You’ve Got E-Mail – Gold and Equities Sure Did

November 7, 2016 - 5:14pm

 by Gary Wagner

There’s only one story today and it concerns a massive collective sigh of relief from investors and traders in equities and the U.S. dollar. The reaction was caused by the director of the FBI, James Comey, clearing Hillary Clinton in the most recent email kerfuffle in which some previously known emails were found on Mrs. Clinton’s top aide’s personal computer.

The Dow Jones Industrial Average was up by 365 points today, which amounts to a 2.00% rise for the session. The S&P 500 is up around 2.20% and the NASDAQ is up 2.35%.

European stocks were up strongly as were those in Asia, except for Shanghai, which was treading water.

The U.S. dollar was up against the euro, British pound, the yen and the Swiss franc. It gained most on the yen, a benchmark haven currency (as is the franc), rising 1.33%.

A strong dollar helped push gold lower. Today’s loss of $23 can be attributed about evenly to dollar strength and regular trading. The loss was about 1.80%. Silver was also off on the same market forces, although not quite as severely.

Benchmark U.S. 10-year bond yields had to rise in order to lure investors into the haven play that is getting a lukewarm reception at the trading desks.

On the energy front, OPEC – the wolf crying “Production Cuts!” – claims once again that at least a freeze is in the offing. That caused West Texas Intermediate crude to rise about 91¢ per barrel or 02.00%. It thus brushed up against the $45 per barrel mark. Brent North Sea was a little softer but up a healthy 1.60%.

The COE VIX volatility gauge, which had soared 40% last week, fell about 16% on the session.

No matter who you are for or against, tomorrow will mark the end of what most agree has been the electoral equivalent of the Bataan Death March. By one count, this election started 570 days ago if you count from the day the first candidates threw their hats into the ring. That’s a little more than a year and a half.

So, we have a little more than twenty-nine months to go before the process starts again. Enjoy your time off.

For those who would like a deeper analysis, I invite you to try our daily video newsletter. Simply use the link at the bottom of this report to sign up for a free trial.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Gold Forecast: Proper Action
Thursday, October 13th, we sent out a trade alert recommending that our subscribers initiate a long position in gold. Last week on Wednesday we moved our current protective stop to below 1288 (1285). Today we were stopped out as gold prices dropped.
 
Long gold @1259.60, stop hit @ 1285 for a $25.00 profit ($2500 per contract)
Gold Market Forecast

Based upon statements made by the head of the FBI yesterday, the precious metals markets took the cue of buying on rumor and selling on fact. As such we saw the precious metals complex as a whole decline strongly, with gold leading the way in terms of greatest percentage drawdown when compared to silver.

I’m not convinced the fireworks are over, and we could certainly see a continuation of today’s trend should Hillary Clinton be elected as the first woman president of the United States. On the other hand, although it is a extreme long shot, if Donald Trump does win the election tomorrow we could see much of the premium that fell out of gold today quickly return and equities give up the majority of their gains.

Trending Markets Forecast

Statements made by the head of the FBI yesterday were absolutely perceived as a clear message that all systems are go for a Clinton presidential win tomorrow. As such, US equities staged a dramatic relief rally moving the Dow Jones industrial average dramatically higher. The NASDAQ outperformed the Standard & Poor’s 500, closing up almost 2 ½% on the day.

The Standard & Poor’s 500 closed above its 50-day moving average, which is significant.

The US dollar surged in value, gaining about 7/10ths of a percent on the day, putting dramatic pressure on the precious metals complex.