To The Moon

Last week’s U.S. non-farm payroll data attracted widespread attention due to severe market disagreements and the need for official data to guide trading decisions.As the first official data released after the U.S. government shutdown ended, although it was delayed by two months, it still provided a baseline for the market's subsequent trend.

Before the release, the market had largely withdrawn expectations for a Federal Reserve rate cut in December, with the probability dropping below 50%, which was a main reason for the stock index decline last week. After the data release, Federal Reserve officials voiced mixed views, with both dovish and hawkish statements highlighting significant divergence ahead of the December Fed meeting.

Dovish comments raised the odds of a rate cut and boosted stock indices, while hawkish remarks suggested a pause on cuts, leading to market adjustments. This divergence is expected to continue driving market volatility until the meeting in December.

Technical Observation of Nasdaq Index Futures

Regarding the Nasdaq’s movement, discussions about whether AI investments are overheated have surged, which is common during technological advancement phases, usually causing large swings in tech stocks.

However, AI applications today are considerably better positioned than the dot-com bubble in 2000, making a massive crash less likely. Importantly, given the current global economic environment, AI’s broad application is probably the most promising sector, with few industries showing comparable potential for expansion.

Therefore, capital concentration in AI stocks is more a reflection of limited alternatives. From this perspective, the Nasdaq’s volatility is normal, though a real directional change requires other factors.

The Nasdaq has retraced to the 5-month moving average level; this month may need consolidation, but it doesn’t necessarily indicate a rebound yet. The key volatility will likely occur next month after the Fed’s policy meeting. If the Nasdaq continues to drop next week and breaks below the 5-month moving average, the next support level would be near the 20-month moving average, around 21,000 points. Investors should not rush to bottom-fish at this stage.

Has the Gold Price Peak for This Year Been Confirmed?

As for gold, since its rise began in October 2023, the price has consistently tracked the 20-week moving average as the long-term trend line.

When gold prices retreat or consolidate near this 20-week line, a new upward wave generally follows, usually gaining 20% to 30%. The recent gold surge in September and October 2023 already rose 33%, matching its typical fluctuation pattern.

Thus, gold is likely to now enter a phase of adjustment or wide volatility. If it consolidates, expect a range approximately 10%; if it adjusts further, the 20-week moving average support will be tested.

Since gold tends to consolidate for at least 2 months and up to 4 months, it looks difficult for the price to reach a new high again this year. Investors intending to buy the dip should be patient and wait for better timing.

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