Commodity markets are suffering a bit of a hangover this morning, with metals off yesterday’s highs. Senate R Marco Rubio made a statement regarding stimulus likely to follow the election. Markets initially jolted lower, specifically Gold and Silver. The game goes on, as algos day trade on stimulus headlines. Running it back from yesterday:
Gold: -1.1% with neutral momentum. Rejected the top of our range at 1937 yesterday. May have a few more “good” weeks left, but the set-up could be negative into year end.
Silver: -1.93% similar analysis to Gold – 25.80-26.00 at best on the upside over next 2 weeks.
Copper: very bullish set-up but -1.45% after a 2 day breakout. More upside in Copper as stimulus awaits, as well as infrastructure talk.
Oil: the only commodity market that didn’t participate in the upside yesterday. Crude held the low end of our range overnight, and we think the path is higher in the near to intermediate term for Oil.
US Dollar is catching a strong bid off of the lows (holding the low end of our range overnight). The euro and pound signaled immediate-OB yesterday, so the bounce in the dollar comes as no surprise. The next signal we’re looking for is a potential bottoming process in the dollar that may not bode well for metals into year-end. The dollar could easily bounce back to 94-95 and still hold its longer term bearish set-up and narrative.
Stocks- the IV premiums have ballooned even further this morning, with the SPY now at a 40% premium. Wall Street is hedged for downside risk. When the market is fearful, we think that’s a strong signal to buy. When the market rises, the IV Premiums begin to “sweat” off, and eventually turn to DISCOUNTS aka the market becomes complacent – that’s typically a sell/short signal for the indices.
Jobless Claims came in UNDER 800K this morning, which is a positive on rate of change, but still a very large number.