We are writing this right after Bernanke finished his much-anticipated speech at Jackson Hole, Wyo., and the main risk markets of S&P 500 futures and crude oil futures exhibited a shot of volatility. There was an initial “knee-jerk” reaction to the downside in both markets after players heard Bernanke sound very negative on the US economy. With this disappointed and frustrated view on the economy, he certainly is leaving the door open to more QE in the perhaps not so distant future. Once traders realized Bernanke did not indicate the Fed is done with more asset purchases/QE, crude oil futures and SP 500 futures swiftly reversed course.
It is very interesting to see that the Fed basically controls the US stock market. Even with Bernanke stating very bluntly that the labor market is “tepid” and has no positive outlook fundamentally for the US economy standing on its own two feet (which one might think would cause the stock market to get a move to the downside), the S&P 500 went down, but then came right back up initially after the speech. This is mainly because Bernanke mentioned the QE is a distinct possibility (and probability) to further support the economy (and somehow still maintain price stability).
We take a look at platinum futures this morning, and we notice that our key pivot level of $1,510 was a nice support area as platinum dipped after Bernanke’s speech. We look to $1,528 as the next minor resistance for platinum futures. The recent rally was indeed due to an acute fundamental situation, but overall this market could continue to drift higher as fundamental uncertainties continue as precious metals gain value as more QE might occur.
Platinum Futures chart
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