The past two weeks have been coined the “Trump rally” by the financial media and his victory in the election has seen the stock market and the US-Dollar rallying while Gold has been selling-off as risk appetite increased. Trump has announced major stimulus programs and the market believes that the US is going to do well. He has yet to deliver and if he does not follow through on his plans, we could see a sharp turnaround since the optimism seems to be priced in already – this is something to keep in mind going forward. The following is the opinion of Optimus Futures LLC:
The S&P Emini closed higher for the week and price closed right at the historic resistance at 2180. However, Friday was a down day right at the resistance level. The real test comes now and the question is if bulls have enough power to push price into new highs. If the level holds, price could fall back all the way to 2010 which is the lower support area.
Gold has been selling off and Gold price shows the exact opposite behavior compared to the Emini SP. There is little safe-haven demand for Gold right now and in times of less uncertainty and more euphoria, Gold usually trades lower. Just as the S&P Emini hit a resistance level, Gold traded back into a support are at 1220 after it spent most of the past week ranging. There is another support level just below at 1190 which is below the psychologically important round number at 1200.
The driver of Gold price is the stock market right now and as long as the optimism continues, Gold will keep selling off. Gold traders must keep an eye on the development of the stock market going forward.
November could be the best month for the US-Dollar in over 2 years. Good US data and the positive outlook keep driving the US-Dollar higher. However, the real catalyst behind the rally is the monetary stimulus announced by the FED. This past week, Yellen sounded very optimistic about the December rate hike and it seems like a certainty now. Investors are pricing in the upcoming rate hike.
The US-Dollar has broken above the resistance at the big round number at 100 and is now on its way to the next resistance at 104. If the rally continues with last week’s speed, we could even see a rally all the way into the 108/110 area.
Crude Oil had a good week and the OPEC seems to be ready to finalize the deal to limit the oil output. Iran had been the main stumbling block for this deal so far and most OPEC nations are ready to grant Iran more flexibility on production volumes. A production cut is aimed at controlling the surplus and drive oil prices back higher again.
Crude oil found support at the 42 level last week and traded back into the range at 46. 46 seems to be the current resistance level but if more positive news on the OPEC deal come out, a rally back into the highs at 52 seems possible in the near future.
After the major surge in Copper 2 weeks ago, price just drifted sideways last week. This is a common behavior after such an explosive move and market participants need to make up their minds where to go next. Analysts reported that they remain bullish on Copper, mostly because of the good Chinese data and also the potential US stimulus programs but, at the same time, investors seem to be hesitant to buy at the current high level.
Last week, price just hovered at the support/resistance area at 2.50 and price action shows a contraction into a narrow wedge. On a dip, investors could get interested again to re-enter long positions. The only news event out of China this week is the medium impact CB Leading Index on Monday. So it could be another quiet week for Copper.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.