Gold Last Gasp or Selling Done?
Apropos of nothing we thought the cover pic simply funny. It relates to Gov Christie’s absence during the hurricane worries last month.
But there is a parallel, as politicos in general are just absent when it comes to fixing the underlying problems we face. NJ, CT, IL and others are all on bankruptcy verge.
On the 30 minute chart below we see gold opening and dropping in the early part of the day, only to recoup most of its losses as afternoon waned.
With the Chinese once in a decade “elections” and tax reform being thrown about,It is almost as if risk on is the new risk off.
Chinese devaluation and threats of corporate tax breaks undermine Gold and give even more reason to own equities.
All the doomsday headlines of late seem to amount to a “watched pot ”.
One thing possibly positive for gold is showing; the relative strength in these sell-offs is weaker than in past pushes lower. Stay tuned.
Market Wrap: IBM Takes the Baton, Drives Record Highs
Netflix (NFLX) disappointed traders with its pop and drop after earnings yesterday… so it’s a good old-schooler IBM (IBM) showed up to pick up the slack.
IBM blasted up over 9% after reporting better-than-expected earnings and revenues.
And importantly, the company hinted that it could grow revenues after 6 years of declines.
With IBM leading the charge, the SPX, Dow Jones Industrial Average, Nasdaq Composite, and Nasdaq 100 all made new all-time highs.
The Dow, of which IBM is a large component, led the way with a 0.7% gain,
US Treasury yields and the dollar charged higher again today, with some traders chattering that the new Fed Chair could be on the hawkisk side.
Bank stocks sowed, as did the Russell 2000.
Speaking of banks, ISH Markit data shows that short interest on financial ETF’s are near a 3-year low.
It’s quite clear if this is bullish or bearish since we’ve seen big moves both ways after short interest got this low. But right now, the banks are looking pretty darn good.
The overall market action remains very sedate.
There is a decent amount of movement in individual names, but the indices are trading in extremely tight ranges.
The VIX hit a low of 9.87, marking the 23rd straight day with an intraday low below 10.
Since CBOE changed the VIX calculation methodology in October 2014, there have been just 61 trading days with an intraday VIX low below 10.
So we went from having a sub-10 VIX about once every 20 days to 23 in a row.
Yes, I keep repeating these statistics every day, but they’re no less relevant.
This morning, Business Insider reported that traders are still betting big against volatility:
With the VIX sitting at levels not seen in several decades, implying that markets do not expect any significant lift in stock market volatility in the month ahead, traders have been selling VIX futures aggressively recently, leaving net short positioning at the highest level on record last week.
Based on positioning, traders have never been so confident that volatility won’t spike over the next few weeks.
Meanwhile, the technical picture remains intact.
This morning, T3 Live Chief Strategic Officer Scott Redler said “Holding [SPX] 2552-2554keeps the current complexion intact. See how we handle 2559 on the open to judge whether we extend or retrace.”
The SPX bottomed at 2559.67 today, bouncing right above Scott’s outline 2559 level. And of course, that means we stayed far away from the 2552-2554 range.
So the bulls are still in charge.
There is a lot of mystery surrounding President Trump’s tax policy, but at least earnings season has been pretty good.
As of last Friday, 81% of reporting S&P 500 companies have beaten earnings expectations, and 78% beat revenue expectations. And that was before this week’s solid reports from Morgan Stanley (MS) and the aforementioned Netflix and IBM.
That said, Treasury Secretary Steve Mnuchin warned of a “significant” stock market drop if tax reform is not passed, which almost felt like a not-so-subtle threat.
The jury’s still out on what happens there, but for now, the bears still can’t get on base.
Read more by Soren K.Group
