The DXY is breaking 104 (First time since March) as traders/investors gear up for rate cuts.
Rate cut probabilities are showing a 98% chance of fed easing by the September 18th meeting.
Why? Because the jobs market is showing signs of cooling, and inflation is trending lower again overall. Services PMIs also had a big role to play, showing weaker outlook for the powerhouse component of the US economy.
Does this mean the dollar will fall for months on end? Not necessarily. But - the selloff in USD is likely a repricing of the dollar, now that the US outperformance gap is narrowing a bit.
AUDUSD & USDCHF both looking strong today. Will look for an opportunity to trail stops on each! - Nick
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Gold Daily Chart (VIP Trade Update)
- Gold breaking all time highs, stops trailed just behind previous resistance (now support)
- Nick
The 10 year yield continues to suggest weakness in the market as interest rate forecasts are now expecting 3 rate cuts this year starting in September, then November and December. If the yield can fall under this level of support around 4.16%, we could see bond prices catch more demand to the upside. -Frank
Читать полностью…Yields are really tumbling on looser monetary policy expectations. Current yields have been under the 8 day moving average since July 4th indicating that a stronger trend to the downside could happen in the coming months.
Data from the A1 EdgeFinder
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Retail is now short the NASDAQ and the SPX500 along with the dollar. AUDUSD, GBPUSD and EURUSD are now the top three short USD pairs.
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Markets are very much unfazed by that failed attempt to assassinate the former president on Saturday. All indices are steadily higher this morning which goes to show that the attempt did not have a considerable impact on prices.
The odds of a Trump victory have increased post Saturday's event. The tech index looks to retest the level from Thursday that had led to an eventual 2% decline in one day for the NAS. Analysts are now pricing in three rate cuts for the year, after we had expected maybe one.
Gold, 4H Chart:
Price breaking out - nearing nominal all time highs! Congrats to fellow bulls.
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Dow Jones Daily Chart:
We've got liftoff! Resistance breaking to the upside as rate cuts are considered very likely this year.
Inflation cooling, jobs data cooling.
I'm looking for retests. Next week will be big...
- Nick
This marks the fourth month in a row of declines for CPI in the US. That is the first time it's happened since January of 2023 which suggests the trend could continue lower to the Fed's liking.
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Retail seems to be heavily long dollar and oil while shorting the US indices except for RUSSELL. Gold remains mixed with DOW and DAX.
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As yields take a tumble, bond prices jumped on cooler inflation data. The 10 year treasury note is now considered a strong bullish reading on the EdgeFinder due to the reinforced belief that a rate cut will happen this year, even as soon as September.
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The NASDAQ dropped as much as 2% at the time of writing this marking a long overdue pullback in the tech market. If the rotation out of big tech continues, we might see the NAS100 give back all of its July gains or more. Big names like NVDA, MSFT, AAPL, GOOG and META are all down between 2-3% after this CPI data.
-Frank
Frank also making moves! He bought the breakout on gold yesterday, already nicely in profit.
We're on a roll!
We are getting a counter reading from the EdgeFinder for UJ which is now a -7 even though price is in a strong uptrend. The reason for this is due to mostly fundamental factors suggesting a weaker dollar in the coming months. With three rate cuts forecasted this year, price fell substantially in the past few days. We need to look for another break below this trend line on the 1D timeframe to help confirm a reversal in price.
-Frank
Gold's historical score on the EdgeFinder this year, for those who enjoy backtesting - check this out!
Читать полностью…SPX500 is still testing the highs for the fifth day in a row. Either price will breach the resistance point or reverse lower to a range within this wedge pattern on the 1D timeframe. If it reverses, we could find support around $5,500. A break higher could lead to another run up to the $5,800s where the top of another long term trend line meets price.
-Frank
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COT shows another shift as smart money is selling NAS and SPX which may have prompted the Thursday sell off. Russell is the only US index that shows a positive number for weekly change.
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IWM shares are up over 2.3% today after analyst expectations shift from one to three rate cuts this year. The score is still neutral, however, as the bias slowly creeps into the bullish camp. It's likely that Powell will not say anything new about interest rates, but investors listen anyways for clues.
Small caps are more sensitive to rates than the mega cap indices as borrowing costs tend to affect the smaller companies before larger ones with lots of cash. If Powell says anything dovish, this index will likely rally.
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Gold still sits at a +9 strong bullish signal as we approach Powell's speech this morning. Investors are looking for any indication on when interest rates will fall and will be listening keenly on his wordage towards monetary policy.
Data from the A1 EdgeFinder
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There was a large divergence in COT last week between mega caps and small caps as the DOW, SPX, and NAS all saw buys from smart money while the RUSSELL was one of the largest shorted for the week. I would imagine that this Friday's COT report will be different. We could see selling on the big indices and buying on the small caps.
Data from the A1 EdgeFinder
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If you're wondering why stocks are down today:
They're not.
Absolutely fascinating day! Market seems to be selling out of megacaps and into the average stock.
- Nick
Silver, Daily Chart:
Price action is clearly breaking out in recent weeks. We see strong demand for silver leading to fresh higher highs and hower lows.
My entry (which admittedly narrowly missed being stopped out) is now back in the green.
Stops trailed in VIP.
- Nick
As market drop, small caps jump higher on cooler CPI data. The RUSSELL is very much interest rate sensitive and has been a sector lagger and is now leading gains over the other indices. One thing to note is that we could be seeing a rotation from mega caps and big names into the other indices that had fallen behind.
Data from the A1 EdgeFinder
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