Risk On Is Back as Dow Approaches 20000

Trump’s second full working day has triggered, or at least influenced, a risk on trading environment today. More importantly, today’s upside move in equities might be indicating a resurgence of the recent equities rally that formerly had been in a period of consolidation.

With the equities markets just settling, the Dow Jones Industrial Average is trading up 120 points at 19,920. Once again, the Dow is within striking distance of that elusive milestone, 20,000. However, both the Standard & Poor’s 500 as well as the NASDAQ will close today at new record highs.

The Standard & Poor’s 500 is currently at 2282, putting it up almost 17 points on the day, a ¾% gain. This is the highest close on record for the S&P 500. The NASDAQ 100 has also closed at a new record high, trading to a high of 5104, and closing at 5100. This 36-point rise is also a ¾% gain net gain.

Gold Trades to a Two-Month High Before Succumbing to Profit Taking

In overseas trading last night, gold prices reached a two-month high at $1220.10 before selling began to enter the market. According to Kitco News, the selling witnessed today in both gold and silver pricing was certainly highly influenced by profit taking. The real question is whether or not today’s round of profit taking is indicating the potential for lower pricing in the immediate future, or if it is simply an extremely short term round of profit-taking based on the fact that gold traded to a two-month high.

While it is quite clear that traders and investors have been putting capital into US equities, as witnessed by a new record high in both the NASDAQ and S&P 500, how safe haven assets will react in the next couple of weeks is uncertain. It is quite possible that we will see both risk on and safe haven assets run in tandem, which is an unusual occurrence, although we have seen this relationship in the past.

We are at the doorstep of a new era as this new administration begins to act upon campaign pledges and promises. Even more important is the fact that President Trump is wasting no time and enacting policies based upon those pledges. We are beginning to gain real insight as to the future direction of this new administration.

Wishing you as always, good trading,