Last Wednesday I indicated that present market behaviour suggests that we could be out of this quagmire within a week and yesterday I suggested to close short positions and start getting long on gold juniors. I also highlighted Adam Mancini's twitter post that we need to get past 3330 to be in a firmer footing to scale higher.
Overnight Wall St action confirmed all these, The Dow gained 410 pts or 1.5% to 27,584, the Nasdaq was up 1.87% at 11,118 and importantly the S&P500 closed above 3330 at 3352 higher by 1.61%. And again, the trading action throughout the session was an upward line with a small offset towards the end of it. As I mentioned, Apple was a likely contributor, it went higher by 2.39%, so did Tesla by 3.4%, Amazon by 2.55% and Boeing continue to edge higher by another 6.44% gain.
This headline below is sweet music to the ears. We saw PM rebound strongly overnight, Gold break into 1880 zone is a positive move closing at $1885 and AUD Gold also up at A$2660. Silver which traded below $23 when ASX closed yesterday shot higher to be at $23.80.
No real known catalyst known for the markets positive bias , but I suspect that the downside risks from these two events took several notches down - first, the TikTok/WeChat saga's threat has been diminished following the courts ruling to stop the TikTok ban including downloads and with the ban deferred until past the elections. Well, this saga was created by POTUS to demonstrate he was tough with China, a perception more than a reality (and the Chinese know it) more than he really cared about national security. So it is no longer an immediate threat. Second, the market is increasingly feeling more positive about a resolution to the stimulus impasse with Pelosi indicating she is hopeful and confident it will get done, negating earlier beliefs the Dems were using the stalemate to put electoral pressure on the Reps.
The EV beneficiary sector is a hot sector to be in - market participants are seeing the coming of this phenomenon. PLL would be going gangbusters this morning with huge overnight Nasdaq gains, the exuberance likely to filter through to cheaper EV beneficiaries like VUL and EMN. Elon Musk said that he expects fossil fuel vehicles to in my own words become dinosaurs in due time; conventional fossil fuel energy sources may be still around for a couple of decades and longer but with declining prospects and Australia is late to the party to diversify , diversify, diversify. We have the technology, we have the brains but we do not have the political will*. We have to be what?? .....yes, Be Ahead of the Curve, we are already behind.
* Optimal political decisions/policies need to be made in the long term interests of the entire wider community , not to a political base on the basis of what it takes to win elections. Political leaders need to have a vision to be Ahead of the Curve and not determine policies based on populism. Country first not political expediency. Gold, Silver, & Stocks Surge As Real Yields Tumble
by Zero Hedge
Mon, 09/28/2020 - 16:01
Election Uncertainty reached its cycle highs today as the VIX curve steepened dramatically... Source: Bloomberg
And stocks still appear unwilling to accept that level of uncertainty...
Stocks Close Higher After Volatile Trading Week Source: Bloomberg
So which pill do you want to take?
Real Yields tumbled today, despite nominal yields being unch...
Source: Bloomberg
Gold rallied over $30 from the ovenright lows...
Silver also surged...
And gold's gains dominated the USD rally this afternoon... Source: Bloomberg
Stocks were also bid on the real rate slump as well as hope for stimulus (though from where we are completely unsure)...Small Caps dominated the day...
S&P, Dow, and Nasdaq all pushed back up to their 50DMAs but with around 30 minutes to go in the day, the markets rolled over...
Today's price action saw the biggest buy program since the start of July, following last week's major sell program... Source: Bloomberg
3rd short-squeeze day in a row - erased last Wednesday's tumble...however, the ammo seemed to run out during the day... Source: Bloomberg
Some claimed that today's surge in stocks was driven by month-end rebalancing but that seems to be rejected by the fact that there is no bond-selling... none! Source: Bloomberg
And if that's the case - the quarter-end rebalancing suggests a massive selling pressure on stocks... Source: Bloomberg
Credit continues to bearishly diverge from excited stocks... Source: Bloomberg
Treasury yields were mixed in a small range with the short-end lower and long-end modestly higher... Source: Bloomberg
The dollar chopped around within its own 2-day range Source: Bloomberg
The Turkish Lira was the FX markets' headline maker today... tumbling to record lows amid warring states...
Cryptos were modestly higher from Friday (with Bitcoin Cash best)... Source: Bloomberg
The gold/silver ratio dropped back below 80x today... Source: Bloomberg
WTI broke back above $40 today...
Finally, we note fear and greed are equally balanced... for now... Source: CNN
