Tech Cracks Nearly 5%. Gold, Palladium and Platinum Hold Their Ground.

FROM THE TERMINAL

Gold's Golden Thread flipped to rising on Wednesday's close, with its CCI jumping from -135 to -19 in a single session. The Golden Terminal has the full CCI history behind that call for every market on this board, plus the sector rotation map. It's free: one email confirmation, no card.

Open the Golden Terminal and pull up gold →

THE LEAD

Wednesday's close gave us eight green threads. This morning the board got its first stress test, and it came from the stock side. As of 11:28 AM, Nasdaq 100 futures are down 4.7% and the Nasdaq Composite is off 3.9%. Bloomberg is calling it a chipmaker selloff. Reuters says investors are reassessing the AI spending boom. Some investors also worry the new Congress means tighter rules for tech, per Bloomberg.

Now look at the metals. Gold is up 0.9% to $4,110. Palladium is up 4.6%, and platinum is up 2.6%. The dollar index hasn't moved. The most crowded trade in the market is getting sold hard, and the metals are keeping their gains. That tells you something about where nervous money is going. Today, it isn't going to the dollar.

Wednesday's close is why this matters. Gold, silver, palladium and platinum all turned green in the same session. GLD gained 3.7%, SLV 5.2%, PALL 7.9% and PPLT 5.6%. Each one's CCI jumped and finished above its own 14-day average. Gold went from -135 to -19. Those are still negative readings, so nobody should call this a new bull market. But the direction changed, and the board graded it.

The dollar's thread turned red on the same close. UUP slipped 0.38% to $28.90, and its CCI dropped from -9 to -124, well under its 14-day average of 12. The Supercycle Score climbed from 5 to 9. That's still a Strong Headwind. It just isn't a Ludicrous one anymore.

The stock indexes are a different story. Both threads turned green on Wednesday's close. Today's tape is testing that call hard. The Golden Thread grades closes, not the middle of a session, so the board will rule tonight. A close anywhere near these levels would put both stock threads at risk.

Crude is bouncing 2.6% to $90.39 after Wednesday's 8.1% drop in USO. Its thread stays red. A one-day bounce after a break is exactly the kind of move the Golden Thread is built to ignore.

Richard Dennis built the Turtle rules so a trader didn't need an opinion. The market gives a signal, and you follow it. For metals holders, the signal is green, and it held up this morning. For anyone long tech on momentum, today is the reminder that a signal can be one day old and already under pressure.

A word of caution. Silver is slipping and copper is down 1.7% this morning. Copper never confirmed, soybeans stayed red, and the dollar still sits at 91% of its yearly range. Friday's jobs report can shake every one of these threads. Treat the turn as real, size it modestly, and let the close test it.

MACRO

This morning's labor data held up. Initial jobless claims came in at 189,000, below the 196,000 estimate. Continuing claims rose to 1.718 million. Third-quarter productivity jumped 3.6%, well above the 2.8% estimate, and unit labor costs fell 0.7%. That's a stronger economy with less wage pressure behind it, which is not what a market worried about tech spending usually gets.

Treasuries rallied Wednesday. The 10-year yield fell 5 basis points to 4.90%, and the 2-year fell 3 to 4.58%, so the 2s10s spread narrowed to 32 basis points. ADP counted 86,000 private jobs in October, above the 69,000 estimate, and ISM services slipped to 54.5.

Natural gas storage rose 77 billion cubic feet, a little under the 81 billion estimate. The big one is Friday at 8:30 AM: October payrolls, expected at 65,000 after 29,000, with unemployment at 4.2%.

POSITIONING

The newest Commitment of Traders report still runs through October 27. Speculators held a net long of 14,121 dollar index contracts, 64.6% of open interest. In gold, the net long was 186,451 contracts, the sixth straight weekly trim. The next report lands Friday at 3:30 PM and covers positions through Tuesday, so it won't show this week's metals move either.

The tell is the gap between the tape and the positioning. Funds spent six weeks trimming gold. If the green threads hold through Friday, those funds are light for a turn. The report after next is where you would see them start to chase it.

FROM THE PORCH

NASA's Swift Observatory was expected to come down out of orbit Wednesday after nearly 22 years up there, per Talk of Titusville. Swift went up on a Delta II from the Cape back in November 2004. Plenty of folks on the river probably watched it go and never gave it another thought.

Swift had one odd job. It hunted gamma-ray bursts, the brightest flashes in the universe. Most of them last a few seconds. So the satellite was built to swing around fast and point its telescopes before the flash was gone. That's where it got the name.

Here's the part I like. Catching the flash was never the science. The flash just told you where to look. The real work was the afterglow, the light that hangs around for hours and days after. The afterglow is what told astronomers how far away the thing was and what it was made of.

Wednesday's board was a flash. Eight greens in one session, after one green the day before. This morning you can already see which ones have an afterglow. The metals are still lit. The Nasdaq's light is fading fast. The Golden Thread doesn't care how bright the flash was. It wants CCI still climbing, and still above its average, when the next close comes in.

Coke-TV is running this morning as "tech heads for a correction." Pepsi-TV is still running "oil crashes on the election." Neither one mentions a satellite from the Cape that spent 22 years teaching people that the bright part isn't the answer.

Eight greens on the close, a Nasdaq trying to take two of them back, and a dollar that hasn't moved. Enjoy the flash, wait on the afterglow, and keep your eyes on today's close and Friday at 8:30. - Brad

ALSO WORTH READING

When the Nasdaq drops nearly 5% in a morning, the cash doesn't vanish. It moves into other sectors. The Sector Cycle Radar tracks where it lands, every trading day, and it's free.

Get the free Sector Cycle Radar →

Data sources: live front-month futures quotes as of 11:28 AM ET; ETF-proxy closes for the board and the dollar, native index levels for the Nasdaq Composite and S&P 500, the Treasury curve, the economic calendar and CFTC Commitment of Traders data, all via Financial Modeling Prep. Chipmaker selloff per Bloomberg (11/5); AI spending reassessment per Reuters (11/5). Oil per CNBC (11/4). Swift Observatory per Talk of Titusville (11/4). Hero photo: Unsplash.

This newsletter is for informational purposes only and does not constitute investment advice. Do your own research and consult a licensed financial professional before making any investment decision.