The Industrials are poised to play catch up post FOMC. They have lagged the SPX and NDX. Everyone is on edge about the FOMC meeting tomorrow and nervous (selling today) about a repeat of the 2,000 point drop after the meeting in June. That was the first real correction the markets experienced since the March 23rd Covid low. We do not expect to see anything like that post FOMC. The Fed policy statement will be released tomorrow at the usual 2pm EST. Expect supportive policies to remain in place. The dollar should form a bottom and get a serious bounce which will put pressure on metals and stock market. Expect some back and forth the next few days as Washington negotiates its next round of stimulus. We think the next advance in the markets will take place over 1-2 days and is most likely after a stimulus deal is reached early next week. An 800-1400 point day in the DOW is possible early next week for a short term top followed by 3-5 days of consolidation.
The FOMC meeting should trigger a decline in gold in the days that follow it. We do not advise shorting. Gold is now in a major bull market and the pullback will be either shallow or a sideways consolidation event. We are in buy-the-dip mode. There were too many warnings signs the last 7 days to be long and stay long metals as a trade. All of our peers saw the same thing and only long term investors benefited from the past 7 day spike. However, we knew a reason would surface to explain the outlier buying, and yesterday after the close we found out why: Goldman Sachs upgraded their gold target to $2300. When Goldman speaks the street listens.
We expect new support at $10,500 BTC to be tested in the near future after this spike has exhausted. Big picture - BTC is going much higher during the rest of the year along with the metals. Buy and hold will pay dividends. Short term we would like to see $12,000 tested first.
Denny’s reported after the bell with poor results as expected. It should bounce tomorrow and is trading at 40%of its pre-Covid value and not going out of business anytime soon.
Our AI has a target for the end of August / early September in crude as a summer top.
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