This is a sample entry from Drew Rathgeber’s newsletter, The Rath Overlay, published on Friday, October 24, 2014.
Gold is currently trading at $1,232.50 (Z4) per troy oz., off its highs at $1,255.00 creating a bear flag. Silver is currently sitting at $17.22 (Z4) per troy oz. right below 15 day EMA; as I said last week both market still look very weak even though they tried to go higher, and this still holds true today. Not much to get excited about in the metals sector. The indices had another volatile week, with the ES trading currently at 1939.00 (Z4), and a massive V-Wedge rebound, however still looking a bit bearish, and wonky technically speaking. The grains sector starting to become bullish, with Corn hovering at $3.64bu (Z4), Soybeans $9.9925bu (X4), and Wheat at $5.35bu (Z4), definitely keep an eye on these market they are turning bullish (Angel Cross 15/40 EMA) on the daily charts, will need a few more days to confirm. The energy sector still showing signs of weakness, watching Natural Gas drop to its lows $3.66 (Z4) mmBtu, and Crude Oil consolidating however still trading nears its lows at $81.30 (Z4), you could still see a small counter bounce, however still looking bearish.
On the economic news front we had good news with Existing Home sales rising a solid 2.4% in September to 5.17 million units. Also, we had Consumer Price Index (CPI) a bit soft at 0.1%, (indicated in commodity prices) for September. We are seeing large build-up in Crude Oil Inventories, which is contributing to the downfall of oil prices, and economically a bit concerning going into winter. Jobless claims came in slightly better than consensus 285K, at 283K initial claims. Up next this morning will be New Home Sales, and don’t forget next week we do have an FOMC announcement on Wednesday.
Metals Market Commentary: Watch here
In The News
CPI Prints Smallest Possible Increase In September Even As Beef Prices Surge 17% In 2014
After last month’s shocking 0.2% drop in CPI, driven almost entirely by plunging gasoline prices, September CPI once again posted a modest rebound, rising 1.7% from a year ago, or 0.1% month over month, just above the 0.0% expectation, with core prices excluding food and energy rising precisely in line with the 0.1% expected. (more)
Why It Better Not Snow This Winter, In One Chart
It will be the plotline of scary stories parents tell their children for decades to come: in Q1 2014, the US economy was supposed to grow 3%… and then it snowed. This led to a -2% collapse in the world’s largest economy. Yes, inconceivably heavy snowfall (in the winter), and frigid temperatures (in the winter), were the reason for a $100+ billion swing in US GDP. Well, as the following chart from DB’s Torsten Slok shows, of the roughly $2 trillion in GDP the global economy is expected to grow in 2015, about 90% of that is expected to come from China and the US! (more)
IMO: This has been in the back of my mind as we enter the winter months. Already, with a fragile economy as is, if we have a really cold and snowy winter I can only imagine what this will do economically. Remember last year?
Why the Stock Market Rally Is Bad News
U.S. stocks had their biggest rally in a year on Oct. 21. The S&P 500 has now recovered in a blink: a 5 percent rise since Oct. 15, reversing a 7.5 percent drop. Bummer. Long-term investors barely had a chance to jump on one of the market’s best buying opportunities in years. They’ve been waiting for discounted stocks for a long time. The S&P 500 hasn’t had a bargain bin since a couple brief drops in 2012. Neither met the definition of a correction, a drop of 10 percent or more. The last extended double-digit declines were in 2011.
IMO: The #1 question I get “Where do you think the indices are going?” my answer “It’s rigged, how can you comment on a rigged market.” This is since TARP was created.
In The Markets
Emini S&P (ES)
Market Comments: Deep V formation, and like I said at the top of this newsletter, very wonky looking.
Market Comments: Overall, still trending sideways and slight break in its bear flag formation and still holding below the 15/40 EMA. Will need an event to get the bulls back I believe.
U.S. Dollar (DX-M)
Market Comments: Back n’ fill to flat is what we have now. Be interesting if we break above 86.80 and anything is plausible.
The Week Ahead
- 10/27 – Pending Home Sales 10:00AM ET
- 10/28 – Durable Goods Orders 8:30AM ET
- 10/28 – Consumer Confidence 10:00AM ET
- 10/29 – EIA Petroleum Status Report 10:30AM ET
- 10/29 – FOMC Announcement 2:00PM ET
- 10/30 – GDP 8:30AM ET
- 10/30 – Jobless Claims 8:30AM ET
- 10/31 – Consumer Sentiment 9:55AM ET
*IMO – In My Opinion
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