Powell Pending: Another leg up in Gold and a new Stock bull?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Monday, I wrote that traders might find today's 25bp hike to be a "sell the news" event for anything denominated in USD – but the action in gold, the DXY and stocks since then suggests to me that bulls may yet have another leg up.
First, the DXY on the weekly chart below, now sitting in the support zone I have shown numerously over the last 4 months, seems like it's about to break down further. A clear breach of the bottom Bollinger band should occur before a turnaround – which may coincide with the 200-week MA.
Extending the upward-sloping trend line on the daily gold chart back to the November low shows it clearly still intact – with stochastic RSI having hit oversold (as I mentioned it likely would on Monday), but immediately turning back up with bulls' defense of $1900, rather than the deeper move to the $1885 level I anticipated may occur; as traders know, adapting in real-time is an outright basic survival skill in this game.
The weekly chart of S&P futures shows momentum finally catching support for the first time since July 2021. It shows how the index found support in October of last year at the 200-week moving average, and it shows a clear breakout of the downward-sloping trendline taking place last week. I have been suggesting consideration for a renewed bull market for quite some time now – and the technicals match up. A move to 4175 - 4200 before a pullback into a higher low would be another reinforcing signal.
Would it be surprising to see the disconnect between rich and poor, those who own and those who do not, continue to grow over the next decade? Forgive my perhaps jaded view – but I think stocks can go higher as the real economy continues to suffer - while official government statistics, central banks and mainstream financial media co-ordinate (business as usual, in my opinion) to do the job of "creating a rosy economic picture" that hard money advocates will see right through, as usual.
Volatility should be anticipated going into end of this week.
Thanks and good luck.