ciao bella

market vibes

August 2…) 

“It’s hard to make money on the highs.” Pit adage

One of the questions on my mind this morning is whether markets have made their highs and lows for the month of August; August 1 being the first balance of the sample and then moving directionally for essentially the entire period pending the next FOMC on September 18.

The board is configured in a fairly old school way: Stocks down. bonds up, dollar down, gold up. Good is good. Bad is bad. At a point in the not too distant future, if this plays out according to script, a cyclical recession will ensue, the Fed will cut several times, stocks, and dollars will go down, the curve will steepen, and gold will continue higher. When this type of development occurs, known unknowns come into play. Trade tensions go up. Scandals get outed. Politics reshuffle. It’s a lot more than .25 bps. every two months. The ten-dollar word of tomorrow is disintermediation.  

For now, gold is a few dollars from an all-time high trading on light volume, moderate positioning and OI, devoid of any narrative, technically stable and into its 6th day of higher highs and higher lows. This is the top of the range. if you buy it here your trade must be perfect. It’s either all-time highs with range extension higher or you lose. Any existing longs with reasonable location will hold. But as you can see wherever you look… shares, ETF holdings and open interest, very few longs exist.