Asia stocks climb tracking Wall St rally; Nikkei hits record high, China GDP beats
I’ll leave out the details on gold, silver, mining stocks, and copper, but I’ll tell you about the markets that likely triggered the moves in the PMs. You might find this valuable as well.
Stock Futures Teeter on the Brink
So, why did the precious metals sector sold off so heavily in the overnight markets?
Probably because of the breakdown in the stock index futures.
The breakdown was tiny, but… The whole world is watching it. Everyone at least somewhat familiar with the technical analysis knows that when this support (the late-2025 lows) is truly broken, a huge slide is likely to follow.
I have very little doubt that this is just around the corner, but the question is if the stocks will slide without an additional rebound.
Based on the following:
- 6,500 provides the support and stocks moved back up after breaking it, thus flasing one buy signal
- the previous lows were broken very insignificantly,
- when we had similar price pattern in 2007-2008, stocks rebounded one last time
- the move lower in the USD Index is likely not over yet
I think that stocks are likely to invalidate this breakout and move higher – perhaps one last time.
The situation in German stocks (the DAX Index) supports the rebound from the technical point of view. The stocks just reached their rising, long-term support line and since the decline was sharp, a rebound is likely.
2008 Analogy Intensifies
The is likely the beginning of the 2008-all-over-again scenario that I’ve been warning about for months – perhaps in an even more brutal way.
The USD Index moved higher today, however, it’s still early in terms of the response time to what used to happen after Fed’s interest rate decision days after major short-term upswings or downswing. My previous comments remain up-to-date:
The vertical, dashed lines represent Fed’s interest rate decision days. There are two things that stand out:
- After the rate decision, the USD Index tends to move sharply. Sometimes up, sometimes down, but those reactive moves are similar in terms of time. They usually take between 5 and 9 trading days, with 5-6 being most frequent and 3 days being a local outlier based on the lack of clarity on what move should be measured.
- We usually see reversals after the rate decision – in particular when USD is after a bigger short-term move. We saw that in late July - early August 2025 and in late October – early November.
Based on point 2, it’s likely that we’d see a short-term decline here.
Based on point 1, it’s likely that we’d see it last 1-2 weeks.
There’s something else on top of that. Namely, the USD Index tends to reverse its course close or right at the turn of the month. The turn of the month is 1.5 weeks away, which perfectly fits the post-Fed-rate-hike tendency.
This means that the precious metals market quite likely has about 1.5 weeks to rally. Miners could rally faster initially than metals and also top earlier – that’s how they tend to perform in general.
At this point you might be thinking that miners are bound to decline today given the overnight moves lower in gold and silver, and while this might be true, it’s also true that gold and silver are already moving back up as I’m typing this, and it could be the case that they both end today’s session in the green, thus triggering a rally in the mining stocks.