Trump backed down today, apparently negotiating with ghosts.
Before that happened gold, silver and GDX had all registered the lower targets we had set. Risk/reward is and was greatly improved, and it had nothing to do with the TACO. It had everything to do with the price crash to extremes.
As for broader stocks, I am still hedging my long positions (a few added per this morning’s notes), pending the short-term downtrend holding. For example, SPX not climbing much higher above the 200 day average (orange) and remaining below the EMAs 10 & 20 (jagged blue lines).
However, the market is sending some risk-on signals, internally. That could be a clue that SPX would end its correction much higher than planned. Also recall, however, that we are open to a ‘B’ up of an A-B-C correction (ref. NFTRH 907) prior to a final low.
Internally
If you check the Indicator Charts page you will see the ‘risk-on’ likes of…
- Gold declining relative to SPX (an expected bounce in SPX relative to gold)
- Gold declining relative to copper
- Gold stocks declining relative to copper stocks
- Growth stocks potentially bottoming vs. Value stocks
- Healthcare (XLV) declining relative to the broad market (SPY)
- NDX elevated relative to SPX and SOX rising relative to NDX
- Consumer Discretionary potentially bottoming vs. Staples
- And Junk bonds firm vs. both Investment Grade & Treasury
It’s tough because the relief valve is Trump’s backdown from war. But tuning all that out the indicators will tell the tale. Until they change, they are indicating forward bullish outcomes for stocks. It’s just that these internals improve the prospect of the bull rally coming from higher than preferred levels.
I am day-to-day, week-to-week, carrying the view forward and adjusting as needed.
