Gold ‘fire sale’ offers refuge from the Fed

July 31, 2015

Shanghai (July 31)  For China, this painful slog of a month couldn’t end soon enough. It’s been six years since the Shanghai Composite SHCOMP, -1.13%  endured this kind of financial water torture.

Not so here in the U.S., where investors have to be pinching themselves — not over their good fortune, rather just to see if they can still feel. By the numbers, the current six-month range is in the bottom 2% of all readings dating back to 1949, according to this chart tweeted by ValueWalk:

Numbness has clearly settled over domestic markets, and by the looks of the futures, this lazy summer Friday probably won’t be the catalyst that kick starts the next big move. It could, however, be the start of the start of the market’s resuscitated heartbeat.

“This sort of mass indecision is transpiring just a few percentage points away from record highs is a fascinating development and possibly presages a major turning point in the predominant trend,” writes Reformed Broker’s Josh Brown, in a strong piece for Fortune.

Earnings this morning from some oil heavies might also have a say in what’s next.

Furthermore, today’s economic numbers pave the way for a crucial stretch of data in the coming weeks. That will determine whether the Federal Reserve sits on its hands at the September meeting or the rate hikes begin. Next week’s jobs report will be huge, as will the Fed minutes in mid-August.

In the meantime, investors will be left to fret over the possibilities. And fretting they are. They’ve made it into an art form. Bearish sentiment just hit levels not seen since early 2013 (see “the chart”). Contrarian bulls love to see that, but those jitters are warranted, according to technical analyst Andrew Thrasher. He didn’t make a call for a market top, but he sure made the case for one.

“The risk of a turning point in the long-term trend of the stock market hasn’t been this high, in my opinion, since the start of the bull market in 2009,” Thrasher said. And, if it turns out that way, we just may be looking at some bargain-basement prices on beaten-down gold prices (see “the call”).

Key market gauges

Futures on the Dow YMU5, -0.17%  and the S&P ESU5, -0.19%  are pointing to a fairly quiet end to the week, but it’s still early. In Asia ADOW, +0.01% Shanghai has finished the month down 1.1%, though other markets, such as the Nikkei finished a little higher. Europe SXXP, -0.11%  is also starting out in a tight range. Gold GCU5, -0.78%  and oil CLU5, -1.77%  are both down fractionally as they bid adieu to a horrendous July.


The flow of earnings slows today, but there are still a few numbers to keep an eye on. Topping the list is Exxon Mobil XOM, -0.16% joined by Chevron CVX, -0.24%  and Royal Caribbean Cruises RCL, -1.39% As for those that reported after yesterday’s close, LinkedIn LNKD, -5.76%  and Electronic Arts EA, +0.17%  are both taking a hit premarket, while shares of Amgen AMGN, +2.19%  are moving higher.

Source: MarketWatch

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