullish side; not always or every year but generally speaking. Why the markets are open on July 4 is another story, but consider the first and last hour without the midday doldrums.