Some internal market perspectives on this holiday week.
The US dollar index is down today, testing the breakout support area at 106.
Yet the Gold/Silver ratio is strong, in a would-be hint that it wants to catch up to USD. If the GSR’s firmness holds and USD holds support and resumes bullish we could have a significant market liquidity problem brewing. This would of course be anti-inflationary.
I just made these two posts at X. They join a growing list of items that are flashing internal warnings for the markets. Is USD playing coy today in preparation for another spike upward or is it preparing to fail into a possible year-end asset party?
If silver does not lead gold, it would pretty much count out the inflation trades as party items. Declining interest rates could be spun as bullish (Goldilocks has held sway for so long now, after all). But that declining yields would also play with the “market liquidity problem” theme.
I don’t like much of what I am seeing, including the gross look of market leader, the Semi sector.
Hence, I am reeling in risk. First by taking some profits and increasing shorter-term Treasury holdings (yesterday and today), and maybe, if I can summon the emotional fortitude, will do some shorting beyond the gold stock hedges.
