Markets Rally as Fear Fades – What’s Next?

ByTTT

Good evening, traders and investors.
Today’s session followed through on yesterday’s setup, with equities breaking out of a bull flag pattern and pushing toward new all-time highs. Defensive assets like gold continued to draw questions from members, while bonds and interest rates remain a central risk factor for the months ahead. Let’s walk through today’s action, the broader backdrop, and a few member questions.

Market Insights, News & Economy

Stock Market Trend
U.S. equities advanced again, with the S&P 500 up ~0.4%, the Nasdaq gaining ~0.6%, and the Dow up ~0.2%. Money flowed into stocks late in the session, lifting indices into striking distance of fresh highs. A bull-flag pattern on the SPY projects another ~1% move higher from current levels.

Key Economic Data
Attention remains on this week’s jobs report, though uncertainty grows around the government shutdown threat, which could delay its release. Without jobs data, the Fed’s decision-making path becomes less clear — a risk for markets riding momentum.

Headline News
Gold rallied again, extending its measured run toward the next Fibonacci target. Defensive flows continue into physical gold, confirming its role as the core safe-haven play compared with miners or silver.

Equity Markets: Bull Flag Breakout

  • After last week’s oversold flush and Friday’s rebound, today’s session confirmed the bull-flag breakout.
  • SPY projects toward ~672, roughly another +1% from today’s close.
  • Momentum accelerated late in the day, with heavy volume flows starting around 2 p.m.
  • VIX remains subdued, and the put-call ratio is not showing extreme fear — both suggest room for the rally to extend.
  • Overall: trend is higher, with new all-time highs within striking distance.

Precious Metals: Gold in Focus

  • Member questions centered on why ACS doesn’t hold gold despite its outperformance.
  • Answer: ACS rotates among major asset classes (equities, bonds, currencies, cash) for full portfolio management. Metals are not core holdings, though we do add discretionary bonus trades when setups are exceptional — as with the current gold position.
  • Beyond ACS, I remain long physical gold since the 2019 super-cycle breakout. Depending on price action, I may trim exposure if a parabolic spike develops over the next 6–8 weeks.
  • Gold has already hit the first target; next measured move is around $4,100–4,400. From here, that’s another ~6% higher.
  • Bottom line: we are long gold in both investment and trading accounts, and still see upside.

U.S. Dollar & Bonds

  • A member asked about the 10-year note: could rates run to 7–8%? The monthly chart suggests this is possible — a devastating outcome for bonds.
  • If rates push toward 8%, TLT could see another sharp decline of 10–20%+.
  • Despite repeated attempts, trying to “pick a bottom” in bonds remains dangerous. The long-term trend is still down, and rates remain in a rising cycle.
  • Cash alternatives (short-term T-bills, BIL ETF) remain smarter defensive plays than long bonds.

Energy & Commodities

  • Gasoline futures continue to flag downside risk. A break of support near 1.86 could open the door toward ~1.30.
  • Crude oil remains in consolidation, with no clear bullish setup yet.

Bitcoin & Crypto

  • Bitcoin popped nearly 5% yesterday but failed to build follow-through.
  • The trend remains sideways-to-lower, and despite occasional spikes, it continues to act as “uninspired risk” rather than a defensive play.
  • A break above its falling trendline is required before crypto earns real attention again.

Member Notes & Questions

  • Gold strategy: Reminder that while ACS doesn’t rotate into metals, we are long both physical gold (long-term) and trading gold (short-term discretionary play).
  • 1–Year Yield, Bonds, and TLT: Still dangerous — trying to bottom-fish has hurt many. The trend is down until proven otherwise.

Key Takeaways

  • Equities: Bull flag breaking higher, ~1% more upside projected; all-time highs within reach.
  • Metals: Gold remains the top defensive play, with measured upside toward 4,100+.
  • Dollar/Bonds: Rising rates still a major threat; TLT bottom-picking remains risky.
  • Energy: Crude oil still consolidating.
  • Crypto: Big pops fading; neutral

Bottom Line

Equities confirmed the bull-flag breakout, setting up for another push toward new all-time highs. Gold continues to shine as the defensive leader, while bonds remain in a fragile, downtrending cycle. Gasoline is threatening breakdown, and crypto remains unimpressive despite sporadic rallies. Stick with the trend, keep gold exposure tactical, and avoid chasing bottoms in bonds or noisy sectors.

Chris Vermeulen

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