Golden Slumbers Awaken
Tim Knight | Apr 06, 2020 11:50AM ET
Generally speaking, everything but bonds and oil are up this morning. Gold has had another strong session, up about $32, and up nearly $200 during its recent uptrend.
As good as this looks short term, I would say again that gold seems prone to rolling over yet again, as it has been lurching in the confines of this nearly perfect oval for weeks. If it reaches escape velocity above this oval, yes, look out, the gold bull market could truly be here.
I had been bearish on bonds until Friday, when the risk of a breakout seemed strong, but that has flopped again. For weeks now, every bond /ZB approaches the level noted below, it retreats. The prospect of a breakout still remains, so I’m not especially enthusiastic about touching TLT in either direction.
In March, equities (shown below via the ES hour bar chart) were making a regular habit of “limit up” or “limit down” days (magenta areas) but we haven’t seen those for a while. Ever since about March 25, we have been imprisoned in the range I’ve tinted in green. This up/down/up/down market is a manifestation of, on the one hand, hope that we’re getting past the worst of this pandemic and, on the other, fear that the bad news will keep tumbling in.
A longer-term view, this time of the NQ, shows stocks remain hemmed in beneath an important resistance level. A break above this would be a very powerful buying motivator, perhaps back to the underbelly of the long-term trendline.
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Whatever the moves are in the next couple of weeks, I suspect there will be a pall cast over the market once earnings season arrives. This season is always met with anticipation, but this time it’s going to take on a gravity that hasn’t been seen in over a decade.
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