This Week's Market Strategy - August 6, 2024 (Tuesday)

Last week's stock prices fell sharply mainly due to semiconductor stocks being sold off! USD/JPY, which tracks stocks, plummeted by 6 yen from the late 157 yen level to below 152 yen. The short yen position at the Chicago IMM futures had swollen, so yen was likely bought back due to unwinding. The question is whether that has ended or not?

Last week, we stated 'There should be a sharp decline to around 152-155 yen, which would be a good buy point!' and it appears to have occurred. There's a possibility of another decline depending on the BoJ tomorrow. Tomorrow evening we have the intervention results announcement, and the FOMC at night, with more festivities continuing. There may be volatile swings, but we want to hold our USD/JPY long positions. However, at 157-158 yen we might want to take some profits.

U.S. long-term interest rates rose through mid-last week, but have been falling sharply in both directions during the latter half of the week. However, the Dollar Index is rising rather than relating to interest rates.

Gold was sold off to $2,350 last week, but is making a sharp recovery afterwards. Last week we wrote, 'Gold remains bullish long-term, so we're waiting for adjustments down to around $2,350.' With the low at $2,351.90, we're wondering if we picked it up well?

WTI crude oil has become sell-dominant due to Trump trade, but $75 is strong support. A Hezbollah rocket attack on the Golan Heights pushed it up to $78. Last week we commented, 'Following the Trump trade trend, there's a possibility of a bit more decline, but is the downside target around $75-77?'

In summary, USD/JPY is taking a breather and declining. We recommend buying around 152 yen. Gold at $2,350 is a buy. For short-term positions, cut losses below $2,300, but medium to long-term holding is recommended. For crude oil, we're waiting for a decline and recommend longs in the $75 range. For short-term positions, cut losses at $72.40.