Pro Perspectives 9/23/20

September 23, 2020

We've been watching a big technical level in Apple the past couple of days as a proxy on global risk appetite. 

With a broad risk-off day in markets, let's take another look …

Apple finishes the day testing this big line again.  Remember this line represents the recovery from the pandemic-induced lows.  

Let's take a look at some other key charts to see if price might be telling us something …

First, here's a look at Copper.  

Copper is an industrial metals that tends to be an early signal on a turning point in the economy, and a good inflation hedge. With that, copper put in a bottom on March 19th, just two trading days before the Fed's announced it would backstop the corporate bond market.  It has since climbed 50%.  But we get a break of this big trendline today (similar to the line being tested in Apple). 

Is copper predicting a slowdown in the economic recovery?  Maybe. 

That would align with what's happening in gold. Gold is now down 10% from early August.

As we discussed earlier this month, as we approach a very high stakes election, we have a vacuum to be filled with uncertainty and speculation.  And we're beginning to see that play out in markets through some "de-risking" and some profit taking on inflation bets. 

As for uncertainty, there is plenty.  Adding to the mix, Trump said today that he expects the election "will end up at the Supreme Court" (i.e. a contested election).  And we also have an uptick in virus concerns. The UK stepped up "slow the spread" guidelines yesterday.   Israel has become the first developed country to go into a second lockdown.  And the head of the CDC said today that less than 10% of the U.S. has been infected by the virus.