evening wrap, october 1

market vibes

“Don’t ever take a fence down until you know why it was put up.” Gilbert Chesterton

The only surprises in the NY session today were not really surprises. The government shut. Oil went down. Gold made a new all-time highs and silver made a new 14-year high. The dollar was steady to a few bps lower. Bitcoin made a run at the September highs and failed but it was a good effort. S&Ps made a new all-time high after a 50 handle dip overnight on the shutdown news. Low to high S&Ps had a 90 handle range, possibly the largest since September 2.

However, despite the bouquet of record highs, the mood was more like droll cynicism than spirited risk on. By mid-afternoon the shutdown was forgotten. I mentioned to a friend NY Grad on substack (check him out), “Maybe we should just get long and shut the government for good?”

Yom Kippur at sundown tonight. You know the old saw, “Buy Yom Kippur and sell Rosh Hashanah” …or is it the other way around?

In the markets

Silver had an excellent day, rising a dollar on trend with few indications of urgency, or FOMO, or overcrowding. There is definite buzz and the ETF is growing but the silver market is still a village or a town. Gold is a metropolitan hive.

Since prices are approaching the undisputed K2 of all yet unscaled peaks in metals, some trepidation should be expected and prepared for at $50.00/toz. The easy ascent would be a low-vol climb with little fanfare in the same steady trend we’re enjoying now. However, I think you have to sell something to tip the Gods guarding the wall if you want them to let you pass. Maybe a few puts…

Gold had another normal day except for the drop in open interest yesterday. We will check in on that in the morning. Technically, the uptrend is littered with these small body dojis (encircled chart below). They’re another expression of prices finding balance in the day structure.

Everyone has their secret sauce with candles. If you make it a habit to review them once a day you’ll begin to recognize language patterns and subtleties. There’s no sign of failure in the trend and the stock market and gold are well correlated so it’s likely the source of buying power is consistent in both markets. That doesn’t preclude a whale in London or Shanghai whacking it overnight but as you can see those dips have been shallow and brief.

In the hourly data we have an imperfect down wedge but it looks like there have been unfilled sellers competing for buyers lowering their offers regularly since the highs this morning. If I had to buy some gold I’d watch this tonight and see if they don’t take out the lows under $3880.00.

Since I have the candles on the the S&P chart, these are bullish hammers with distinct tails and relatively good-sized engulfing ranges (closing higher than opening) and closing on the highs in every instance. This is record high is one in a collection of other assets rising in the same buoyant mass of thermal liquidity… M2, cheap money, falling USD, easy leverage and low margins etc. A very party-on dude gang at the keg…. S&Ps were the clear leader today.

In other markets Bitcoin was up $3000.00 and oil was down ± 60 cents. The dollar was unchanged.. The vix is COT net short the most since 2022. Just a heads up.

my vibe

This isn’t so much a bull market like the Biden years when the FOMC were Olympian gods. The FOMC is irrelevant until the next meeting and the BLS is dark for the duration. This is a confluence of loose money that’s looping in everything we buy. Decent wines in the rack in downtown Morristown are $60; $30 last year and the mood is buy cases. You know what that means. Pizzas $50 next year.

The administration’s growth thesis is the wellspring of everything happening in markets. To wit, inflation is good as long as growth is higher. Team White House is united in a cost-cutting, low-interest-high-growth mission. If it happens, and it is already happening, America wins bigly ….and America is starting to look like a runaway freight train. If I have to type the words record highs anymore I’m going to short code it to RH.

Tim conway … for my friends in AUS

classic find

night all… good luck in Asia

JJ

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