The stock market got positive news from the jobs report - the unemployment was expected to fall to 7.2% from 7.3% and it declined even more - to 7.0%. This is naturally positive news for the US economy, but it's not clear if it's bullish for stocks in the short run (except for today's session, that is). The reason is that markets have recently focused on the possible impact of economic data on Fed's actions instead of acting on them directly. In this case, lower unemployment means that the Fed may consider tapering the open-ended QE program. We don't think that this will be the case anytime soon, but the markets might believe so, at least for a while.
What's the impact on precious metals? Not that significant. The increased "perceived" probability of Fed tapering the QE program is a bearish piece of information for gold bulls, but in the short run markets can react in various ways - for instance gold could rally temporarily along with stocks. It seems to be happening today, but the rally is rather small and doesn't change the outlook for the yellow metal.
Silver and mining stocks have barely moved higher, which is a bearish sign as they are the ones that usually move in tune with stocks - and today the latter rallied.
Consequently, overall, the outlook for the precious metals sector was not changed by today's jobs report and remains bearish, as we outlined in today's previous Market Alert and this week's Premium Update.
To summarize:
Trading capital: Short position in gold, and mining stocks.
Long-term capital: No positions.
Stop-loss orders for the speculative short position:
- HUI Index: 214
- GDX ETF: $22.80
- Gold: $1,262
As always, we'll keep you - our subscribers - updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) and we will send additional Market Alerts whenever appropriate.
The trading position presented above is the netted version of positions based on subjective signals from your Editor, and the automated tools (SP Indicators and the upcoming self-similarity-based tool). You will find more information by following links in the summary of the latest Premium Update.
As a reminder, Market Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
