1. Midterms Day: What Could It Mean for Markets?
It’s congressional election day in the U.S.
Polls suggest Democrats are likely to gain some seats, and that could affect the current administration and its decisions going forward.
The market noise at the moment suggests that a Democratic win could be bad for stocks. Obviously, we’ll see how it plays out. Polls can be wrong, and the market noise can be wrong too.
Price will tell us more. We’ll find out soon enough.
2. Jobs Data Friday: A Tricky Setup
This Friday, we get employment numbers from both the U.S. and Canada. Those numbers will be interesting to watch because, over the past few months, we’ve seen some signs of a slowdown in the job market.
If we get more evidence that the job market is weakening, it could have an impact on the broader economy and consumer sentiment.
Keep in mind that both the Federal Reserve and the Bank of Canada have raised interest rates as inflation pressures have increased. With job markets slowing and inflation still putting pressure on prices, we could be heading into a tricky situation in the coming months.
3. Gold Below $4,000 for a Third Day, Silver Getting Attractive?
Gold has now been trading below $4,000 for a third consecutive session. $4,000 is a major level and should not be ignored.
We could get a retest of that level, and we’ll have to see how it plays out. If more sellers step in, gold could move lower. If selling momentum picks up, we currently see the potential for gold to drop as low as $3,300 to $3,500 in the coming months.
Historically speaking, gold prices tend to be very volatile between September and mid-November.
As we’ve said before, the silver chart continues to look damaged. Silver has broken below a major support level and, at the time of writing, is trading below $50. The next major support isn’t until around $45 to $47. A break below that range could be bad for silver, but it would also make the metal very attractive.
The gold-to-silver ratio is hovering around 80, suggesting that silver is starting to enter attractive territory relative to gold.
4. It’s a Tech Problem, Not a Market Problem
The S&P 500 is trading below its 50-day moving average. Interestingly enough, if you dig deeper, you’ll find that it’s primarily tech stocks and the big names dragging the index down.
The equal-weight S&P 500 is actually trading above its 50-day moving average and has been trending higher since October. At the time of writing, 65% of S&P 500 stocks are trading above their 200-day moving average.
It’s becoming very clear that tech stocks are the ones causing the problem.
There also seems to be a trend developing: as tech stocks fall, defensive stocks and consumer staples are attracting buyers. We’re watching this closely.
Yields are still relatively high too, so there could also be a rotation from stocks into bonds. Right now, the U.S. 10-year yield is at 4.9%, while the 30-year is at 5.3%.
5. A Qatari MOU on Iran: Does It Mean Anything?
Apparently, the U.S. approved a draft memorandum of understanding (MOU) presented by a Qatari delegation for Iran yesterday. Again, we’ve seen that MOUs can mean very little, and we’ve heard plenty of noise about bombings potentially resuming after the midterm elections.
We’re keeping a close eye on this and watching oil prices closely. WTI dropped a bit yesterday, and Brent also moved lower. But the trend, for now at least, continues to point upward.
Bitcoin continues to test the $76,000 to $77,000 range. A break below that level could be bad. Could a Democratic win also be negative for crypto?
There’s a lot of buzz around the Anthropic IPO, with The Wall Street Journal reporting that investors are asking for a lower valuation. That’s interesting because, just a few weeks ago, hardly anyone was questioning AI valuations. The Anthropic IPO will be interesting to watch, if it actually goes ahead.