When we wrote How to Grow Your Wealth in 2023 we began with
Trying to fit a square peg into a round hole.
Looking for Inflation in All the Wrong Places
Could we have known at the time what headlines would emerge?
No. Yet what was obvious is that “From central banks to sovereign spending and borrowing to geopolitics to anti-globalism to ongoing raw material issues and food shortages to rising global debt – nothing is as it was.”
Here are a few:
Rates-While ECB raises .50-they also say they will cap at 4%
Banks–Regional Banks ETF looks lower still with SIVB filing Chapter 11
With $300 Billion added to balance sheet-this is the opposite of QT-and signals a further lack of control
Banks borrowed $165 billion from the FED-more than in 2008
More from the Outlook on the U.S. Dollar
“Most concerning is if dollar drops (just fell from 114 in September to under 104 this past week) then what?
Will the rate matter at all in the fight against inflation?”
And so, our top pick for 2023 was and still is gold.
This is the monthly chart of gold as seen through the ETF GLD.
It dates to pre-2011 when gold was rising after the 2008 crisis.
In August 2011 another huge headline hit the market:
S.& P. Downgrades Debt Rating of U.S. for the First Time
In August 2011, gold ran up to 184.82 before the political dance resolved and everyone played nice again.
Since, the thick horizontal line you see that stretches across the page to this month, GLD has not had a monthly close above those 2011 highs.
However, in August 2020 the GLD daily high was a short-lived pop to 194.45, yet later that month GLD closed much lower.
Technicians can see this chart in 2 ways.
First, as triple, or even quadruple tops around 184-185.
A huge inverted 12-year head and shoulders bottom, which if the neckline clears, measures the gold move to around 260. Pretty much close to the 2023 call for gold to double or go to around $3000 an ounce.
You decide which side of the TA call you want to be on.
However, watch the dollar as your best indicator.
Under 104, inflation hits us in 2 ways. High cost of goods and lower purchasing power.
Of course, keep chaos in your analysis, assuming we have yet to see all the ripple effects of recent headlines (not to mention China, Russia, North Korea all persistently on the back burner).
Forget the Analysts, Follow the Math
MarketGauge’s GEMS Global Macro (Global Equities: Macro Sectors)
Current holdings based on MG’s proprietary indicators show GLD and gold miners GDX in the portfolio.
Additionally, the model holds NASDAQ QQQ and Semiconductors.
Fascinating to see how the quants will resolve going forward.
Finally, check out the interview with Dave Keller on The Final Bar.
Stock Market ETFs Trading Analysis & Summary:
S&P 500 (SPY) 390 pivotal and 380 support
Russell 2000 (IWM) Still weak comparatively-170-180 range now
Dow (DIA) 310 support 324 resistance
Nasdaq (QQQ) 328 is the 23-month MA resistance-300 support
Regional banks (KRE) 44 support 50 resistance-still looks like lower in store
Semiconductors (SMH) 255.64 last month’s high. 248 nearest support
Transportation (IYT) Clutch hold 218 and needs to clear 224 weekly close
Biotechnology (IBB) Closed inside the prior week’s trading range
Retail (XRT) 60 big support and 64 big resistance
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.