” … that would recommend stocks, TIP, and metals and miners will continue south to lower …“
Appears like absolutely nothing product has actually taken place for weeks now. Stocks, the dollar, bonds, and precious metals are all poised for big moves– one way or the other.
Considering that its dramatic $360 drop from its peak of September 2, the S&P has been going sideways in between 3425-30 and 3310-30 Note how the RSI is right around the neutral level of50 Either stocks are combining before going greater again or breaking the perseverance of the bulls before they discard. We’ll know in any case quickly depending on which breaks initially, support or resistance. Unless we get something new on the monetary or financial front, I’m leaning towards additional disadvantage. View that 50- day moving average for a close to the downside.
We’re seeing the very same thing in the 10- year T-Bond. The RSI is around50 Since September 3, the yield is stuck in between 0.60% and 0.72% and a variety of simply 8 basis points given that September 4.
Treasury Inflation Protected Securities, i.e. POINTERS, are also going no place after a massive rally since March. Provided the previous rally and the absence of any real retracement, I’m leaning to the downside in SUGGESTION and upside in real yields (inverse of SUGGESTION) in the very brief term.
The dollar is no different. Following its short on September 1, it reached a high of 93.64 and is now stuck in a 1-dollar range of 92.65-9364 And yes, you have actually guessed it: its RSI is around 50.
With the biggest markets stuck in neutral, it is no surprise that Gold is also trading around an RSI of50 However, it has actually been flirting with the purple trendline assistance since March for weeks now and looks like it is on the edge of breaking down. This would be consistent with similar moves lower in stocks and SUGGESTION in addition to greater levels for nominal and genuine yields and the dollar.
In order to prevent beating a proverbial dead horse, we see the specific same thing in Silver and the miners, especially the latter …
Once Again, with all of the significant markets in wait-and-see mode– visibly with the Fed and Congress on hold with regard to new financial and fiscal stimulus– typically we get a spike in volatility to follow. The issue is that the Fed and Congress most likely will not act till they have a reason to, and the most sensible reason would be a sharp relocation lower in stocks, which, if connections hold, would indicate a higher dollar, greater real yields, and lower metals and miners.
The last time all of these sectors were trading around 50 at the exact same time remained in May. Stocks, POINTER, precious metals and miners had all soared off their lows in March and were kicking back. The dollar, too, however in the opposite direction after falling from its peak in May. What happened next was a spike in volatility, and they all moved greatly in the same direction as prior to: Stocks, IDEAS, and metals and miners shot even greater, while the dollar continued to dump. This time around, the former are coming off peaks and the dollar off its lows. If history repeats but in the opposite instructions, that would suggest stocks, IDEA, and metals and miners will continue south to lower lows and the dollar to higher highs next.
Once again, we’ll know quickly enough, due to the fact that such durations of near-perfect correlation combined with compressed volatility are rare and do not tend to last long. It’s already been a couple of weeks now– prepare yourself for that coiled spring to take off.
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