As everyone knows, the election turned out to be a blue tsunami, and after an initial dip in equities and the metals, everything melted up, as the dollar weakened and the metlup only intensified during the US session as crude tumbled another 9 percent (more on that below).
The S&Ps opened up about a percent, and after a brief dip in the wake of the services ISM coming in basically inline, we popped up to a new high for the day and a gain of nearly 2 percent, where we would chop sideways for the rest of the day until a closing giveback appeared to send us out just off the highs with a gain of over a percent and a half.
The SOX notably fell over 3 percent to new 6-month low and is breaking down on the charts despite the gains elsewhere as the AI trade continued to come under pressure thanks to several surprise governor races going to anti-data center democrats. This trade is going to continue to unwind in the short-term I suspect, and it will set the stage for the Fed to punt on a rate hike in December, which will pressure the dollar and yields and help the metals.
The dollar was weaker, with the DXY losing a third of a percent. BTC rose 3 percent.
Yields fell all across the curve by 5 to 8 bps.
Commodities were higher across the board, except for crude, which plunged another 9 percent on top of yesterday's 8 percent. Commodities that had previously been crushed all rebounded sharply. For example, palladium rose from the dead and jumped 8 percent, while platinum popped 6 percent. Copper had never really come in to begin with and was flat.
Gold exploded overnight and recovered $4000 and then melted up again during the US session to as high as $4070 while at the same time breaking the downtrend since August. After backing off to around $4060, the metal then chopped sideways near the highs for the remaining couple hours to go out just off the previous highs at $4065 for a gain of over 3.6 percent.
Silver also ripped overnight and then popped again during the US session to as high as $52.50 before backing off to around $52, where it would also chop sideways near the highs for the remaining couple hours of the session to end near the highs at over $52 for a gain of over 5 percent.
The GDX gapped up on the open and surged up to over the 20 dma and the downtrend since August and would basically go out on the highs right on that downtrend with a gain of over 9 percent.
Unlike prior reactions to a Tier 3 BUY from my model since August, gold, silver, and the GDX all closed WELL above their 5 dma today, which is very different from the tepid bounces since the August high that followed a Tier 3 BUY signal and ultimately only resulted in rebounds to the 5 dma before selling resumed when my model moved back to neutral.
Consequently, I'm encouraged that this rally is "different" and is actually the start of something more substantial to the upside. Whether this is the beginning of a move back to new highs or just another multiweek rally in a bear market like the July-August rally remains to be seen. However, either way, it's worth playing from the long side.
I believe a LOT of wise guys are short, and one day of upside isn't enough to shake them out. Open interest in gold rose over 2 percent yesterday during gold's decline, so that smacks of very aggressive spec short selling just as one example.
Let's see what happens, but the next big hurdle will be for gold to recover the 100 dma at $4200 and for the GDX to break out of its trading channel it has been in since August (it closed right on the top of the channel today). My guess is it's going to try and blow through that channel tomorrow or Friday at the latest. Likewise, silver needs to take out the top of its trading channel since September up around 52.75 spot, and I suspect it will do so tomorrow or Friday as well.
My gold model moved back to neutral, but unlike prior cycles of late, I don't think we'll see the bears return tomorrow. Instead, they're likely to get run over by bullish buying follow through.
Positions: Short SPY, QQQ, MDY, and IWM. Long DBA, STRC, IBIT, and BLDR, which incidentlaly melted up for 9 percent today to a new high for the move thanks to mortgage rates declining again.
Metals: I sold my SLV 47 calls for today for 33 cents and kept the SLV 47 calls for Friday. I also added a "wad" (that's a technical term) of SLV 49 calls for 13 cents for Friday in the final minutes of the session as well as added GDXU, AGQ, and SHNY.