The airwaves this week have been dominated by the US election. Lots of bullish pronouncements but not once have I heard the word “debt” while at the same time accompanied by the Fed singing from the same songbook. Where will it end? Well with an unending supply of funds, then chartists are left on the sidelines. I mentioned late last week that my Geniuses are now at 106% invested as they increase their leverage to the upside. Just bear in mind that at the 2008 low, this mob were leveraged short and that didn’t end well for them either. At the same time fewer and fewer stocks are driving the market higher. Put it all together and the ice is getting thinner and thinner.
The US dollar is still finding it very hard to get any traction and after trying to rally ended the week to the downside. The Aussie dollar broke through recent highs along with many of the crosses. The weakness in the US dollar helped gold to finish on a stronger note. On my long term (and I mean very long term) point and figure chart of gold I have the price locked in the most beautiful diamond pattern. I would have liked to see gold come back a bit further but at the moment it is sitting on the highs that were registered in 2011/2012 and this level is acting as strong support. All the precious metals finished right on their downtrends. As mentioned a number of times, I believe we will ultimately see gold very much higher – it is just the short term that had me a bit cautious.
I drew attention to the LME metals some weeks ago and we have seen some handy rises since then – particularly nickel. Watching copper closely to see if it can break topside again. There has also been some sharp rises across a number of commodities this week such as the grains. Don’t forget these are part of the food chain and if anything will signal inflation, then it is food commodities.
The XJO continues to be locked in a very tight range – something that doesn’t happen very often. Every time it looks like it can break topside something happens to weaken the market off again. As with the US, interest has been dominated by a small number of stocks that have performed exceptionally well but if anything looks like a bubble it is this lot. I know morality isn’t part of the marketplace but I don’t think this whole business will end well.
Along with the precious metals, our gold index finished the week right on the downtrend.
I know I often say an interesting week coming up but I think this one might well prove extra interesting….
And something else to keep in mind – tomorrow September arrives. Historically September is the worst month of the year.
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