The Feds are Coming, The Feds are Coming

This is going to be an important week.  Some say historic.  In short, the following take place this week:

  • Monday – ISM Manufacturing (9 AM CST)
  • Tuesday – Mid-Term Elections
  • Wednesday – Election results + reaction, FOMC and Fed Funds (QE2????)
  • Thursday – Unemployment claims (8:30 CST)
  • Friday – Non-farm Payrolls (8:30 CST)

As is always the rule, the reaction to the events will be more important than the events themselves.  Look for some awesome volatility this week, setting us up for year-end performance-driven moves.

Dollar and Gold

I believe we have seen an intermediate low in Gold.  1,315 is the new floor, which should stick now with QE providing more fuel for dollar debasement and a flight to hard assets and commodities.  We are seeing deflation in the things we want and inflation in the things we need.  Some would say we are in a “stagflationary” environment, but whatever you call it, true growth in the economy does not exist.

Below are charts of gold and the dollar, with some idea as to where the dollar may go.  The yearly cycle in the dollar may well put the bottom in later on still, as we digest QE.  I have a target move on the dollar at 74-71, which would put gold at 1,500 – 1,600.  Performance anxiety will drive mutual funds, hedge funds and others to chase this for sure.

If QE is not as robust as expected and gold fails at 1,315, look for a correction but not an all-out capitulation, as we will continue to see currency wars support the decline in currency to support exporting nations’ livelihoods.

Anyway, have a Happy Halloween, stay focused and trade the extremes.  Keep in mind, too, that the first move in these markets is often the WRONG move.

Peace.  Go Rangers!

Advertisements

About thefront9

Independent trader with a flexible approach to the markets. Position trading, swing trading and day trading using Futures, Equities and Options. This site is intended to help others (and myself) see what I see and to stay true to the discipline of making trades at the extremes. Contrarian and TastyTrade addict! Living in Texas with my family, helping others and maybe playing some golf from time to time makes life busy and great. Add a little music and humor and that just about sums it up. Trade the extremes and manage risk.....always!
This entry was posted in Daily Pivots. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s