This rally has been insane...
Is gold getting tired? I will stay in my longs unless we break 4H support.
- Nick
Retail is still bearish the indices but recruited a few more players to the short side. EURUSD, GBPUSD are now short by the crowd. USOil is still long and a few other USD pairs are still mixed. -Frank
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The NAS100 is still hanging on to the uptrend although the index is down today. Tech stocks have been outperforming the rest of the market with help from strength in the semiconductor sector. Because stocks have been very resilient over the last couple months, it's hard to say when/if a pullback will happen.
Tomorrow's number is going to be very important in determining direction for the stock market. Unlike gold, investors want to see a softer inflation number which would help alleviate pressure from the Fed who may think they will be forced into a rate cut should inflation continue to rise. -Frank
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Very important news in the US comes out this week which is CPI. Any signs of higher inflation could be detrimental to the indices, dollar and oil.
Читать полностью…Wages have also dropped today which could be indicating a potential decline in inflation. Although wages have mostly remained steady, it's still a good sign to see wages fall since it could be due to declining inflation. Tuesday's CPI report is going to be important for investors' outlook on an interest rate cut.
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NFP came in hotter than expected, however, unemployment rate did too and wage growth declined to 0.1%. Another thing to note is that jobs numbers beat expectations but broke the 3 month streak of steady growth. Last month's report was 353K, today's was 275K. Last month's NFP was revised to only 229K in today's report as well. The indices' markets initial reaction is negative in premarket. Gold is mixed, dollar is down on the day, oil is also down.
What we can take from this is probably a weaker jobs market considering that UE rates rose and CPI levels were stubborn. Although premature, stagflation concerns may take hold in the market as we see declining growth and higher CPI. We just need to watch for the next inflation report now. -Frank
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The assets with an arguably bullish stance are the ones being sold by the crowd. Meanwhile, AUDUSD, GBPUSD and EURUSD are mixed. Oil is one of the top short positions from the crowd as well.
- Frank
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Bitcoin is now testing some strong resistance around its all time highs of $68,000. A break above this would signal a continuation of the strong uptrend. But a retracement could mean a retest around maybe the $53,000s.
In the same scenario as gold, bitcoin might actually see strength the concerns of lower economic output and higher inflation. That's why tomorrow's NFP is so important and why a beat or miss could greatly change the narrative of sentiment. -Frank
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AUD GDP came in last night at the same level as last quarter. After looking further into the data, however, I noticed that their last month's revisions changed to 0.3% suggesting that this month was a decline in growth. Although GDP decline is not great for the currency, inflation is still much lower on a YTD basis as CPI has fallen from 7% to 4.5% in March.
-Frank
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Gold
More analysis on gold reveals that we could be up against a potential pullback on resistance for the metal. Although the EdgeFinder is still marking gold at a +6, price has run up over 5% in this week alone. There is likely going to be some cooling in momentum at some point, and the $2,140-50s seems like a good area to see some profit-taking in the short term. If this occurs, we may see price come down to the low $2,000s again. ADP GDP came in cooler with JOLTS (lower expectations this month) happening soon for the USD. A weaker reading will likely prompt more gold bullishness for the day, and a stronger reading could push gold lower.
-Frank
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Although a positive change in US inflation will cause the EF score to change to a -1 on the pair, it still may be bullish this time around as fears of stagflation in the US are still prevalent. Either way, the Fed is likely going to cut rates. It is just a matter of whether they are forced to or not.
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Retail is still bearish the indices but recruited a few more players to the short side. EURUSD, GBPUSD are now short by the crowd. USOil is still long and a few other USD pairs are still mixed.
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GU is still a strong bullish reading on the EdgeFinder although the score fell by -1 since Friday. The trend reading is now weaker than before after price came up to test a strong resistance level on the 1D timeframe.
Tomorrow's CPI is equally as important for this pair as the pound is trading directly against the dollar. CPI values will determine whether GU is on support or resistance in the next few days. There could be a bullish argument for both higher or lower CPI. This is because both directions could still indicate a rate cut. Either way, it's bearish for the dollar. -Frank
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Last week, we talked a lot about a potential stagflation issue going on in the US. It comes down to tomorrow's CPI number and how investors interpret the data. Gold most likely wants to see a higher level of inflation to indicate falling growth and labor with rising CPI.
The metal's score has changed by -1 to take price down from +7 to +6. COT still shows heavy interest in gold and bitcoin which could be serving as a hedge to stagflation. Instead of beating expectations, it will be important to watch which CPIs come in higher than the previous month, Core especially. -Frank
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NAS100 continues to chug higher after a stronger than expected rise in job numbers. However, after revisions, last month’s NFP showed a stark 124K difference in the real number of jobs added (actual: 353K, revised: 229K). This month was 275K, but can we believe that number will hold up in next month’s NFP report with revisions? Unemployment rates rose as wages declined. This news is on top of an already slowing economy and stubborn inflation levels. At some point, it seems that the indices may reach their peak, but the question is when. Investors need to stay cautious during this period as rate cuts may come as a necessity rather than a luxury.
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Forecasts are now projecting Europe's interest rate to stay the same while USD's is lower in the coming quarters. Because of this, the dollar is likely going to be weaker than other currencies for some time. ECB remained unchanged once again at their policy rate meeting. They believe that inflation will continue to cool with through 2025 to hit slightly lower than 2% by the end of next year.
- Frank
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We can watch retail sentiment deteriorate over time as gold continues pushing higher towards $2,160s. Smart money is not short, but they are slowly moving some funds out of the metal and potentially taking profit.
- Frank
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GBPUSD is now in the bullish range after gaining another point this morning. The trend is reading stronger as the dollar index continues to drop by another 0.4% today. Whether or not the Fed cuts rates due to stagflation or an expansionary environment, it still does not look very bullish for USD.
This is because investors are expecting rate cuts at some point in the near future. Whether it be for a healthy or poor economy, it's not a good look for the dollar. The stagflation scenario, however, is more bearish for USD.
-Frank
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We can't not talk about gold in this type of situation unfolding in the economy. The EdgeFinder has this metal placed at a +6 which is still unchanged from yesterday. The score may change tomorrow depending on the latest NFP data.
The bullish case for gold would be a lower NFP because gold's price tends to perform better based on weaker economic readings and that the US could be close to experiencing a stagflation scenario. If NFP were to come in hotter than expected, it would be a less bullish moment for the metal. -Frank
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I've been on a bit of a hot streak recently with my positions. However -
All good winning streaks will end, and fortunately so will losing streaks.
When times are really good, it's important to remember this simple reality of trading. I'm NOT leveraging more. I'm NOT getting overconfident, and I'm NOT going to think I'm invincible from here!
I WILL have another drawdown period in the future. It's inevitable, but shouldn't be feared. It could start tomorrow!
Just remember - what will keep you in this long term is risk management, discipline, and having a backtested edge. - Nick
After today's softer ADP NFP report, the indices are still up. Friday's NFP will be a determining factor in market direction. Despite three months of climbing jobs numbers, this month is expected to come in much lower. If we see a sign of cooling labor, it could spell the start of our stagflation concern happening in the US economy. Dollar bulls and indices bulls are hoping for a higher jobs number Friday. Gold and arguably bitcoin bulls are hoping for a softer number.
- Frank
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Remember: All time highs are historically bullish, especially after a ranging period & while retail traders are heavily short the move!
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