Gold up 2% on Soft CPI

Market update.

CPI came in very soft today. (See UBS trader’s explanation at bottom).

The dollar weekend substantially.

Gold and silver rallied nicely.

Bonds even rallied.

Stocks were soft, barely budging higher.

Then things reversed.

Stocks went negative, bonds gave back some of their gains, and gold softened just a bit.

Overall, the market behavior was extremely logical today for a change. Everything that you’d expect to rally on a soft CPI did just that.

Stocks are overbought.. they softened.

There are too many shorts in bonds… they rallied.

There is too much money waiting for a dip that never comes in gold.. they bought.

The least supported in the rally were stocks in general. As the day wore on through mid morning, it became apparent positions that *needed* to be traded would dominate the rest of the day.