23rd October 2023
In the intricate dance of global finances, we find ourselves yet again in the midst of a week that speaks volumes through price action, shedding light on the trajectory of money flows in recent times. For as we follow the trail of currency, we often discover the brushstrokes of the larger economic canvas.
This week unfolded as another chapter in the grand saga of risk aversion. Investors sought refuge, but there was one solitary sanctuary they turned to, an asset that stands as a timeless testament to unwavering strength – GOLD. Like a beacon in a storm, it held firm against the tide of uncertainty. In these times, one could be forgiven for hesitating, but the direction was clear. All roads led to this precious metal, where centuries of history had woven a protective cloak around it. In comparison, other assets paled in the face of this financial fortress.
Yet, this flight to safety wasn’t an isolated event. The giants of finance made their moves, positioning themselves in a risk-off stance. And where the financial giants tread, the herd, often referred to as the ‘dumb money,’ eventually follows. It’s a stark reminder that even in these times, you can never be too late to join the herd, especially if what I suspect is looming on the horizon comes to pass. Mind the GAP…
The market summary
US10Y bonds continued their sell-off, pushing yields beyond the psychological threshold of 5%. A number significant only in the realm of human emotion, but one that signifies a lack of interest and faith in the US and its debt. This is even more glaring when no flight to safety occurs during times of conflict.
The Dollar, on the other hand, stood its ground. A flat, unwavering line in the sand, displaying no inclination to sway. It became evident that all financial roads led to a singular destination in the past 1-2 weeks.
The SPX500 took a heavy tumble, returning to recent lows. A breach of these levels could very well confirm the arrival of the bear market.
Gold, in a spectacular display of strength, surged to the 2000 level, appearing poised to breach it with ease. It’s a freight train hurtling forward, unstoppable.
Oil experienced upward momentum throughout the week, though it still lagged behind recent highs. Its fate hung in the balance, as the demands of conflict could push it higher, while a looming recession might drag it down.
Bitcoin too had its story to tell, with a push upwards within a range of 32K to 25K. It’s a pivotal moment for the new-age asset. Will it continue to defy market sentiment, or will it revert to its old ways if the markets plummet further? Institutions hold the key to its destiny, as they alone can propel it upwards. Cautionary words are spoken, urging caution in the wishful thinking of enthusiasts.
Implications for US Traders
For us, traders and observers of this intricate dance, the lesson is clear – track the flow of money, and discard the distractions that flood our screens. The media’s ceaseless chatter might try to pull us away, but our focus remains on the shifting tides of finance. For now, the spotlight is firmly fixed on the US bond market, where trust, or lack thereof, in US debt holds the key. The flight to gold serves as an illuminating beacon, offering insight into the potential escalation of global conflicts. Remember, money moves before news can ever tell its story.
Trade smart, Trade safe
understanding the flow of money in the financial markets is essential for traders seeking to make informed decisions. By focusing on key assets and currencies, traders can anticipate potential economic trends and geopolitical developments. As we continue to follow the money, it’s clear that the road ahead remains uncertain, but by closely tracking these indicators, traders can navigate these somewhat unprecedented times with a little more confidence.
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