Bull and Bear Market

Welcome back, hope everybody had a great Thanksgiving….

We’ve got the G20 at the end of the week where Trump and Xi Jinping are expected to hold a side meeting to attempt to narrow the trade gap. Many feel that Trump and Xi can only win from this meeting, but we’ve heard that before. The U.S./China trade war didn’t get us bearish to begin with, and a resolution won’t be the reason for us to deviate from that call.  I see stocks are bouncing from a gap higher overnight and yields are ticking higher as well.  We have covered a lot of our treasury’s position, but still have some outstanding contracts out there that need to be rolled from Dec to March. 

Here’s the rundown-

SP500- carries a pretty wide trading range with upside to 2720-2750 and immediate downside to 2600. Once again, optimism of the Trump/Xi meeting has markets hopeful to start the week. We will also hear from Fed President Jerome Powell this week. There’s been some decent within the Fed to pause it’s rate hike cycle, and we even heard Powell express concern over global growth in recent weeks. This could be a great catalyst that jams the S&P 500 to the top our range and allows us to position, once again, for slowing growth and inflation. 

Gold-Sort of trapped here at 1225 and will likely make a decision to stretch higher or retreat back to the low end of our range (1205 area). The dollar strength has been a thorn in the side of gold, but we still believe more upside is coming over the next few weeks as gold has garnered a lot of central bank attention in recent months. The 2 biggest catalysts for a dollar reversal remains China trade and Brexit. 

Oil- Just an absolute bloodbath, and rare event has taken place in oil in recent weeks. -35% in 8 weeks! OPEC meets on Dec 6th regarding production.  A weaker dollar would assist a bounce in oil, but we’re going to look for a bounce to sell into as the Oil Volatility Index (OVX) remains bullish trend, but overbought. 

10-yr Notes- Yields are bouncing, and could bounce even further if any headway is made with Trump and Xi.  However, we’re still buyers on dips as we believe any progress on trade will likely be a trapdoor for stock bulls as the cycle continues to slow. 


Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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