The Brains Trust-2019, page-318

US dollar considerably stronger overnight and managed to leave commodities generally weaker including gold. I had mentioned earlier that it might come back to $1300 to $1290. Tough watching this consolidation.

S&P finished up slightly. The huge volatility does seem to have ended in late January as my charts suggested but is likely to return once the market confirms its trend here. I needed time to see whether we were going to start the next leg down or whether there actually is some buying power left. I still favour lower prices but I do admit the buyers are putting up a heroic fight.

Shanghai was back in business yesterday and actually broke a trend line. Watching closely today as this market is having a much bigger effect through the whole financial scene than is generally accepted. The yuan was weaker overnight in line with the stronger dollar so a bit of a fight going on here as the two combatants eye each other off.

And now the serious part of my notes – iron ore. There was a lot of excitement yesterday about the iron ore price being limit up in China. But it meant absolutely nothing because that market had been closed for the week for their holiday so the limit up was an effort to catch up to a week’s trading. The important point is that the price has retreated overnight. Not really enough evidence to say that was a top of importance on just one day’s trading. What it may mean is that prices will hold in a slightly higher range for longer but longer term, the market will continue on its merry way as other miners will increase their output.

But an even more serious part of my notes today – yes you guessed it – steaming coal. This market is in real danger of breaking down here and if it does, then Australia is in a little bit of bother. Keep this in mind.

Our market struggled yesterday to maintain its level after the rally of the past week or so as banks clambered off their recent lows. A lot of overhead resistance in the lot of them. BHP and RIO have done a really good job of holding the fort but if iron ore eases off further, then I think we might see a re-think in these two as well.