Risk is high for tech stocks and gold
Updated
The Nasdaq is looking like it may test its support line soon. The index has been responding very negatively to any whiff of rising interest rates (falling prices) on bonds. Bond rates fell (and prices rose) for five weeks straight, but then they hit the 200-day EMA like a brick wall, broke their trend, and have been trading sideways the last two weeks. This week it's looking like yields might resume their uptrend again. Here is an ETF of long-term government bonds, so you can see what I mean about the 200-day EMA resistance and the risk of a rollover:
If this falls, expect the Nasdaq to fall through its support line and perhaps to head downward to its 200-day EMA. Gold will drop as well. Note that gold has already perfectly hit the target I posted two months ago, and now looks ready for a pullback from resistance:
Similarly, the USD is at a support level after a six-week slide:
The market has a couple different ways to price in inflation. It can either sell the dollar (and buy gold and bonds), or it can sell gold and bonds (and buy the dollar). (If inflation gets really bad, the market could sell both bonds and the dollar at once. If that happens, it might be okay for gold and crypto but could be really bad for US stocks.)
Right now we're alternating between these two tools. If the dollar finds support and gold finds resistance here, then the market will rotate to selling bonds, and yields will go up. That's consistent with the price action we're seeing in
TLT, with its rejection from the 200-day EMA. Bottom line: we might be poised at a negative inflection point right now for gold and tech stocks.
If this falls, expect the Nasdaq to fall through its support line and perhaps to head downward to its 200-day EMA. Gold will drop as well. Note that gold has already perfectly hit the target I posted two months ago, and now looks ready for a pullback from resistance:
Similarly, the USD is at a support level after a six-week slide:
The market has a couple different ways to price in inflation. It can either sell the dollar (and buy gold and bonds), or it can sell gold and bonds (and buy the dollar). (If inflation gets really bad, the market could sell both bonds and the dollar at once. If that happens, it might be okay for gold and crypto but could be really bad for US stocks.)
Right now we're alternating between these two tools. If the dollar finds support and gold finds resistance here, then the market will rotate to selling bonds, and yields will go up. That's consistent with the price action we're seeing in
TLT, with its rejection from the 200-day EMA. Bottom line: we might be poised at a negative inflection point right now for gold and tech stocks.Note
Update: Extremely hot CPI number today means that either bonds or the dollar will have to give. Bonds are down slightly but sitting at support, deciding whether to fall further.DXY is up, seemingly on the expectation that yields will rise:
GLD is down a bit, but mostly it's waiting to see what yields and DXY will do:
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