Fed Won't Cut 50 BPS, but Gold Is Back on the Table
After three weeks of sideways action, a critical gold ETF has broken out with strength.
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Stocks have enjoyed a strong week. I have heard plenty of talk about the S&P 500 and tech names but not much chatter on gold. The CPI and PPI data from the past two days dampened the thoughts of a 50 basis point rate cut, while simultaneously putting gold back on the table.
SPDR Gold Shares GLD certainly responded well on Thursday. After three weeks of sideways action, GLD broke out with strength. The bullish flag pattern now supports GLD.
Over the past four months, we have seen several gaps and retracements on GLD. The approach here would be one of patience rather than chasing. Watch for a retracement back to around $233 and buy a bounce off of it.
Speaking of tech, the Magnificent Seven is coming back to life. It would look even better if Alphabet GOOGL could be excluded from the group. Four days of green has the Roundhill Big Tech ETF (MAGS) in breakout mode. I prefer to see a strong full stochastics indicator before becoming a true believer, but a close over $46 will change my mind.
I wouldn’t blame a trader for singling out Amazon AMZN, Microsoft MSFT, or even Meta META, rather than buying the group of seven. Even Tesla TSLA gets interesting on a close above $235.
These names have all become such large allocations of major indexes and ETFs, though, that owning those rather than the individual stocks will likely bring a similar return. If they move higher, they will take the broader market with them and vice versa. When small caps begin outpacing the market, individual stocks will get much more interesting again. I’m looking forward to that time as it has eluded us for quite some time now.
At the time of publication, Byrne had no positions in any securities mentioned.
