The pent-up energy from 18 months of consolidation below 1000 is still there, so 1200 is a matter of when rather than if. At the same time, the trade is definitely crowded and considerably above 200MA and the psychological 1000 supports and still under the Damocle's sword of a possible countertrend rally in USD. The main obstacle to 1200 and above before year-end is how soon and how fast a correction will come, in my view the sooner and the harder, the better. I feel for the hundreds of rationalizations that bears keep on feeding nonstop to justify their view that we are in a bubble and a devastating correction is imminent. Mean-reversion thinking is an extremely dangerous sport in strong trends - even more so in totally uncharted territory - such as the one that we are witnessing right now. The market owes explanations to no one!
Hi Ashraf. I continue to remain amazed at the continuous flow of ideas that you come up with. Thinking of possible surprises in the second half, I was looking some correlations, particularly S&P vs USD/EUR 6-month rolling return correlations (currently and all-time lows) and Gold expressed in Euro terms. The former may re-correlate - namely break the standard risk aversion trade of hedging falling risk-seeking markets with long USD - whereas the latter may break (similarly to what happened in 2005, with both $ AND gold rising against EUR). Do you have any views on these scenarios, please ? Keep the good work !
Once market participants realize the gap between their perceptions (one of the fastest stock market recoveries ever) and actual economic reality (unemployment rising fast, individuals and companies cutting costs left right and centre, still fragile housing and financial system, energy ?), THEN the $ may finally have its day in the sun. But it may take a while, say as long as 2-3 months, before actual numbers deliver the stark message and clear the current second-derivative-type thinking. It is also legitimate to question how just one NFP number (I spare you all the BLS adjustment details) could legitimately trigger such a radical change of perspective on the Fed switching to tightening before the end of the year - one of the key drivers of the $ sudden recovery. There is still plenty of dry powder on the sidelines of stock markets to buy the dips another time and delay a major drop for a while. Possible dislocations on the downside (< 1.37) could be: 1) The $ continues to rally and triggers a massive wave of stops from CTAs and quant shops around 1.37ish. Such a massive move would be driven by technicals and flows rather than fundamentals. 2) Something going seriously awry this side of the Ocean, particularly some credit blow-up in Eastern Europe (a la Latvia) 3) The market finally awakening to geopolitical risk - particularly in the Middle East.
Sorry if my questions generated the wrong impressions a few days ago. I had not paid sufficient attention at how you indicated the April timeframe for a possible rally in gold, my mistake. I do agree that the quantity, continuity and quality of information is way above the call of duty for a free website. For instance, it would be reasonable to have your hotcharts section as part of paid subscription service (OK, I know that other readers will hate me for saying this ....). The most important thing, however, is wishing you a happy 48th birthday (I was also born in 1961, about 7 weeks before you, now you see how carefully I read your book!). While you work on the "platinum-tier" of your website, I will be delighted to take you out to lunch next time business takes you to Switzerland or I am in London, just as an advance payment ,-).
I wish there were a listed ETF tied to your credibility, I would buy a truckload thereof!
Try publishing this in the UK weekend papers: Traders bet BankofEngland will raise rates to 6.25% --highest since 1… https://t.co/GWXrTEAk4R(10 months ago)
Poor start to a slow market day as Ezone PMIs disappoint. Im still keeping an eye on the rare (-2%) USD-GOLD combo,… https://t.co/UyRzWsRbs7(10 months ago)
-5% YTD is not good, while -7% from the year highs can be tough. Gold traders have their eyes fixated on this for n… https://t.co/NV5UMKsfNo(10 months ago)
ما وراء هبوط الدولار مع الذهب و من منهما يتمكن الارتداد؟
موعدنا الآن في غرفة شركة إكس أم لجلسة الأسواق
https://t.co/Y7tD0RxCS2
@XM_COM (10 months ago)
Jobless claims > 300k before next FOMC meeting would be ideal for Fed to make up for any CPI upside surprise (10 months ago)
"Cook & Eat at Home" scheme may come next to defeat UK inflation... (10 months ago)
Earlier in the week gold selloff was attributed to smaller than exp China EASING. Metal is now holding v well despi… https://t.co/ZW9cmXTPWW(10 months ago)
Gold, Yields & Nasdaq
Yields are breaking down, and may potentially extend towards 4.32%, which could imply further gains in XAUUSD and NASDAQ, depending on the outcome and inner details of the CPI. EURUSD...
View Hot-Chart..
The pent-up energy from 18 months of consolidation below 1000 is still there, so 1200 is a matter of when rather than if. At the same time, the trade is definitely crowded and considerably above 200MA and the psychological 1000 supports and still under the Damocle's sword of a possible countertrend rally in USD. The main obstacle to 1200 and above before year-end is how soon and how fast a correction will come, in my view the sooner and the harder, the better. I feel for the hundreds of rationalizations that bears keep on feeding nonstop to justify their view that we are in a bubble and a devastating correction is imminent. Mean-reversion thinking is an extremely dangerous sport in strong trends - even more so in totally uncharted territory - such as the one that we are witnessing right now. The market owes explanations to no one!
Keep the good work !
Luca
Once market participants realize the gap between their perceptions (one of the fastest stock market recoveries ever) and actual economic reality (unemployment rising fast, individuals and companies cutting costs left right and centre, still fragile housing and financial system, energy ?), THEN the $ may finally have its day in the sun. But it may take a while, say as long as 2-3 months, before actual numbers deliver the stark message and clear the current second-derivative-type thinking. It is also legitimate to question how just one NFP number (I spare you all the BLS adjustment details) could legitimately trigger such a radical change of perspective on the Fed switching to tightening before the end of the year - one of the key drivers of the $ sudden recovery. There is still plenty of dry powder on the sidelines of stock markets to buy the dips another time and delay a major drop for a while. Possible dislocations on the downside (< 1.37) could be:
1) The $ continues to rally and triggers a massive wave of stops from CTAs and quant shops around 1.37ish. Such a massive move would be driven by technicals and flows rather than fundamentals.
2) Something going seriously awry this side of the Ocean, particularly some credit blow-up in Eastern Europe (a la Latvia)
3) The market finally awakening to geopolitical risk - particularly in the Middle East.
Sorry if my questions generated the wrong impressions a few days ago. I had not paid sufficient attention at how you indicated the April timeframe for a possible rally in gold, my mistake. I do agree that the quantity, continuity and quality of information is way above the call of duty for a free website. For instance, it would be reasonable to have your hotcharts section as part of paid subscription service (OK, I know that other readers will hate me for saying this ....). The most important thing, however, is wishing you a happy 48th birthday (I was also born in 1961, about 7 weeks before you, now you see how carefully I read your book!). While you work on the "platinum-tier" of your website, I will be delighted to take you out to lunch next time business takes you to Switzerland or I am in London, just as an advance payment ,-).
I wish there were a listed ETF tied to your credibility, I would buy a truckload thereof!
Luca