Stock markets are making decent gains again on Tuesday, continuing to pick themselves up after a tough start to the year.
Some may be encouraged by what we’re seeing this week, with less focus on the Reddit rebellion as Silver continues to give back some of its gains, but I’m just not convinced. For starters, I don’t think the Reddit crowd will disappear that easily, although it may have to rethink its strategy after its recent foray into precious metals.
Investors have also not been in a particularly upbeat mood since the turn of the year and I don’t think we’ve seen enough of a correction to draw them back in. Whether it was the “taper tantrum” talk, lack of interest in earnings or being spooked by the retail community, it’s not the behavior of the buy the dip crowd we’ve seen so much of over the years.
The first quarter was always going to be a challenge and that’s what we’ve seen unfold. The rest of it has been a bit of a sideshow and the narrative has very much fit the behaviour we’ve seen. But following a bumper end to 2020 on the back of a long list of positive events was always going to be tough as countries went back into lockdown one after the other.
The start of the week has been encouraging and earnings season could yet get investors excited again, with results from Amazon and Apple to come later today. These two names performed well yesterday, perhaps in anticipation of knockout quarters. Should we see strong results and immediate profit taking – classic buy the rumour, sell the fact behaviour – it won’t do much for sentiment into the end of the week.
Oil breaks above range amid colder weather
Oil prices are rallying strongly once again and broke through the upper end of their range today on the back of strong momentum. A surge on Monday was followed with a breakout today as risk appetite improved in the markets. Colder weather has also been touted as a reason behind the sudden spike in prices but the important thing is that it ends the period of consolidation. We’re seeing some resistance around $58 in Brent, $55 in WTI, and a break of this could see it pushing $60.
Gold in trouble as dollar breaks key resistance
Gold is struggling on Tuesday. The last few sessions has seen it ride the wave of Silver’s popularity – albeit to a far, far lesser degree – but with it now getting a bit of a reality check and the retail crowd losing interest, gold is tumbling. What’s more, the dollar has been rallying and the index has broken through major resistance at 91. Markets are behaving oddly at the moment but this breakout has been building for some time and could put serious pressure on the yellow metal in the near-term. We could see gold back on the defensive soon with $1,820 a big test and $1,800 below. I wouldn’t be surprised to see $1,760 also targeted.
Bitcoin settles in its comfort zone
It’s been a funny week for bitcoin. From once again being forced to defend $30,000 like its life depends on it to the world’s richest man teasing his following by adding #bitcoin to his profile, it’s been a wild ride. One we’re all-too-accustomed to at this point. But even by bitcoins own standards, it’s been pretty crazy. It’s going to be so interesting to see how it behaves in the coming days after initially giving up all of Elon’s easily fought gains only to stabilize in its comfort zone around $35,000. Another run at $30,000 would once again be a worrying sign, especially after the excitement of last Friday but there’s nothing obvious to suggest it’s what we’re going to see.
