Roughly 24 hours before the latest great ‘decision’ gets handed down on whether or not the Fed is considering changing ZIRP-eternity any time soon I thought I’d put up a general update of various markets.
It is the same old theme for the S&P 500, with a sideways to up bias on the intermediate and slight downward bias on the short-term. SPX is grinding up and down every couple days and this is a market that people should stand aside from, outside of individual trades and long-term orientations taken for other reasons. This market is and has been going nowhere.
Currency hedged Europe is similar, but further into what looks like a routine correction. This one is on radar as part 2 of the Euro QE trade, but has further to drop first.
Commodities (DBC) still look bearish but continue to have the potential to bounce.
USD (UUP), however, will have to continue to correct to give commodities a lift.
Euro will have to continue to bounce to bring HEDJ (and Euro STOXX 50) to buy levels. Unlike everything above, Euro’s MACD and RSI are green.
Gold’s (GLD) technicals continue to be questionable at best. Risk (ref. CoT data for gold and silver reviewed last weekend) is reducing on the precious metals, but price is its own animal in the short-term.
Silver (SLV) continues to be at a point where it can bounce. It is also near a point where it needs to bounce to avoid a bearish ‘lower low’ signal. CoT on silver has improved greatly but again, price is what it is in the short-term.
Silver-Gold ratio as well needs to bounce here for commodities and the ‘inflation trade’ to rally.
GDX bounced yesterday but in not breaking above the wedge (lines not drawn, but fairly evident by the chart below) it remained as it has been lately, bearish. Ref. HUI having closed below the key support parameter of 160.
As it became evident that yesterday was just another bounce I re-shorted NUGT simply because I want to play this market a little bit. File this under ‘Day Trading’.
There is nothing in the precious metals technicals to contradict what has been the advise all along. That would be for those not comfortable with trading and instead looking to take positions for the next bull market to either a) wait for a bottom and some upside confirmation or b) be ready to buy and be prepared to then buy lower and/or hedge with the understanding that it is a long-term process.
I don’t like much of what I see above. It is a jangly week as FOMC week’s often are. Add a side of Greece and you’ve got an emotional formula for the jagged, spiky whipsaw market to continue.
The US market is going sideways and despite today’s bounce, not looking impressive in general. Within that I still have areas of interest like the Semiconductors (per individual items noted recently).
Global stocks are a mixed bag with a bearish bias. Europe and China are potential trades that are still out in the future.
Commodities remain of little interest until we get a signal that ‘inflation fears’ (one measure is TIP-TLT) will resume the bounce and USD will resume its corrective action.
Precious Metals are on the road to reduced risk as evidenced by what went on in silver’s CoT data last week. But the bearish technicals have not relented yet, so they are what they are. CoT is not a fine timer, it is a condition (in this case, a condition of low risk).
Considering the pomp and circumstance of FOMC week and it makes sense to play it close to the vest for a while longer, not committing to a given stance until the next moves in currencies (USD and Euro) especially, become evident.
Will FOMC push the USD over the cliff by talking weak or bring the tough talk? I think there is little chance these people would have the guts to put a negative surprise (rate hike) to the market but they could get cute with their wording. In short, I personally cannot out guess a manipulative entity (and the markets that react so emotionally to it) that has held sway so firmly since 2012. So I am managing accordingly.