Market Commentary-January 5

In Asia-Pacific, Japan’s Nikkei index took a hit of 2.25% by commodity selling price and particularly industrials (Copper) which were walloped on Thursday, however, saw its low levels in early trading and spent the remainder of the day session recovering.

Very first headline news that the U.S. and China intend to reconvene discussions next week has been pretty much all it took to commence the stock market leap. However, an added benefit has been that China reduced the Reserve Ratio Requirement by 50 basis points at first then an additional 50 basis points afterward and this made it easier for Europe to perform.

Eurozone traded much better around the trade-talks and was aided by the China Reserve Ratio Requirement cut announced early in the morning. Key indices had been already positive and have been hopeful of the favorable American non-farm employment number to end the first trading week of the new year.

By the end of the Eurozone trading session, you might have thought it was Christmas one more time! Not only had we observed positive China reduced cash reserves, later trade-talks news, after those American non-farm numbers which were a great surprise and then to top it all we hear from Fed Chairman Powell of a level of sensitivity to market risks! Hallelujah! 

American stocks markets had been already positive responding to timetabled trade-talks. Only then do we see the Reserve Ratio Requirement news in China along with a big surprise positive 315,000 print on the non-farm employment number and futures market were off to the races once again.

Cash DJI opened up positive 2.5% and after a whipsaw response to the Federal Reserve's previous and present interview, the trading day was set for the good. Fed Chairman Powell’s level of sensitivity, as well as patience comment, offered the comfort many were hoping to find, which led to among the best day trading days in recent history.

Few late closing remarks from the President Trump interview suggesting some optimism before the trade-talks have helped sustain on Friday results and provided positive sentiment for the upcoming week. We had now healthy 4.3% gain for the Nasdaq and followed actively by 3.35% gains equally for S&P500 and Dow Jones Industrial.

On Friday trading session, front-month Gold already has gotten to our Outer Gold Rally $1302 target - along with Inner Gold Rally $1296 as indicated on Jan 4 commentary.

Right after a short pullback and regenerating its power, the behavior of Treasury Bond futures and Gold suggests that something significant is in progress and that it is probably going to happen rather quickly and than gradually. We now anticipate Gold action in future weeks to advance upside quicker and in much larger chunks.

The same scenario might be at some point shortly for the S&P500 going the opposite way - those very last set-off numbers specified in our chart analysis below. So this week has been very informative especially concerning Treasury Bonds and Gold - Stay tuned.


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