Gold still sits at a +9 strong bullish signal as we approach Powell's speech this morning. Investors are looking for any indication on when interest rates will fall and will be listening keenly on his wordage towards monetary policy.

Data from the A1 EdgeFinder
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Markets are very much unfazed by that failed attempt to assassinate the former president on Saturday. All indices are steadily higher this morning which goes to show that the attempt did not have a considerable impact on prices.

The odds of a Trump victory have increased post Saturday's event. The tech index looks to retest the level from Thursday that had led to an eventual 2% decline in one day for the NAS. Analysts are now pricing in three rate cuts for the year, after we had expected maybe one.

IWM shares are up over 2.3% today after analyst expectations shift from one to three rate cuts this year. The score is still neutral, however, as the bias slowly creeps into the bullish camp. It's likely that Powell will not say anything new about interest rates, but investors listen anyways for clues.

Small caps are more sensitive to rates than the mega cap indices as borrowing costs tend to affect the smaller companies before larger ones with lots of cash. If Powell says anything dovish, this index will likely rally.

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Retail is now short the NASDAQ and the SPX500 along with the dollar. AUDUSD, GBPUSD and EURUSD are now the top three short USD pairs.

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COT shows another shift as smart money is selling NAS and SPX which may have prompted the Thursday sell off. Russell is the only US index that shows a positive number for weekly change.

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Yields are really tumbling on looser monetary policy expectations. Current yields have been under the 8 day moving average since July 4th indicating that a stronger trend to the downside could happen in the coming months.

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The 10 year yield continues to suggest weakness in the market as interest rate forecasts are now expecting 3 rate cuts this year starting in September, then November and December. If the yield can fall under this level of support around 4.16%, we could see bond prices catch more demand to the upside. -Frank

SPX500 is still testing the highs for the fifth day in a row. Either price will breach the resistance point or reverse lower to a range within this wedge pattern on the 1D timeframe. If it reverses, we could find support around $5,500. A break higher could lead to another run up to the $5,800s where the top of another long term trend line meets price.
-Frank

Gold Daily Chart (VIP Trade Update)

- Gold breaking all time highs, stops trailed just behind previous resistance (now support)

- Nick

P&L

Gold's historical score on the EdgeFinder this year, for those who enjoy backtesting - check this out!

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We are getting a counter reading from the EdgeFinder for UJ which is now a -7 even though price is in a strong uptrend. The reason for this is due to mostly fundamental factors suggesting a weaker dollar in the coming months. With three rate cuts forecasted this year, price fell substantially in the past few days. We need to look for another break below this trend line on the 1D timeframe to help confirm a reversal in price.
-Frank

AUDUSD & USDCHF both looking strong today. Will look for an opportunity to trail stops on each! - Nick

(Both trades were shared in VIP!)

Frank also making moves! He bought the breakout on gold yesterday, already nicely in profit.

We're on a roll!

The DXY is breaking 104 (First time since March) as traders/investors gear up for rate cuts.

Rate cut probabilities are showing a 98% chance of fed easing by the September 18th meeting.

Why? Because the jobs market is showing signs of cooling, and inflation is trending lower again overall. Services PMIs also had a big role to play, showing weaker outlook for the powerhouse component of the US economy.

Does this mean the dollar will fall for months on end? Not necessarily. But - the selloff in USD is likely a repricing of the dollar, now that the US outperformance gap is narrowing a bit.

RUSSELL
The small caps are making their way back up as they are considered a catch up trade to the rest of the markets. As the tech and big name trade dwindle, the rest of the market (smaller companies) are finally starting to see more demand. This is likely due to the three interest rate cuts that are now forecasted for this year. If this trend continues, price may even end up retesting the highs around $244-45 on the 1M timeframe.
-Frank

S&P 500
Although not a big drop today, it seems like the rotation could be starting to take a toll on the big name indices. Price struggles to break above a rising trend line on the 1D timeframe and is reading overextended on our custom Bollinger band indicator. The SPX500 may need to drop back a little bit before investors want to get back in. Support lies at $5,500.
-Frank