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Gold and Silver Prices
Gold tallied a gain for the second week in row but closed lower on Friday as stocks rebounded.
"'A rally in the U.S. dollar is putting downward pressure on gold today,' said Alex Turro, market strategist at RJO Futures.
"'Event-driven rallies usually don't last long," said George Gero, managing director at RBC Wealth Management, adding that a rebound in equities was one of the main factors weighing on gold. 'We need more (ammunition) for gold to move further as it has been very well abandoned with only a few central banks buying besides some retail buyers.'
The Fed hiked rates last month for the third time this year and is expected to raise them again in December.
"'Gold is going to be dictated by the U.S. Federal Reserve. As long as interest rates continue to move higher, it's going to continue to apply a lot of downward pressure on the precious complex,' RJO Futures' Turro said.
"During Thursday's surge, bullion broke above the narrow trading range of the past 1-1/2 months.
"'Gold is trading fairly close to the 100-day moving average at $1,228. There should be plenty of resistance, but a close above that level could signal a move higher," MKS PAMP Group traders said in a note." ("Gold prices fall as dollar gains, stocks rebound," Swati Verma, Reuters, 10/12/18.)
Gold ended the week up $14.60, closing at $1,217.30. Silver ended the week down $0.05, closing at $14.58.
There's more pain to come for stocks, according to analysts watching the charts - Franck and Imbert
The steep S&P 500 decline indicate there may be more pain for equity investors.
"With the U.S. stock market in the midst of an October sell-off, Wall Street analysts who study charts for a living are worried the situation could get much worse. Among the reasons that have technical analysts concerned are a breakdown in the bull market leaders and a drop by the S&P 500 below its average price of the last 50 days.
The S&P 500 is down 2.5 percent for October and counting amid Wednesday's slide.
"'The selling is a result of selling the best performing stocks this year and it is difficult to time when that selling pressure will slow,' said JC O'Hara, chief market technician at MKM Partners, in a note. 'The best-performing decile of S&P 500 stocks this year is lower by 6.6 percent in October. Today, that basket is lower by 1.7 percent (the worst of all 10 deciles).'
"'Until we see some stabilization in that basket, we will continue to see weakness,' O'Hara said.
"Netflix dropped more than 6 percent, while Amazon fell 3.3 percent on Wednesday. Facebook and Apple, meanwhile, pulled back at least 1.5 percent each...
"These declines pushed the S&P 500 below its 50-day moving average, a key technical level. Entering Wednesday's session, the index's 50-day moving average was around 2,880.
"Andrew Thrasher, portfolio manager at The Financial Enhancement Group and founder of Thrasher Analytics, said the S&P 500 also breached its January highs.
"'What's concerning is that we saw the index break below its January high with narrowing breadth and not getting a confirmation of the most recent high by several momentum gauges,' Thrasher said. 'To get back to being bullish in broad U.S. equities I want to see SPX recover that January high...'
"October's declines come amid cautious trading on Wall Street on the heels of a spike in borrowing costs, which can dampen corporate profits and the economy.
Higher yields on relatively safer assets - such U.S. Treasurys - can also lure investors out of stocks and into debt and spark a broader rotation across asset classes. The benchmark 10-year Treasury note, a barometer for financial instruments ranging from mortgage rates to corporate bond rates, has climbed about 20 basis points since last Monday. The benchmark rate also hit its highest level in more than seven years in the previous session.
"The yield curve and growth and value are dominating the tape. With growth selling off, I would highlight a lot of stuff is starting to get very oversold," said Robert Sluymer, technical strategist at Fundstrat. "A lot of stuff is oversold...'
"If the sell-off continues, however, the 2,800 will be a key level to watch for investors, said Frank Cappelleri, executive director at Instinet.
"'It's a round number. It was also a key point to move through,' Cappelleri said. 'When we broke above it, the patterns signaled a move to 3,000. If we move below that on a closing basis, that target is nullified.'
"The S&P 500 is down more than 3 percent since last Monday. October, though positive for stocks on average, is famous for market crashes in 1929 and 1987, a 554-point Dow drop in 1997, sell-offs in 1978 and 1979 and the meltdown in 2008 after Congress rejected the bank bailout bill.
"The decline in the S&P 500 follows a correction in the small-cap Russell 2000, which remains more than 8 percent off its 52-week high." ("There's more pain to come for stocks, according to analysts watching the charts," Thomas Franck and Fred Imbert, CNBC, 10/10/18.)
Now That Gold Is Rallying, Here Is The Next Key Level To Watch- Analysts - Golubova
"With this overdue gold rally finally setting in and gold prices at six-week highs, analysts are anxiously eyeing the next key resistance level in hopes of seeing a sustainable move up.
"Following global equity sell-off and weaker-than-expected U.S. inflation data, gold finally saw the strength that was sorely missing these past six months.
"'Gold's move is overdue given the big equity decline yesterday,' London Capital Group head of research Jasper Lawler told Kitco News on Thursday.
"Investors seemed to have been waiting for the U.S. inflation data this morning before reacting to the massive drop in the U.S. equity market on Wednesday, with the Dow alone dropping more than 800 points, noted Lawler.
"'Gold traders were looking to get the CPI release out of the way before seeing a green light to start buying up for this breakout. Technicals were leading up to this and hopefully we'll get more out of this,' Lawler said.
"The next important step for gold is to close above the $1,220 an ounce level, which will determine whether or not gold can continue to move higher or at least retain its recent gains in the short-term, according to analysts.
"'We need a close over $1,225 and we need the following day to open up stronger. That is how gold prices could move up to $1,250 and even as high as $1,266 - the 200-day moving average,' RJO Futures senior market strategist Phillip Streible said.
"'$1,220 is the key. A close above that opens the door for a big rally, while a close below would mean that gold remains in consolidation,' said Bubba Trading chief market strategist Todd 'Bubba' Horwitz said.
"Gold is also showing signs of getting its safe-haven demand back, with investors shifting their attention not only to risk-off assets but to gold in particular.
"'Gold is now a decent hedge or a haven play, particularly for those investors who have to be invested and are concerned about [the equity space],' Lawler said. ("Now That Gold Is Rallying, Here Is The Next Key Level To Watch- Analysts," Anna Golubova, Kitco News, 10/11/18.)
Stocks could fall 40% to 50% to reach fair value, with recession in first half of 2019: Morgan Street Capital - Fox
Investors should be ready for a major stock market correction with equities down as much as 50% according to investor Mark Yusko.
"Investors should brace themselves for a significant stock market correction, as well as a recession in the first half of next year, investor Mark Yusko warned on Thursday.
"In fact, he says, fair value for equities would be down about 40 percent to 50 percent. However, that doesn't necessarily mean the stock market will have to go to fair value, Yusko said.
"'If interest rates keep normalizing, if liquidity keeps falling, if earnings go to where I think they are going to go, which is lower, I think we are going to have a meaningful correction,' the founder and chief investment officer at Morgan Creek Capital said on CNBC's "Power Lunch."
"Yusko, a noted stock picker who took first place in Portfolios with Purpose's fantasy stock-picking contest in 2016, predicts a recession in the first or second quarter of 2019.
"'Things are paying out now just like they did in 2000, 2001, 2002,' he said. In the back part of 2000, the stock market went down, 2001 brought a recession, and in 2002 the stock market took a big turn down.
"'It's just going to be painful for a while to adjust this overvaluation,' Yusko added.
"Stocks seesawed in the red in volatile trading on Thursday. The Dow Jones Industrial Average plunged by more than 650 points in afternoon trading, a day after the blue-chip index plunged nearly 832 points, or 3.15 percent. The recent rapid rise in bond yields has been weighing on equities, adding to concerns about the future for Federal Reserve monetary policy. On Thursday, Treasury yields fell from multiyear highs after weaker-than-expected inflation data.
"Yusko also questioned whether the economy is really strong.
"'We had one good quarter. We've been sub 2 percent [economic growth] for six years,' he said. Plus, forecasts are that gross domestic product is going to be lower than expectations in the third quarter and even lower in the fourth quarter, and there are bad demographics and bad debt, he added." ("Stocks could fall 40% to 50% to reach fair value, with recession in the first half of 2019: Morgan Street Capital," Michelle Fox, CNBC, 10/11/18.)
Jamie Dimon sounds warning about 'geopolitical issues bursting all over the place' - Son
Chase CEO, Jamie Dimon, saya higher rates with inflation is a bad thing that can derail economic cycles.
"J.P. Morgan Chase CEO Jamie Dimon raised concerns Friday that rising interest rates and geopolitical flareups could derail U.S. economic growth.
"'The economy is still very strong...' Dimon said in a media conference call following his bank's earnings report. 'I was pointing out the probabilities that I thought were higher that rates would go up. I still believe that. I do think you're going to see higher rates.'
"While rising rates amid a strong economy are good, they could eventually put a halt to the nearly decade-long economic growth cycle, he said. Dimon said later in a conference call with analysts that benchmark rates could reach 4 percent. The 10-year Treasury yield was last at 3.16 percent, up significantly in the last month, a move that sparked the longest decline in the S&P 500 in almost two years.
"'If rates go up because you have inflation, that is not a plus. That is a bad thing,' Dimon said. 'So far, we still have a strong economy in spite of these increasing overseas geopolitical issues bursting all over the place.'
"When asked to name these issues, Dimon rattled off a list that included the Trump administration's trade dispute with China, Brexit, the unwinding of bond-purchasing programs by central banks around the world, as well as flareups across Europe, the Middle East and Latin America including in Italy and Turkey.
"It's an extensive list of stuff," Dimon said, adding that most of the times, it's rising rates and not geopolitical issues that ends up derailing economic cycles. "I'm just pointing that out. No one should be surprised if it happens down the road." ("Jamie Dimon sounds warning about 'geopolitical issues bursting all over the place,'" Hugh Son, CNBC, 10/12/18.)