Replay of 2007?

This is a chart of the 10 year crossed with the 2 year bond yield. The two sets of horizontal dotted lines are the markers of inversion and reversion for 2007-08 and 2022-24. If the Fed does cut by 50, we could see this chart's value increase as the short term yield will likely fall harder than the longer term yield, creating a steeper divergence.

The reason I'm pointing this out is because the inverted yield curve chart has been very accurate in predicting a market fallout in the following months. Although it's not going to tell us exactly when a recession will happen, it has foreshadowed several major crashes in the past, 2008 being the most recent.

Silver play in VIP during FOMC yesterday 🔥📈

- Nick

Metals tend to perform more optimistically on lower rates since the act in cutting reduces the value of the dollar, specifically silver. Assets like silver and gold trade directly against the dollar, and will likely see further upside this year.

Silver is more sensitive to interest rates than gold since it is not just a shiny metal but also carries more utility than its gold counterpart. If the stock market were to tumble, metals would probably be a safer position to be in.

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Oil production will become more manageable with lower rates, but there are some supply issues surrounding it. With less borrowing costs, consumer demand may increase to help prevent an oversupply. Going into the election, politicians would like oil prices to be low, but the commodity may have bottomed out.

Price tested the lows of December 2023 and rebounded nearly 9% from those levels. There is still significant resistance in the way, but oil prices could steady in the fourth quarter after its 25% this year. The next level price could test is around $71.60 on the 1D timeframe with support around $67.

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Treasuries are largely overlooked as they are not as exciting as metals or stocks, but with more interest rate cuts on the way, yields will drop causing bond prices to rise. This will happen gradually over time, and their performance may be muted for some time if demand for stocks continue to be robust for the rest of the year. But it is still a likely winner for Q4 and most likely 2025.



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Silver 4H Chart

Silver long position, initiated in VIP on FOMC day.

We've got a nice runner here! Trailing stops just below 4H lows.

Retail is heavy long oil, gold, silver and small caps. Now the crowd is short SPX and mixed on NASDAQ and DOW. They are also loading up on the dollar.


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With declining retail sentiment, COT remains steady on their long positions in the metal. Price has very much outperformed the stock market with a whopping 33% gain this year.

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New interest rate projections came out suggesting that the dollar's rate will be as low as 4% by Q2 of next year. Going from 5.5% to 4% is a 150 basis point drop in 6 months.


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The Dow Jones hit another all time high this morning at market open indicating the potential for blue chip stocks that yield dividends. The act of a 50 bps cut does not necessarily mean a healthy economy/stock market, but it does almost force investors out of the risk-off trades in bonds.

Since yields are dropping, stocks may be the play going forward. Despite how overvalued they are, euphoria can last a while in the equities market. COT shows a large bullish change from last week's positional sentiment. AAII increased a little as well.

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Gold has been on a tear all year in light of the recent rate cut forecasts and finally the decision last week. It's hard to chase the highs here, so any pullback to these levels on the 1D timeframe seem like they could be good long opportunities.

It's a matter of if prices come down enough. It's never a good idea to chase the highs even though the trend for gold will likely continue in the upward direction.

I wanted to share this chart from the EdgeFinder. I find it to be a very simple overview / summary of economic data in the USA.

Keep it really simple: we've got 4 red and 4 blue readings.

Economy is not too weak, not too strong = neutral on stocks.

If we start to see a big change (more blue, or more red), watchout!

- Nick

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Demand for chip stocks have been increasingly high according to analysts on Wall Street and the tech giant's CEO, Jensen Huang (CEO of NVDIA). A lot of the S&P's and NASDAQ's run has been carried on the back of momentum stocks, NVDA in particular. If the AI trade continues, the stock market will likely remain propped higher.

This stock needs to move out of this consolidation zone to keep carrying these indices higher. Although SPX can continue to float higher, it will likely not be much of a move without the tech giants grabbing more demand from the risk on trade.

Gold’s uptrend has price overextended in the short term, so the metal may look to retrace back down to levels of support. $2,600 looks like the first level of support price may come down to test if we get a retracement. There are some arguments out there that silver will outperform gold, and gold is already up 28% this year. Price may be looking to test $2,700 in the next few quarters, but if the uptrend continues at this rate, it could hit that target soon.