By: Jeff Cooper
Hit and Run Morning Stock Report: May 4, 2023
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May Day May Day
There’s a lot of concern the way the Fed and the Treasury are handling things.
Gold is hitting all-time highs.
Central Banks are buying. Why?
The US is entering a recession which means increased debts exasperating the GDP ratio with a treasury default looming, ENDING the USD reserve currency.
Right on the heels of Powell’s presser yesterday where he assured the banking system is strong, the regional banks got imploded again.
It seems fittingly symbolic….or is it symbolically fitting?
The stock market took no solace in Powell’s presser.
It took no prisoners
Following Monday’s Kiss of Death of the 4187 square, yesterday’s FOMC was slated for a bearish resolution.
For new members, the FOMC Cha Cha Cha refers to the historic pattern of 3 moves in opposite directions
After the Fed’s announcement and news conference.
A 10 min SPX shows classic FOMC Cha Cha on Wednesday.
It came in the context of 3 swings higher into the body of Monday’s rollover.
Long-time members have heard me say ad nauseam for years that what really drives the price of precious metals in the big picture is not inflation, but distrust of the government and a lack of confidence in the banking system.
To wit, the lumber/gold ratio is imploding as noted yesterday.
Ditto the price of crude oil.
These are deflationary events.
Yet, the precious metals ripped this week.
A daily GLD shows it is on the verge of breakout.
GLD bottomed in early November, 90 days/degrees later it topped in early February.
As offered two weeks ago, late April/early May will be a pivot point as it is another 90 days out from early February and 180 days out from early November -- a possible Low to High to Low cycle.
GLD started to accelerated here in early May from a high level consolidation.
Is it possible we’re dealing with a Low to High to High cycle? Yes.
But follow through should see accelerated momentum.
As Matt pointed out last night on the private twitter feed… May 3rd is square 2073 gold.
Above 2073 and sustaining opens the door to beaucoup blue sky.
360 degrees in price up from GLD’s 150.50 swing low is 203.
Clearing and sustaining above 203 projects to 232.
On the above daily GLD to top rail of the black channel projects to the 232 region…or higher.
Notice the initial breakout/throw over above the green tops line in April.
That was a third touch of resistance.
A push higher from here triggers a Rule of 4 Breakout.
Holding this Rule of 4 Breakout on the important Friday weekly closing basis sets gold/GLD up for gappage higher.
Pulling the lens back to the weekly GLD shows it is on the verge of a weekly Rule of 4 Breakout within the context of a one year Cup & Handle.