With June gold contracts at $2405/oz and S&P 500 is now trading below the psychological limit of 5000 units, it seems that the markets are readjusting on the one hand the valuations of the investment products and on the other hand the degree of risk that accompanies them.
Stock market investor sentiment has given a clear signal of strong selling (Strong Sell) on Wall Street both on an hourly and daily time frame. As we can see in the hourly analysis, the 12 main moving averages give a strong sell, together with the 9 main technical indicators.
At the same time, in the daily analysis, the overall signal is also “Strong Sell”, with the 9 main indicators giving Strong Sell and of the 12 moving averages, 8 give Sell and 4 Buy.
Further weighing on investor sentiment as reflected in the CNN index Fear & Greed Index expresses even greater fear. The index is at 31, down from 46 last week when the weather was already starting to deteriorate and from 69 a month ago, as seen in the chart below. The index values range from 0, which is “extreme fear”, to 100, which is “extreme greed”.
So the CNN Fear & Greed Index has returned to the values it had in October 2023, when the S&P 500 was trading at 4300 unitsas we see in the following graph:
At the same time, the total Market Momentummeaning market momentum is beginning to fade with the S&P 500 inching dangerously close to its 125-day EMA, a bearish breakout of which would mark a major reversal of the trend that has prevailed since last November.
At the same time the CBOE volatility index Volatility Index, known to all stock market investors as the VIX Fear Index, is at extreme fear values at 18.71 points well above the 50-day Moving Average which is at 14.67 points as we can see in the following chart. Again, VIX prices are reminiscent of October 2023.
On the contrary, June Gold Futures (Gold Futures – Jun 24 / GCM4) trading at $2406.70/oz, both technical indicators and moving averages give a strong buy signal (Strong Buy), on hourly, daily , weekly and monthly time frame.
How long can these inverse lives of stocks and gold last? It’s just the developments in Middle Eastwhich have triggered the reversals in stock markets and gold markets?
The truth is that in trying to interpret the recent stock market movements and changes in the gold, bond, oil and other commodity markets, everyone is focusing their attention on events in the Middle East. In the Houthi attacks on the international merchant fleet, Iran’s missile attack on Israeli soil, as well as Israel’s “response message” through the calculated strike on the strategically important province of Isfahan, which is home to the country’s nuclear facilities and its stronghold Ayatollah Ali Khamenei.
However, things are not that simple. Even oil prices rose slightly, coming in below levels seen before the Iranian Revolutionary Guards’ attack on a ship in the Strait of Hormuz and before Iran’s missile attack on Israel. Thus we see that the “reality” of the markets remains relatively calmer than the estimates of geopolitical analysts.
And indeed, her two-month estimate Citi for the target of 3000/oz dollars, for gold it was not related to events in the Middle East, but to the momentum that has given gold both its politics Fed, as well as the large purchases of physical gold by the central banks of the regional economic powers. As for the Fed, this time last year markets were expecting 6 to 7 interest rate cuts by 2024. Last February estimates fell to 3 to 4 cuts and now today the most optimists expect 2 cuts by the end of the year and the pessimists just one .
As for stock markets, they are still behaving and moving in tandem with the 10-year bond trading at a yield of 4.657%, and with estimates that the level of 4.5% and 5% constitutes a new “realistic” interest rate environment.
It is therefore most likely that the markets will value economic events and economic estimates more, despite the tension in Israel-Iran relations.
His report International Monetary Fund, presents a global picture that is sure to influence the markets. It refers to anemic and unsatisfactory growth rates from China and the European Union which depend on imported energy prices. It refers to the strong and prolonged inflationary pressures reversing the Fed’s rate-cutting policies. It refers to the risks of the strengthening of the dollar against the regional currencies of the developing economies. It refers to the increase in geopolitical tension and the transfer of this tension to trade transactions. Finally, it refers to the absence of flexible policies on the part of governments.
At Wall Street the massive sales of insiders continue, while at the same time the developments in Tesla they are not only encouraging. With the “totem” stock of the new economy troubling. The recall of 3,878 Cybertrucksthe decline in production and sales of electric vehicles, the layoffs of 14,000 workers, the renewed infighting among shareholders over Elon Musk’s $56 billion pay, along with the recommendation to sell Tesla stock by powerful brokers and investment houses, are raising a number of concerns about the future of the “perpetual high flight” of Wall Street stocks.
At the same time, a series of objections are expressed about the course of gold. In a recent analysis of Bank of America’s – Fund Manager Survey, analysts estimated that gold is overbought in contrast to bonds which are “underweight”. And through this perspective, they predict that in the next period of time there will be a movement of funds from gold to bonds mainly due to the high interest rate yield of the latter. And the majority of analysts reject the possibility of a recession in the next twelve months.
At the same time its chief precious metals analyst HSBC, estimates that in addition to the classic players, several new traders who are not interested in gold “per se” participate in the gold market. These traders either follow the uptrend alone, or hedge, so-called hedging that is. This fact, according to HSBC, is likely to have created a temporary distortion in the market, resulting in the possible appearance of a sudden decompression of demand, which will lead to a sharp decline in gold prices.
Regarding the course of the General Index of the Athens Stock Exchange both on a weekly and monthly basis, as we can see in the following tables, it was more than satisfactory. On a weekly basis, it fell just by -0.57%with the Nikkei to recede against -6.21%the Nasdaq against -5.36%, him S&P500 against -3.08% and the DAX against –1.08%. On a monthly basis, it fell by -1.77%with the Nikkei in the -7.36%, the Nasdaq in the -6.59%him S&P500 in the -5.08% and the DAX in the -1.54%. A behavior that certifies the healthy image of the Athens Stock Exchange and its resilience in the face of external pressures.
