Market Finds Footing After Precious Metals Meltdown

After a week of chaotic action, the market finally found its footing on Monday. Better than expected factory activity raised optimism about economic growth, and worries about a new hawkish Federal Reserve chair modulated. The dramatic swing in precious metals slowed as dip buyers took advantage of lower prices in both the Magnificent Seven (MAGS)  and the Russell 2000 (IWM) .

The mood grew quite negative over the weekend, in large part due to the painful swing in gold and silver, but also due to heavy pressure on Bitcoin and Ethereum. The cryptocurrencies were unable to bounce back, but selling pressure eased as the day progressed.

Mixed Action Across the Indices

The Russell 2000 and the DJIA (DIA)  led to the upside with breadth running about 57% positive. New 12-month highs and lows were about even. Nvidia (NVDA) , Robinhood (HOOD)  and Disney (DIS)  weighed on the indices, while retail and financials helped to produce some green.

The question now is whether the lows hit early Monday will hold as support. The answer to that will depend on earnings, and the big report from Palantir (PLTR)  after the close is helping the cause with a positive reaction. It is a solid report with a big jump in guidance, but PLTR is still an expensive stock with a P/E of around 220.

Looking Ahead to Alphabet

The report from Alphabet (GOOGL)  will likely be the most important news this week, but there will also be some economic news as well for investors to consider.

The dip buying interest on Monday is good news that created some support, but that support is not very strong. If it is tested, there is a good chance it may fail. On the other hand, this has been a rolling correction and there are still some pockets of solid action. The bad news in AI, gold and bitcoin grabs the headlines while the business media mostly ignores the positive action in other areas of the market.

Have a good evening. I’ll see you tomorrow.

At the time of publication, DePorre was long GOOGL.