GOLD POST ECON&EARNINGS DATA|MID-TERM PITCHFORK|LOG CHARTING1.11
Updated
Just a short update to my previous idea. (Log charts are soo great)
Analysis of the ECON data and the asset correlations with addition of the newest ECON data and earnings.
Without a doubt the economy is slowing down(REF #1). The fiscal stimulus of the rate cut is wearing off. This is not a debate, it's a fact. But we already knew this. Fiscal stimulus in expansions does not last long typically around 1.5-2.5 years, especially if the corporations increase their buybacks by large proportion. CAPeX is continuing in a downtrend.
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Here's how economic data can be interpreted so far.
1. Every time there's a mention of manufacturing data, seems that gold soars. Apparently, no one cares about manufacturing data from the equity bulls. We will see how tomorrows' manufacturing data turns out(both US and Chinese). The Chicago PMI 48, drop to 43.2, adds much doubt.
Data analysed so far for the week up until today the 1st of November:
i) Japan: Bullish. ii) US: Mixed iii) UK: mixed iv) Australia: Bearish sentiment v) Eurozone: Italy bullish/bad unemployment, Spain: Bullish, France: Bullish, German and the rest is mixed leaning bearish. iv) Canada: Very Bearish (getting into analysing each YoY, QoQ indicator would be very long for this update)
2. At the same time, the GDP's of US and the eurozone were surprisingly good. Inflation came lower than expected. This in fact, increases the chance of another rate cut (fulfilling the dual mandate). At this moment this is very unlikely for December, but probabilities could change drastically.
3.Powell at the press was surprisingly confident, almost too confident in the economy. No mentioning of manufacturing data (again). Status quo, in fact means that we are getting close and closer to a recession. It's not that the economy isn't growing, it's still around 1.9%(unrevised), but the global economy has had a decent contraction. Could be compared to to 2015-16. This is why, status quo is leaning towards the bearish case for equities.
Log chart on equities, notice how the chart is having slower expansions(lower rate of growth/change/log). Will do a separate chart and analysis on the spx during the weekend.
4. Yields haven't really recovered fully. (Ref #3) Judging by the bounce from the august lows. It's somewhat bullish, yet still weak. Trade worries are just too overwhelming. Equities won't be bearish, unless the US10Y is above 2%.
5. Earnings have been as expected, bullish to same degree. Nevertheless, actual problem is small caps continue to underperform. Margins are becoming tighter and tighter. This is not a healthy sign. Yes, we do live in a giga economy, but most of the job creations and transactions are still part of the small economy.
It's a short update, and to wrap it up. Gold seems to be targeting the 1650-1800 area as an extension to wave III. There are two drawn variations. The pitchfork itself is fitting to a remarkable degree, judging by how well gold has followed the band lines thus far. At the moment Gold it's simply neutral, still within the horizontal range. I would wait for a monthly close above 1550(resistance from 2012), before calling it fully bullish.
This is it for the gold update, hope it's useful. There's other indicators to mention, nevertheless I think these are the crucial asset correlations to analyse.
-Step_ahead_ofthemarket-
________________________________________________________________________________________
>>I do not share my ideas for the likes or the views. This channel is only dedicated to well informed research and other noteworthy and interesting market stories.>>
However, if you'd like to support me and get informed in the greatest of details, every thumbs up and follow is greatly appreciated!
________________________________________________________________________________________
References and Disclosure
1. FED rate supercycles:
2. Weekly RSI bouncing off the trend line: //
3. US 10 Y Yields:![10Y US TREASURY NOTE|PREMIUM[LONG-TERM]YIELD ANALYSIS|PART 2/2"](https://s3.tradingview.com/k/kH1DVEC1_mid.png)
Full Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content for private or corporate purposes- contact me through any of my social media channels.
Analysis of the ECON data and the asset correlations with addition of the newest ECON data and earnings.
Without a doubt the economy is slowing down(REF #1). The fiscal stimulus of the rate cut is wearing off. This is not a debate, it's a fact. But we already knew this. Fiscal stimulus in expansions does not last long typically around 1.5-2.5 years, especially if the corporations increase their buybacks by large proportion. CAPeX is continuing in a downtrend.
________________________________________________________________________________________
Here's how economic data can be interpreted so far.
1. Every time there's a mention of manufacturing data, seems that gold soars. Apparently, no one cares about manufacturing data from the equity bulls. We will see how tomorrows' manufacturing data turns out(both US and Chinese). The Chicago PMI 48, drop to 43.2, adds much doubt.
Data analysed so far for the week up until today the 1st of November:
i) Japan: Bullish. ii) US: Mixed iii) UK: mixed iv) Australia: Bearish sentiment v) Eurozone: Italy bullish/bad unemployment, Spain: Bullish, France: Bullish, German and the rest is mixed leaning bearish. iv) Canada: Very Bearish (getting into analysing each YoY, QoQ indicator would be very long for this update)
2. At the same time, the GDP's of US and the eurozone were surprisingly good. Inflation came lower than expected. This in fact, increases the chance of another rate cut (fulfilling the dual mandate). At this moment this is very unlikely for December, but probabilities could change drastically.
3.Powell at the press was surprisingly confident, almost too confident in the economy. No mentioning of manufacturing data (again). Status quo, in fact means that we are getting close and closer to a recession. It's not that the economy isn't growing, it's still around 1.9%(unrevised), but the global economy has had a decent contraction. Could be compared to to 2015-16. This is why, status quo is leaning towards the bearish case for equities.
Log chart on equities, notice how the chart is having slower expansions(lower rate of growth/change/log). Will do a separate chart and analysis on the spx during the weekend.
4. Yields haven't really recovered fully. (Ref #3) Judging by the bounce from the august lows. It's somewhat bullish, yet still weak. Trade worries are just too overwhelming. Equities won't be bearish, unless the US10Y is above 2%.
5. Earnings have been as expected, bullish to same degree. Nevertheless, actual problem is small caps continue to underperform. Margins are becoming tighter and tighter. This is not a healthy sign. Yes, we do live in a giga economy, but most of the job creations and transactions are still part of the small economy.
It's a short update, and to wrap it up. Gold seems to be targeting the 1650-1800 area as an extension to wave III. There are two drawn variations. The pitchfork itself is fitting to a remarkable degree, judging by how well gold has followed the band lines thus far. At the moment Gold it's simply neutral, still within the horizontal range. I would wait for a monthly close above 1550(resistance from 2012), before calling it fully bullish.
This is it for the gold update, hope it's useful. There's other indicators to mention, nevertheless I think these are the crucial asset correlations to analyse.
-Step_ahead_ofthemarket-
________________________________________________________________________________________
>>I do not share my ideas for the likes or the views. This channel is only dedicated to well informed research and other noteworthy and interesting market stories.>>
However, if you'd like to support me and get informed in the greatest of details, every thumbs up and follow is greatly appreciated!
________________________________________________________________________________________
References and Disclosure
1. FED rate supercycles:
2. Weekly RSI bouncing off the trend line: //
3. US 10 Y Yields:
Full Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content for private or corporate purposes- contact me through any of my social media channels.
Note
Gold Weekly RSI on the log chart bouncing off the trendline.
Note
DXY might've hit the the bottom on the monthly and could be looking for a bounce. Although, there is a slight RSI divergence on the weekly. 2020 is an election year, too many uncertainties.
Note
Apologies for any typos. vi)* Canada and other ones. It's been a long dayNote
Promised update on the latest released economic data.On Friday last week and today, there were few positive manufacturing surprises (China and Europe), US manufacturing continuing to contract but to a lower degree. Most importantly, it seems that manufacturing(excluding services) is starting to stabilize. Starting from the summer the dominant trend was bearish.
Currently there's very low probability of another rate cut for December, the probability even dropped compared to last week after the FOMC. This was to some extend expected.
Overall, expecting gold to stay within the horizontal range, probably for the rest of November.
(Keep noticing typos constantly, I should maybe hire an editor...)
-Step_ahead_ofthemarket-
Note
Past 3 weeks, gold has been trading around the median pitchfork trend-line. Meaning that it's somewhat fairly priced, given current conditions. Expecting gold to swing either way in December, based on trade news. Since equities have been rallying quite hard for the past couple of weeks, a shift in momentum gold/spx should be expected.
-Step_ahead_ofthemarket-
Note
An old but still relevant idea. Unfortunately as the traders curse goes, didn't completely followed through. But that's okay, there's still some potential of gold to continue its bullish run.
-Step_ahead_ofthemarket-
Note
Nonfarm payrolls 266k, expected consensus 180k. That's close to 50% surprise. Unbelievable numbers for November. Wages still slacking. Overall, this in a way is a good thing as more people are employed, furthermore boosting consumer confidence.This figure coincides with the SPX breakout in November. It was also one of the best monthly performances on record. Perhaps one of the reasons is that trade fears were beginning to cool off.
This figure will set the direction for the 4 weeks left that we have of 2019. Nevertheless, going into 2020, things won't be as optimistic as they are now.
-Step_ahead_ofthemarket-
Note
Gold breaking back inside the horizontal range. Could expect 1515 by New years.fred.stlouisfed.org/series/OBFRVOL
fred.stlouisfed.org/series/SOFR
There might be additional volatility around new years in money markets, this might help gold continue the bullish trend. However, seems that the FED has acknowledged that there's serious issues with repo markets and so far things are under control.
Note
Chart performing really well so far. Expecting a breakout in January, and potentially to target that 1600-1650 area by February.-Step_ahead_ofthemarket-
Note
Target reached! 1650, perfectly timed wave III.Should see some chop around these levels, before further upside to 1800. We'll most likely see another FED cut in the next 2 FOMC's.
_step_ahead_ofthemarket
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