Gold have broken out decisively on the weekly charts above resistance at 1365 – 2375. With most of the major central banks dovish and ready to inject stimulus, hard assets will continue to do well against fiat money. Buy on dips is the mode to be in!
Trump tweets on the Trade War is driving the stock market correction. Fundamentals and the underinvestment of the market at large remain relatively unchanged. A correction to the 7600s on the index will be a good level to consider getting involved.
JPMorgan (JPM) reported record earnings last week with strength across all major lines of businesses amid a “more constructive environment”. The stock jumped 4.2%, the biggest one day move since Nov 2016. With a close above the weekly Ichimoku cloud within reach, all signs point to an impending melt-up in stocks.
Despite market pricing expectations of rate cuts by the Federal Reserve, Gold is weakening against the USD. XAU/USD has closed below the Daily Ichimoku Cloud for the first time since late last year. If it stays below the cloud, and breaks decisively below 1270-80, the next target would be the low 1200s.
Nasdaq Composite Index closed at new 2019 highs last Fri. That also coincided with the first close above the weekly clouds for the year. It remains to be our high conviction call that stocks will make new all time highs this year.
Shanghai Composite Index has broken into the weekly Ichimoku clouds and continue to trade well. With policymakers determined to channel credit to the right sector and promote growth, the bears are now in retreat. Time to look for opportunities to get long on any reasonable pullbacks!
US Treasury 10Y yield looks set to break and close below the weekly ichimoku cloud soon. A benign inflation outlook and easing bond yields will be good for stocks going forward. New highs in US stock markets remain very much on the cards as the catalyst for the selloff last year was a hawkish Fed that was causing yields to go increasingly higher.
S&P500 index breaks and closes above the weekly ichimoku cloud for the first time this year. As we have been saying since the start of 2019, new highs will be seen this year. Investors came into the year very under-invested and the longer the index stays positive on the year, the worse it gets for those who are not involved.
Since the surprisingly dovish stance taken by the Federal Reserve at the Jan FOMC meeting, the Dollar Index (DXY) has been on the rise. Price action is especially encouraging against the EUR. If US rates are lower and growth prospects deemed discouraging by the market, what’s driving the USD strength? More importantly, is there any reason to not get involved?
With widespread of fears of an impending recession and calls for a bear market coming into 2019, the market is generally under-invested. The Nasdaq has now pierced through the bottom of the weekly ichimoku cloud and a close above the cloud will likely lead to new highs this year.