Correction Time Indeed
S&P 500 didn‘t look back after Friday‘s opening bell – poor AAPL, AMZN guidance stemming from the cloud business chiefly (AMD, INTC, MSFT noting cooling in personal computing) was ignored, and the bull flag that I told you about in the premium section, was duly resolved to the upside.
Bonds confirmed as far as their risk-on posture goes, but HYG looks in need of a little daily consolidation while long-term yields need more time basing as the Fed and foreigners have largely vacated the market – that goes chiefly for Japan, Europe, and also China in need of supporting their own currencies or making energy purchases, which is meaningfully impacting respective trade balances. The dollar though looks medium-term vulnerable here – the upswing of last two days leaves something to be desired, the greenback has potentially topped, or at least (this one is sure) has entered a corrective mode.
The current era of tight money is best illustrated by the degree of yield curve inversion, and how the short end of the curve is still pushing the Fed to tighten not only by 75bp in Nov, but by the same amount in Dec too. Having looked at recent central bank moves (Australia and Canada lowering the pace of rate increases while only ECB tightened in line with expectations), the Fed would probably though relent after Nov as well (the cracks overseas are growing, debt servicing costs in the States inexorably rising, and currency crises abroad looming), which has implications for all asset classes discussed below.
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Gold, Silver and Miners
Precious metals would rejoice over the dollar consolidation, and the only question is whether USD needs to pause in its upswing, or has to really correct lower – the odds are we would get a greenback downswing before midterms. Add some focus on waning growth, and not on inflation fighting, and the bullish bias manifests.
Copper will join precious metals, and its chart posture is looking fine. The only watchout is should USD swing to new highs, which isn‘t though immediately (this year) likely.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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