It's Easy to Forget

Equities staged an intraday fade of an initial bounce off headlines that Trump teased imminent trade deals, which may be an early sign of fatigue on the part of the market regarding the nonstop conjecture around the various tariffs we have seen for a good while now. As they say, there is only so much tread on a tire.

In addition, Nick Timiraos (The Fed's supposed mouthpiece) seemed to drive the point home in several tweets today that The Fed needs to see much more concrete economic weakness before they actually cut rates again, which may or may not be the key "leak" in front of tomorrow's FOMC to brace markets for a more hawkish Powell than they expect. 

If it does, in fact, prove to be an accurate leak then you can be sure that Trump will reignite the fiery rhetoric directed at Powell and possibly hint at looking into replacing him before his term is up, once again. 

The reason why I am mentioning all of this is due to how many market veterans I see scratching their heads as to what "gold knows" here, and why the yellow metal continues to shine. Well, perhaps gold is expecting an institutional crisis coming right up with The Fed versus the White House, for starters. 

Putting all of that one side, when the market goes so long without a powerful downtrend it can be easy to lose track of the basics. If you agree that we remain in a bear market, then the homebuilders, for example, are at a juicy short entry. 

Specifically, this is the first 50-day moving average test for the homebuilder ETF (XHB, daily chart, below, with the 50-day as the dark blue line) since January. 

Seeing as we are now in May, a 50-day test is entirely reasonable within the context of an ongoing bear market. The presumption is that rallies are to be sold until further notice and until further improvements.