What To Expect This Week
We can reasonably expect a significant move up or down in three markets this week:
At the end of last week, I noticed an interesting market phenomenon:
- As of Friday’s close, the Dow closed down settling on its 50-day moving average. (By the way, the 50-day is now above the 200-day MA, reflecting recent stock market strength.
- The same situation applies to gold.
- The yield on the 30-year treasury bond closed down too, settling on its 200-day MA. (For the 30-year treasury, the 50-day is below the 200-day MA, reflecting recent strength in the price of the bond.)
So three dynamic and relatively uncorrelated assets all settled exactly on their respective moving averages. So now we wonder whether these averages will provide support for each asset, or whether each asset will break down further below that support, indicating a further, perhaps dramatic, weakening in the case of stocks and gold, and conversely indicating strengthening in the price of the 30-year bond.
We'll see what happens this week.
StocksHere's why I think we we may see a significant move. (Of course, just saying a market will move up or down isn't saying much. "Significant" is the key word.)
Bonds
Gold
At the end of last week, I noticed an interesting market phenomenon:
- As of Friday’s close, the Dow closed down settling on its 50-day moving average. (By the way, the 50-day is now above the 200-day MA, reflecting recent stock market strength.
- The same situation applies to gold.
- The yield on the 30-year treasury bond closed down too, settling on its 200-day MA. (For the 30-year treasury, the 50-day is below the 200-day MA, reflecting recent strength in the price of the bond.)
So three dynamic and relatively uncorrelated assets all settled exactly on their respective moving averages. So now we wonder whether these averages will provide support for each asset, or whether each asset will break down further below that support, indicating a further, perhaps dramatic, weakening in the case of stocks and gold, and conversely indicating strengthening in the price of the 30-year bond.
We'll see what happens this week.
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