Correction Time Indeed

S&P 500 didn‘t look back after Friday‘s opening bell – poor AAPL, AMZN guidance stemming from the cloud business chiefly (AMD, INTC, MSFT noting cooling in personal computing) was ignored, and the bull flag that I told you about in the premium section, was duly resolved to the upside.

Bonds confirmed as far as their risk-on posture goes, but HYG looks in need of a little daily consolidation while long-term yields need more time basing as the Fed and foreigners have largely vacated the market – that goes chiefly for Japan, Europe, and also China in need of supporting their own currencies or making energy purchases, which is meaningfully impacting respective trade balances. The dollar though looks medium-term vulnerable here – the upswing of the last two days leaves something to be desired, the greenback has potentially topped, or at least (this one is sure) has entered a corrective mode.

The current era of tight money is best illustrated by the degree of a yield curve inversion, and how the short end of the curve is still pushing the Fed to tighten not only by 75bp in Nov but by the same amount in Dec too. Having looked at recent central bank moves (Australia and Canada lowering the pace of rate increases while only the ECB tightened in line with expectations), the Fed would probably though relent after Nov as well (the cracks overseas are growing, debt servicing costs in the States inexorably rising, and currency crises abroad looming), which has implications for all asset classes discussed below.

Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there, but the analyses (whether short or long format, depending on market action – today long) over email are the bedrock, so make sure you‘re signed up for the free newsletter and that you have Twitter notifications turned on so as not to miss any tweets or replies intraday.
 

Gold, Silver, and Miners

gold, silver, miners

Precious metals would rejoice over the dollar consolidation, and the only question is whether USD needs to pause in its upswing, or has to really correct lower – the odds are we would get a greenback downswing before midterms. Add some focus on waning growth, and not on inflation fighting, and the bullish bias manifests.
 

Copper

copper

Copper will join precious metals, and its chart posture is looking fine. The only watch out is should USD swing to new highs, which isn‘t thought immediately (this year) likely.


More By This Author:

Another Bought Dip
Bulls To Get Challenged
Q4 Rally Confirmed

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