Yesterday’s little contrary CPI bounce has failed as of pre-market this morning. Stocks (ES, NQ, Global) are down and base and precious metals are down as well. They of the contrary bullish CoT structures. Bond yields are on a small bounce and of course the star of our show, Uncle Buck is up again (DXY ticks a new high at 108.87).
This is happening with another alarming CPI behind us, decelerating global economic data and a hawking FOMC coming up on July 27. This is what we are looking for it we’re looking to that event to possibly signal a ‘buy the news’ rally with some teeth to it.
As for silver and gold, let’s start with the little brother. Today in pre-market it is banging the 18-18.50 support area that we have been anticipating. The daily chart is terrible. The monthly chart has little other than said support area (it is significant support, however). Assuming silver is to find a low here (let’s not assume anything, functionally) it could grind around for a while until FOMC unless it is planning to get a jump on the contrary play (assuming such a play is in the works).
Gold is a mess on its daily chart as well. Here is a weekly view. As you can see, the preferred ‘handle’ breakout has been lost and now gold has another fan line roughly at the area of fairly unimpressive looking support. Given the sentiment situation (incl. CoT), gold could hold in the 1680 area. But if that fails, there is little support until 1564. A final washout scenario, if it were to happen could easily see a swan dive to that level, where I cannot see a way I would not be extremely bullish.
General Bottom Line
It appears that we may be looking to FOMC (July 27) after all, for a potential global macro turnaround of some kind. For stocks it would be a bear market rally, in my opinion. Potentially commodities too.
But if the ‘inflation trades’ are merely taking a break (as might be indicated if the 30yr yield continuum pulls back to 2.5% and finds support before a future upturn) it could also be a buying opportunity. As for precious metals, I’d be open to a bull market resumption, but that is getting well ahead of ourselves for now. Everyone’s still in bleak sentiment mode, after all.