Everyone expected the hurricanes to affect job growth, but I didn’t see many forecasts of an actual contraction. 
It remains to be seen what happens beyond the initial knee-jerk data. But, for now, the currency markets are going crazy — with the dollar and USDJPY spiking higher in an attempt to offset the plunge (well…the 2017 version at least) in equity futures.
The positive side of this development is that gold, oil and gas are following our playbook nicely.
continued for members…
Gold came within 1.1 of the .618. But, note, it might still hang around for another week or two, waiting for the SMA200 to catch up to the .618. Or, it might just ignore the .618 and go for the SMA. Tough to say.
CL has reached our SMA200 target and is subject to a bounce anywhere between here and 48.36.
…RB is finally giving up on this latest spike. Note that the bump that came out of nowhere to help lift stocks over resistance fouled up the .618 and red TL target. Now, reaching the .618 means breaking the TL — a more complicated proposition.
Needless to say, equities are not liking this development much. ES is off 6 points, and SPX will likely take the opportunity to backtest the recently broken (courtesy of VIX) Fib lines.
Both SPX and ES broke out past some pretty significant resistance. If this holds, bulls are in the clear. For SPX, the test is holding 2536. If it can’t plenty of downside targets starting with 2510 and including 2500.
If ES drops back into the rising purple channel and below the 2.24 and 1.618, then we still have a good shot at 2500.
Nothing in this morning’s data should have bolstered the dollar. Even if you take the news as rate hike positive, it would affect only the short end (which has already priced it in.) Yet, the dollar and USDJPY are screaming high. As usual, it’s all about propping up stocks.
UPDATE: 9:37 AM
Gold just reached the .618, obviously well ahead of the SMA200. It could keep dropping, so I’d take a chance on a bounce here with tight stops just in case. If it drops through 1264.50, I’d want to be short again.
Best initial targets if we get the bounce here are the red TL at 1271.60, SMA100 at 1275.1 and SMA10 at 1282.90. If it can break above those, we might get a shot at that backtest way up at 1380. But, it would have other SMAs and channel lines to work above first. We’ll take it one step at a time.
My hunch is that it will bounce up to the SMA50 around 1300, then decide whether the SMA200 matters or not. Can’t help noticing that the broken, rising white channel intersects 1380 around next Friday, Oct 13 — the day CPI is released. If it comes in hot, GC could got nuts. If it drops through the SMA200, the downside targets are 1222, 1200 and 1184.
As some of you know, I am in the process of moving. I’ve been putting it off all week, but I need to take some time to attend to the endless to-do list. I’ll sign off for now, but hopefully check back in before the close.
GLTA.