Grandich Thoughts on Markets

Normally, I like to start things off with a cartoon but with Hurricane Irma already devastating many and on the verge of slamming the U.S. (unlike anything else possibly in history), I think we’ll just do a quick summary and close in prayer.

Overall – I believe my “Two Down, One To Go” commentary of August 28th pretty well sums up what I still feel. I would add the following:

  • Stock market continuing to weaken internally. And when the #1 financial powerhouse in the world says that “financial markets are too expensive”, it’s probably time to start paying attention (and know they didn’t wait for that public comment to start selling).

  • At the beginning of 2017, I noted being long the U.S. Dollar was the most crowded trade that I have ever seen in my entire career and was a screaming short. It has indeed imploded and has just broken key support around 92. Trump speaking about getting rid of the “debt-ceiling”, only adds to the longer-term negative direction for the old and tired “Uncle Sam”.

  • I spoke about gold breaking out above the neckline of the technical “W” formation of this year. That it did. With Trump talking about opening the debt floodgates, much of the world still in easy monetary conditions, and a whole host of geopolitical issues worldwide, gold can make a run at $1,400. But it won’t be easy, nor do I think sustainable from this point straight up as the market is fairly overbought. I would sooner see the next few weeks be a period of consolidation. I see a correction now with the risk to the downside appears to be the previous neckline at $1300. My choosing gold over general equities didn’t go over well with most at the start of the year; but I suspect by year’s end, I will no longer feel like the proverbial Maytag repairman.
  • I like to continue seeing copper above $3 but can’t. Much of this up move has been on the back of a belief of a much stronger Chinese economy. I think such expectations will be proven wrong and see copper closer to $2.75 versus $3.50. I would welcome consolidation to the $2.75 – $3 area.