Morning Comment: Chips Stocks And Gold At Key Level

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• Chairman Powell: a deer caught in the headlights
• SMH down 5%, next move will be critical
• Gold looks great longer term

Chairman Powell seems like a deer in the headlights

Chairman Powell (and the Fed) don't seem to know what's going on in the economy or the financial system right now. His performance yesterday was horrible. They have a very tough job, but they're not instilling any confidence.

Chip stocks are weak, next move will be critically important

The action in the chip stocks remains very important to the broad stock market. We realize that we talk about this group an awful lot, but there is no question that it was an important leading indicator for the decline we experience in Q4 last year and also provided great leadership in the 2019 upside rally. Therefore, we need to keep a very close eye on the group.

The recent 5% decline in the SMH semiconductor ETF is not a disaster, but its next material move will be very important for the group AND for the broad stock market. To see which critically important levels I'm watching on the charts, click here to subscribe to my premium newsletter.

Gold looks great longer-term, but needs more work short-term

I have been bullish on gold on a longer-term basis for some time now… and doubled-down on that bullish stance when it broke above its key resistance level of $1,380. However, we turned much more cautious on a short-term basis after it rallied to the $1,450 level in the middle of July. It had simply become too overbought, too over-loved and too over-owned for it to rally any further on a short-term basis.

The big swings of the last few days raises some more caution flags on the near-term picture for gold, but investors will need to stay nimble on the yellow metal going forward. There should be some great opportunities to add to existing positions (or establish new ones) over the near-term. To find out which near-term levels we see as attractive and why we love gold on a longer term basis, click here to subscribe to my premium newsletter.