That was quick!
When I started writing my previous piece "Wither..." a mere week ago I did not expect things to move quite so fast as they have. Inflation paranoia seems to be in early pandemic mode and causing mild panic effects.
We got the US$ bounce; further gold, metal and some commodity price weakness; significant stock weakness - except in US where the weakness is still mild. Looking at the numbers...
The US$ index is approx 86.5%, 1.2550 vs Euro, 115 vs Yen. Could go a little higher before it must make a choice to bounce maybe 5% higher or drop back by perhaps 5%. As a betting man I would just go for the 5% higher, if only because the consequences of 5% lower now ripple quite scarily.
Gold and metals - no messing about, gold and silver jumped straight to the critical lows (gold to near $560, silver below $10 - almost touched $9.50). If these give way expect a further 10% to 20% fall. If you spot the bottom and invest near it you will profit handsomely, it might have happened today or could be as much as 3 months away (highly unlikely to be longer ahead). Copper is a risky trade, a significant economic slowdown could halve and more its price in weeks but it could equally add 10% in a day or two due to labour dispute or increased chinese growth.
Oil is almost on the sidelines for a change. A relief pull back due to Alberto - first Atlantic storm of the season - having no oil / gas impact, and adjustment due to minor $ bounce, explain the WTIC price drop to about $68.50. It would be below $60 if following the gold and metals pull back.
Stocks. They have gone down significantly - 10% and more from recent peaks - but probably have a long way further down to go. Check out what's happened to stock markets in mid-east and asia, not pretty; US, UK and european markets are actually holding up quite well. On US markets: S&P500 broke through and closed below several important technical levels today, closing at 1223 - it needs to claw back to close above 1235 this week else 1160 and possibly lower will soon be seen. DJIA action was very interesting today, the first time below 10,750 for almost 6 months, closing near the day's low after a 100 point decline in last 30 minutes. There has been that pattern of a late in day sell off into a mid afternoon mini-rally recently, is it traders taking advantage of intervention?
Where now?
Could be things will pause for a while - even weeks ?!! - before choosing, but slight rebounds on stocks and metals are a pre-requisite for that luxury. When events find themselves on the brink of a precipice they either pause, plunge on, or runaway, perhaps that will be decided tomorrow, Wednesday, when the CPI data emoerges.
I expect the next serious moves up for silver and gold to be 50% increases and more from current prices but there could be a further 10% to 20% fall before that. I'm no expert market timer so seek those out for spotting the turn. US Stocks are equally critically poised, if they can't manage a bounce and hold of about 0.5% this week they could lose 5% to 10% and it could happen in less than a handful of days. Oil is more dependent on weather, US demand destruction, Iran nonsense etc. My personal guess is things will get surprisingly boring for the next 1 to 2 weeks, then something will trigger a breakdown in the quiet, whereupon US$ goes down, gold etc go up, stocks go significantly down, all quite fast.
We got the US$ bounce; further gold, metal and some commodity price weakness; significant stock weakness - except in US where the weakness is still mild. Looking at the numbers...
The US$ index is approx 86.5%, 1.2550 vs Euro, 115 vs Yen. Could go a little higher before it must make a choice to bounce maybe 5% higher or drop back by perhaps 5%. As a betting man I would just go for the 5% higher, if only because the consequences of 5% lower now ripple quite scarily.
Gold and metals - no messing about, gold and silver jumped straight to the critical lows (gold to near $560, silver below $10 - almost touched $9.50). If these give way expect a further 10% to 20% fall. If you spot the bottom and invest near it you will profit handsomely, it might have happened today or could be as much as 3 months away (highly unlikely to be longer ahead). Copper is a risky trade, a significant economic slowdown could halve and more its price in weeks but it could equally add 10% in a day or two due to labour dispute or increased chinese growth.
Oil is almost on the sidelines for a change. A relief pull back due to Alberto - first Atlantic storm of the season - having no oil / gas impact, and adjustment due to minor $ bounce, explain the WTIC price drop to about $68.50. It would be below $60 if following the gold and metals pull back.
Stocks. They have gone down significantly - 10% and more from recent peaks - but probably have a long way further down to go. Check out what's happened to stock markets in mid-east and asia, not pretty; US, UK and european markets are actually holding up quite well. On US markets: S&P500 broke through and closed below several important technical levels today, closing at 1223 - it needs to claw back to close above 1235 this week else 1160 and possibly lower will soon be seen. DJIA action was very interesting today, the first time below 10,750 for almost 6 months, closing near the day's low after a 100 point decline in last 30 minutes. There has been that pattern of a late in day sell off into a mid afternoon mini-rally recently, is it traders taking advantage of intervention?
Where now?
Could be things will pause for a while - even weeks ?!! - before choosing, but slight rebounds on stocks and metals are a pre-requisite for that luxury. When events find themselves on the brink of a precipice they either pause, plunge on, or runaway, perhaps that will be decided tomorrow, Wednesday, when the CPI data emoerges.
I expect the next serious moves up for silver and gold to be 50% increases and more from current prices but there could be a further 10% to 20% fall before that. I'm no expert market timer so seek those out for spotting the turn. US Stocks are equally critically poised, if they can't manage a bounce and hold of about 0.5% this week they could lose 5% to 10% and it could happen in less than a handful of days. Oil is more dependent on weather, US demand destruction, Iran nonsense etc. My personal guess is things will get surprisingly boring for the next 1 to 2 weeks, then something will trigger a breakdown in the quiet, whereupon US$ goes down, gold etc go up, stocks go significantly down, all quite fast.
posted by Agric | 00:37
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