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

Gold is also overextended, but for a much more bullish reason. The bullish concept behind gold and possibly bitcoin is that regardless, the Fed is going to cut this year or next. The anticipation of a weaker dollar is high upon knowing this. Over time, the precious metal may be able to find more demand. Especially if indices like SPX, NAS and US30 start catching more downside, gold looks increasingly bullish. Don’t expect a perfect run to the upside, however. Gold might be the new trade to look for pullbacks on.
-Frank

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DOW remains strong despite big tech stocks tumbling on lesser demand. Yields continue to fall which is bringing more attraction to the dividend stocks which offers some yield on owning these stocks. The sign of a Fed cut in September is not a bullish sign for everything apparently.

Data from the A1 EdgeFinder
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Tech stocks can't seem to catch a break on the latest interest rate news. Highly speculative positions are souring to the fact that dividend stocks are becoming more attractive. If you look at a market heat map, you can see that only the mega caps have been struggling the most this past week while the rest of the market is keeping other areas stable.

The question is whether this new trend is sustainable or not. Later on we will look at a similar pattern unfolding right now that is eerily similar to 2008. It looks like NAS100 could come down to test the rising trend line on the 1D timeframe before another directional decision.

RUSSELL stocks struggle today with the rest of the market, but their losses are far less severe. The highly sensitive interest rate index has currently topped at $226 share price on IWM. If small caps continue to push further to the upside however, we could see IWM touch somewhere in the low $240s.

Data from the A1 EdgeFinder
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