To The Moon

Despite the ongoing issue of a potential U.S. government shutdown, the short-term major risk factors have been mitigated following statements by the Chinese and American leaders at the APEC summit. This development suggests that after a significant market pullback, weaker asset classes like gold and silver have the potential to enter a phase of range-bound oscillation. Meanwhile, unless a black swan event occurs, the slow bull market in U.S. stocks driven by Nvidia is likely to continue through the end of this year and into early next year.

Over the past month, the relative strength comparison among the market’s "three horses" — U.S. stocks, gold, and Bitcoin (BTC) — has been quite clear. U.S. stocks have remained the last fortress of value, while BTC has served as a leading indicator. As noted before, although there seem to be some issues with two of these sectors, as long as the most critical pillars—U.S. stocks and Nvidia—remain robust, it is difficult for the market to undergo a fundamental trend reversal. Any major disruption would likely stem from two sources: a clear deterioration in U.S.-China relations alongside renewed tariff war tensions, or issues related to former President Trump’s health or intensified internal U.S. conflicts. At present, these factors are not expected to erupt in the short term. Therefore, assuming the overarching trend in U.S. stocks persists, precious metals and the cryptocurrency market may experience a relatively dull consolidation phase.

For gold, we can consider the recent low of 3901 as a relatively reliable support level. In the absence of new positive catalysts, either a further dip or a modest rebound is probable. A downward gap left earlier last week theoretically allows for the filling of the 4137 gap during this oscillation period. What remains to be assessed is the potential risk-reward ratio of trading around this range. It is also notable that spot gold has left a gap, and the premium between futures and spot gold is only about a dozen dollars, indicating strong synchronization between the two. As for silver, the main support lies around 46 to 45.5, with no gap issues on the upside, but in a correlated market move, a bounce back to the round figure of 50 would not be surprising.

The cryptocurrency market is also leaning toward consolidation in the short term. However, on a weekly basis, both BTC and Ethereum (ETH) appear relatively weaker. If this weakness deepens, it could pose risks to precious metals and U.S. stocks. Looking specifically at Bitcoin, the market has experienced engulfing bearish candles in the past two weeks. Nevertheless, as long as the 103,000 low is not breached, there is a chance for a diamond-shaped pattern to form at high levels, with the 115,000 to 118,000 range representing a critical resistance zone.

Another asset exhibiting a range-bound pattern is crude oil. Oil prices previously bounced off the key support zone near 55 to 53, and are expected to move toward 65 to 70. However, the trend in crude is quite weak, making selling on rallies a relatively safer strategy. Over recent years, oil has been highly controlled, making it well-suited for a swing trading approach between defined middle and upper-lower bounds. Unless Wall Street or former President Trump changes management strategies, the best approach remains identifying clear central pivot points and trading within set channels.

Lastly, a brief note on Nvidia: after last week’s major positive news, the stock surged before retreating slightly. There are currently no signs of risk. Until the stock price falls back below 188, the market should be seen as advancing three steps and retreating one, and it is unwise to prematurely speculate about a market top.

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