Over the course of my career, it’s very rare I provide updates within a handful of days of one another.
But this looks and feels very different right now.
The charts across assets are saying something, and I swear they’re saying something really big is coming. Maybe it’s simply the election, and we have to wait another ~3 weeks for resolution. But there’s also a (very large) part of me that thinks something happens before then.
Let’s allow the charts to show us:
- Gold has gone absolutely parabolic. These are multi-decade trends being broken, and gold simply is destroying every single one of them. Doesn’t matter if USD is up or down, UST yields are up or down, geopolitical noise is increasing or decreasing, gold is going up. These are systemic moves that speak to the perceived strength of (and trust in) the current system.
- DXY found support at multi-decade trendlines/moving averages last month and has rallied back to major resistance (20 and 50 week moving averages). Odds are we simply bounce back and forth within this zone until the election provides resolution, but if we break in either direction before…
- Oil and 30 year USTs are at MASSIVE support/resistance levels. Oil looks like it has another $5+ move before the end of the month (maybe subject to how Israel retaliates in the coming days, maybe not). 30 year USTs are back at the 4.40% support level I mentioned last week. Again, maybe everything just continues coiling until the election and then makes a major trend move. Often times, though, that’s just not how markets work.
- JPY is hovering back around the “magical” 150 level but is wedging like crazy. Wedges are notorious for their violence when they break. And rarely does the JPY make big moves without other stuff going along for the ride… remember late July / early August?
- Finally, the S&P 500 and NASDAQ continue to tighten their negatively diverging rising wedges further and further. Wedges are notorious for their violence when they break. Unlikely this time will be any different.
So far, the October surprise has been Uptober. So many in the markets are banking on a post-election rally just like usual, especially with the betting odds increasingly favoring a “market friendly” victory.
Will this time be different? To me, nearly every single asset is invoking Chris Berman: “Not so fast, my friends.”
Happy Friday…
