USD, Tech Stocks Show Strength After Monday's Market Meltdown

US stocks rallied to close higher for the first time in five sessions as big tech led the way yesterday, re-emerging as a haven alongside the dollar. Stock markets stabilize after a bout of volatility that had shaken investors' confidence to the core on Monday as the S&P 500 rose 1.1%,. The better sentiment came amid hand-wringing from Fed speakers about the status of fiscal negotiations.  
 
After Monday's melt-down across most global equities (ex-Tech), there is a temporary sense of calm enveloping the global stock markets. 
 
Still, the question remains heading into one of the most politically contentious elections of all time, is it S&P 500 3200 before 3400 or vice versa before mid-October. 
 
Since the end of the day yesterday, with NASDAQ Futures in the green, it indicates the tech sector's resilience and provides an enduring go-to strategy through the COVID shutdown trade. 
 
Tech is outperforming, while Cyclicals are lagging. Housing and Communication Services lead US equities higher. COVID is less of a factor today – which makes sense considering the latest lockdown initiatives confirm governments across the globe are trying extremely hard to keep things open. All in all, it feels like we are riding the 'safe' long Momentum/Tech trade again, for now.  
 
I stress for now as in this edgy and highly uncertain climate; traders will never stray too far from the sell button as we have not filled any significant gaps from the September 2 beat down as return to NASDAQ 12400 is a huge gap to fill. 
 
Although the central banks can do more, equity markets have likely reached their multiple policy deluges' saturation point. And as such, the stock markets might continue to struggle to make new highs until there are more positive signs of real economic growth.


Gold Falling Out Of Favor
 
Although gold has fallen out of favor, the downside may also be limited due to low yields and geopolitical and trade risks that are likely to provide a price floor. 
 
The lack of a bounce after Monday's drop is not encouraging. While gold does not look persuasive, there is a limit to how low it is likely to fall – at least ahead of a highly contentious US election, a climate of highly charged geopolitical risks, and renewed COVID-19 concerns.