In today’s briefing:
- Gold: Fakeout or Generational Buying Opportunity?
- US Financial Markets: Getting Too Optimistic About Easier Fed Policy?
- Bullish Momentum Vs. Bearish Seasonality
Gold: Fakeout or Generational Buying Opportunity?
- Gold has reached another all-time high at 2500, will history repeat itself? Is this another generational buying opportunity or a bull trap fakeout?
- We conclude that the upside breakout in gold prices has more room to run, though the market is extended and could pull back at any time.
- A long-term point and figure analysis of monthly prices using a 5% box and 3-box reversal shows a measured objective of 4406.
US Financial Markets: Getting Too Optimistic About Easier Fed Policy?
- Financial markets are discounting more aggressive Fed easing in 2024 than is currently being embraced by forward guidance, suggesting recession fears have not been totally extinguished.
- Courtesy of the Great Moderation, monetary policy gradualism remains intact, while markets are discounting a 50 basis point reduction in the federal funds rate after the presidential election.
- The outcome of the presidential election could impact Fed policy in 2025, as both contenders are embracing economic policies that will structurally boost inflation in varying degrees.
Bullish Momentum Vs. Bearish Seasonality
- We can think of two scenarios for the short-term path of stock prices. The market could continue to rise, supported by positive momentum and a neutral sentiment backdrop.
- On the other hand, overbought readings and a lack of leadership could resolve in the typical pattern of seasonal weakness.
- We are waiting for greater clarity as to how market internals develop in the coming days.
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