Friday's Indecision
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Before bouncing off its low for the day, back to the high 1230s, we were stopped out of our trade.
It's better to take the profit, especially with the weekend on the horizon and the uncertainty in Europe hovering about for a few days.
In spite of the enormous regroup and gain by U.S. equities, gold is reaching for the unchanged mark as afternoon trading moves on. Volume is already starting to thin out at 3:30. The weekend has begun, unofficially.
The big uncertainty in the U.S. revolves around what the Fed might do about rates. Europe's sluggish performance is influencing the Fed directors and presidents. The doves, the fence sitters and even some hawks seem truly worried about Europe. As we have tried to impress upon you many times, we don't think the Fed is close to a rate hike, but the nervousness over the possibility can't be dismissed, even if the worry is unfounded. It's like an unnatural force fighting against the natural flow of things.
Gold has had an excellent five days, regardless of the temporary lull. "Gold has had a good week because just about everything else has had a bad week," Macquarie analyst Matthew Turner said. "The rally has paused today, however, as the wider markets are wondering whether things really are quite as bad as they thought they were yesterday."
Are things bad? U.S. earning, employment, manufacturing, consumer sentiment - which reached a seven-year high, and even housing (if more spotty), seem to say things really are pretty good.
However, the S&P seems to be reflecting a particular way of looking at stocks right now. It reminds us of Groucho Marx's line about not wanting to join a club that would have him as a member. Investors don't want to keep putting money in a market that they already own, have bid up, and seems pretty healthy. They're in the club, but think the club stinks. Yet they won't really commit to quitting the club.
Dollar strength, which usually travels in tandem with stronger equities, is the chief culprit in gold's struggles today. The dollar dragged gold down about $4 on the session and regular trading, while fighting a valiant fight, can't quite overcome that drag on momentum.
Oil, after a week in which it went into free fall has picked up 25 cents on the barrel, but, it seems it was being "talked up" from various quarters. Oil still looks shaky, although most likely it will go sideways for a bit before it assumes its next pricing posture.
Hard s it is to believe, we are almost into the holiday retail season. This will add more volatility to the economic mix as seers, pundits, fortune-tellers, the people on Main Street and the people on Wall Street all chime in on what they think various sentiments, data, and hiccups mean. This will toss gold and other investments around like corks on the ocean.
That's not a bad thing if you're a bull.
As always, wishing you good trading,
Gary S. Wagner - Executive Producer