In today’s Money Weekend…US equities have reached a crossroads…perhaps a balancing-up period is coming…gold has bounced as a result of US dollar weakness…and more…
After seven weeks of constant selling, US equities have reached a crossroads. Either things snap and stocks free fall for a week or two, or a vicious short squeeze develops from oversold levels.
In other words, we are going to see a sharp move from here, but you could flip a coin as far as knowing which direction it will be in.
That may not sound like useful advice, but there is value in knowing when it’s time to trade and when it’s time to sit tight and see how things pan out.
If you had been short during the sell-off, now would be the time to take some profits. If you were bullish, now is the time to sharpen your pencil in case we do see stocks rallying and buy signals being generated.
There are a few markets that are looking a bit overextended in the short term, so perhaps a balancing-up period is coming.
The US dollar has been testing multidecade highs and is overbought on the monthly RSI. Despite the fact I think the US dollar will end up heading a lot higher over the next 6–12 months, a sell-off in the short term could be on the cards.
Gold has bounced as a result of US dollar weakness, and we saw strong buying in US gold stocks on Thursday. Gold needs to rally from current levels otherwise there is the chance that the monthly chart could turn bearish.
I give you a detailed update on the current state of play in the ‘Closing Bell’ video below. I analyse the US 10-year bond yield, US dollar, Australian dollar, and gold.
Click on the thumb below to watch:
Until next week,
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Murray Dawes,
Editor, Money Weekend
