Gold’s score is back into bullish territory on the EdgeFinder as price nears the all-time highs. COT suggested a lot of heavy bearish sentiment on the USD. The dollar became 15% more short from institutions which is an aggressive short change in one week. Meanwhile, gold saw a modest rise in long sentiment. There is no big news this week, but things are already looking to follow the risk-on narrative as we close out the year. -Frank
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NICK SYIEK
Type: Swing Trader
Assets: Currencies, SPX500, XAUUSD
Style: Fundamental & Technical Trend Trader
FRANK CABIBI
Type: Swing Trader
Assets: Stocks/Indices, Crypto, Currencies
Style: Technical Trader (trends, breakouts and momentum)
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$IWM - Russell 2000 index weekly chart
Is it finally time for small caps to take a turn?
I am bullish small caps in 2024, due to the interest rate cuts expected to occur as early as March.
Why? Because smaller companies are very sensitive to interest rates, and falling rates may act to boost their profits - especially considering the Russell is made up of many financial companies.
I have recently been selling puts on $IWM, and see it potentially breaking into the 210s soon.
- Nick
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Retail sentiment is mostly short the US indices with mixed gold sentiment, and long dollar positions.
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Some key events this week include CAD and EUR inflation numbers, GDP and PCE in the US, and retail sales in the UK.
Читать полностью…SOLD USDJPY UPDATE (Entered 2 days ago)
📉 Sold at: 145.49 (Floating +376.70 pips 🔥)
🚫 Stop: 142.549 (Trailed: +294.10 pips below entry)
🎯 Target: 138.24 (Targeting +725.00 pips from entry)
-Frank
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Remember December 2021 in the markets? I forgot what that was like too, but that's where we are again. Stocks surpassed March 2022 highs and are now heading back to all time highs which was during a time of ultra-loose monetary policy. We are not at ultra-loose policy yet, but the fact we are already back to similar levels is impressive for the stock market.
When comparing the two monetary conditions in the market for these two time periods, it makes me speculate just how high the index could go given that interest rates are still 5.5% right now, but could be much lower in the coming years. -Frank
Merry Christmas!
Here is a free look at this week's smart money tracker / COT data!
NAS & Gold 🚀
USD 📉
After trailing out of my S&P500 trade, it's pushed on without me.
I suddenly remember what it feels like to be frustrated with trading again...
It's another "waiting for a pullback" kind of day! - Nick
Gold looks increasingly bullish as price is recovering from the 7% sell off at the beginning of December. The metal is coming up to test resistance around $2048 which served as a previous high on the 4H timeframe. If price breaks, we may see a stronger presence of bulls going into the latter half of this week for the GDP and PCE news. -Frank
Читать полностью…USD/JPY bounced back up to a significant resistance level on the 1D timeframe. Smart money and retail are short this pair which could suggest mixed sentiment overall. But dollar weakness still seems like the narrative going into the end of the year as the investors anticipate the start of rate cuts for next year. -Frank
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US indices are optimistic in the EdgeFinder's algorithm, and NAS100 is the strongest reading. At +9, the tech index is expected to move closer towards the all time highs at $16,765. All of the categories are looking strong except inflation and retail sentiment.
Recent inflation rates in the US showed a minor increase in Core CPI. However, the benchmark fell closer to the Fed's target range. GDP and PCE numbers are expected to come out as well, and investors would like to see some degree of decline in PCE and GDP. -Frank
CADJPY does look a little oversold, however, we can't be too convinced of a bullish reversal on the pair just yet. The pair has been in a downtrend since October and has not been able to retest the highs in the 110s. Although we have seen some buying volume in the past week or so, there is still a lot of resistance in the way.
Tomorrow is JPY's interest rate announcement followed by CAD's CPI and GDP later on in the week. Investors will need to see a more restrictive BOJ in the statement, but they are expected to keep rates below 0%. Canada's CPI is expected to come in lower on all fronts, thus suggesting weakness in the currency.
JP225 is now a bearish reading on the EdgeFinder despite the US indices looking bullish. This is likely due to the recent talks from the BOJ entertaining the idea of higher rates in the future. The trend has flipped as well as COT moving heavier long positions into the JPY currency.
The net change on the index was strongly negative from last week's COT report. However, seasonality is still pointing to a positive month. JP225's direction will mostly depend on what Ueda says tomorrow regarding policy. If he sounds less dovish that before, JPY will likely strengthen and cause their stock market to lose value. -Frank
Gold fell about 1% on Friday after rate cut anticipations dwindled. Right now, analysts are betting on three cuts in 2024, and some think they will come as early as March. However, this was never in the Fed’s plan to do so, and the market may have gotten a little too excited. This is not to say that dovish tones are not circulating around Fed policy now. The entire year, Powell has not mentioned cutting rates once. Yet, he entertained the idea during last Wednesday’s FOMC. The metal’s recovery from the 8% dip from the highs is still looking promising as price appears to still be in an uptrend. The sell-off Friday may have looked a little harsh, but there still seems to be no reason for a bearish gold market now that investors are honing in on the upcoming Fed pivot. -Frank
Читать полностью…Retail sentiment is largely short the indices, and as predicted Monday, stocks were able to find more upside this week. Gold is mixed but will likely turn retail traders short if gold keeps running higher. -Frank
Читать полностью…Now it is likely other central banks will follow suite with the Fed and begin cutting rates at some point next year. Although this tends to weaken a country's currency, the dollar is likely to be most affected by this news.
EU, GU, AU all share similar behavior with the US stock market. So if USD gets weaker, those pairs will become more bullish as a result. Despite EURUSD's neutral score, price not worried about it as the pair nears 1% gains on the day and breached 2% this week. -Frank
Gold is now a neutral reading proceeded by an extremely bullish score from earlier this month. However, yesterday's conference from the Fed suggest continued strength in the gold market after stating several dovish tones. Although remaining cautionary towards their inflation goal, Powell mentioned that a rate cut could be on the table for next year.
Before yesterday, rate cuts were never on the table. The fact that the Fed is now looking towards that goal means rate hikes may no longer be a threat to investors. The 10 year bond rate fell another 1.44% on the day taking yields to 3.96%, lowest levels since August. -Frank