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There is a disconnect (and a new reconnect) in the markets today


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Stocks up. Gold up.  Stocks up Yields down.  Stock up, oil up. That story is different than what we sold earlier this week

Compared to earlier in the week, the various markets have seemed to disconnect, and reconnnect in a different way.
Earlier in the week, we saw 

  • Stocks selling off.  
  • Bond yields moving lower on flight to safety 
  • Gold up strongly on safety concerns. 
  • Oil down on slower growth.

Today we are seeing:

  • Stocks rallying strongly
  • Yields moving lower
  • Gold moving up
  • Oil moving up

The markets are all jumbled up. The “story line” has changed.
What’s up?
Well, it seems the stock market is feeling that the Fed will come to the rescue and if they don’t Pres. Trump will let them know about it, every day.  In addition, there is likely some short covering on the sharp rebound yesterday afternoon and today.  I can easily see some hedges going on on the sell off. Those hedges have to come off when the market either does not reach downside targets and/or levels above get taken out.  Today the market moved above the 100 day MA and 50 day average in the Nasdaq (the S&P so far stalled at the 50 day MA at 2933.20 area).  It is simply hard to ignore.
For yields, the market is getting comfortable with the idea of the Fed coming to the rescue. Plus if global yields are going lower, so will US yields (even if the auctions this week were not all that great).
For oil, the story there was helped by Saudi Arabia who said they were considering all options to stop the slide in prices.  That, along with a price that got within $0.50 of the $50 level has helped the contract recover.
That leave gold as a wild card for the question marks that still persist including US/China, Brexit, trade agreements, uncertainty from the Fed, uncertainty from Pres. Trump and Company.  Technically, sellers tried to correct the precious metal to the downside (and below $1500), but it was not meant to be.  
As for the USD, it is lower today as Pres. Trump did his own currency manipulation today by saying point blank, “As your President, one would think that I would be thrilled with our very strong dollar. I am not!”
Compared to earlier in the week, there certainly is a big disconnect and reconnect in the markets.   
ForexLive

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