Anti-markets (to a seasonal rally scenario) being the US dollar index (DXY) and Gold/Silver ratio, which signal lack of liquidity when rising together and sufficient market liquidity when dropping together.
USD broke down hard on yesterday’s CPI hype and this is a well deserved correction. But USD is actually ticking a minor short-term support level at 106.60. The ultimate downside target was/is the rising SMA 200 at around 105.
If we are already on a seasonal rally scenario and if USD is not going to break down from the SMA 200, then there is already a caution signal upcoming. If, however, USD finds support here and bounces it would actually be better for a seasonal market rally situation, duration wise. The other option is a breakdown in USD as inflation signals fade and the hawking Fed softens. It’s premature to expect that in my opinion. USD is intact above 105.
USD’s companion as an anti-market, the Gold/Silver ratio is bouncing but still in breakdown mode. It will bear watching closely moving forward.
As yet I don’t see reason to abandon a positive seasonal plan from the standpoint of these two ‘indicators’. But it could get bumpy in the interim, which could actually provide the fuel for a more extended seasonal phase. Things did get really peppy yesterday, after all.
Gary, when you have time would you mind looking at the situation in the copper futures and translate WTF is going on?
Hi John, it’s the planned for relief bounce to the 200 day moving average. Been a long time coming, but it’s in its final stages now, at least for the test of the downtrending SMA 200. If Cu is able to take out the 200 then we’d have to evaluate whether it’s real rather than Memorex.
My lean is toward fading inflation and eventual deflationary pressure, which would not be good for cyclical inflation sensitive Dr. Copper. But taking bias out of it let’s keep an eye on the SMA 200.
Thank you Gary. Sincere appreciation. Am holding Sumitomo here in Japan ticker 5713. A slower mover than its US cousins FCX or SCCO.