Looking across the New York market, I think “they” want to take it for another move higher. As I mentioned yesterday, despite the sharp break in New York on Friday, I can see on the S&P chart how this buying could again come to the fore. This is a different ball-game to anything we have ever seen before, so more time required.
I hate having “ifs” around markets but at the moment all world indices seem to be tied into what happens in New York. I think I will just watch for a few days to see how it all plays out but “if” New York does rally then we are likely to join in. We have been playing a very dull game for some time so I will be very interested to see how this affects our market.
The other market to watch is Shanghai. It has put on a terrific performance this year outpacing most indices and didn’t have the final sell-off last year that afflicted everyone else. Will be watching closely as it is hitting up against the first line of resistance. If, there we go another if, but if New York can pick up again, Shanghai should be a beneficiary.
However, at the same time, rates were lower again in New York. This is very important as it does tend to suggest that the US is on the verge of a recession. Just how long before we see further evidence of a slow-down is the key here.
The US dollar was weaker in line with rates. This weakness in the dollar allowed gold to once more climb further into the overhead resistance zone. Again, this is going to take time as we have five years of tops (resistance) to overcome.
Our gold index finished higher again yesterday despite another recent favourite finding a rather large pot hole to fall into. As I have mentioned a few times, I am rather uneasy about the way XGD is running up against a rising trend line. Would like to see it break free from this resistance line. It will be very interesting to see how today’s better gold price affects the stocks.
So again we are captive to what happens in New York – need time. However, I would like to leave everyone with something to think about. At the moment, there is a very small percentage of the world’s investment funds positioned in gold and gold stocks. What would happen “if” for some reason the environment changed and investment managers suddenly felt the need to increase their allocation of money in gold and gold stocks?
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