Tomorrow begins the 2nd quarter earnings-report season for stocks and the equity markets priced in rather disheartening expectations.While ‘green shoots’ ruled the second-half of the first quarter, investors are beginning to believe that perhaps the stock markets have priced in hope of a recovery and the actual health of businesses.The slide in stocks brought about some flight-to-quality buying in the US dollar, which gained ground against all the major currencies expect for the yen.Gold managed to rally for much of today’s session before succumbing to pressure and ended the day near even.
Do investors have more to hope for in a weak dollar and strong stock market, or a weak stock market and a strong dollar?This appears to be the sad case that we are facing, unless Congress and the Obama Administration begin championing fiscal responsibility. Unfortunately, it appears that Democratic legislators wish to give another try at a third fiscal-wrecking ball of a stimulus bill. Will another stimulus bill be inflationary?Yes. In as much as the last one currently is, meaning that we need economic recovery in order to have demand driven inflation. Until then, the devaluation of the US dollar has caused commodity prices to rise, but in doing so negatively impacts economic recovery. A catch-22 is perhaps at hand.
For the rest of the week, look for gold to trade closely with equities.One could plausibly note a slightly upward-slanted head-and-shoulders topping formation on the September SP chart.Today’s breakdown failed to hold support, giving way to lower objectives between 850 and 840.The $900 range in gold is vulnerable if stocks roll over like Fido.
Review charts on these markets here www.britefutures.com. Remember that futures and options can be used for bullish or bearish positions; feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use our online paper trading service BriteTrak,contact me attom@altavest.com. Visit www.altavest.com to request a FreeTrading Kit. Keep in mind that there is risk of loss in all trading.
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