Markets Flash Mixed Signals as Fed Uncertainty, Weak Jobs, and Oil Slump Challenge Risk Appetite

Markets Flash Mixed Signals as Fed Uncertainty, Weak Jobs, and Oil Slump Challenge Risk Appetite

• Fed guidance is murky as weakening jobs and soft oil signal slowing momentum
• Bitcoin’s breakdown and surging metals suggest shifting risk appetite across markets
• Gold pullbacks appeal, while equities and bitcoin demand patience for better setups

If you follow mainstream financial media, the beginning of this week was all about the Fed. Would they cut rates this time around and then what would they forecast moving forward? The quarter-point cut was as expected, but the outlook, which contains just a single cut of a quarter point in 2026, was the cliffhanger. Investors were looking for GPS-type navigation to guide expectations, but were instead given the equivalent of an old map.

As it stands, the Fed is in a precarious position. Data shows a weakening job market, and Powell even suggested the data being published may be painting a brighter picture than reality. At the same time, inflation has not come down in most instances, and the one place where it may be slowing—oil—could also be an ominous sign that it isn't just the job market that's slowing, but the economy as a whole. While I could give a macroeconomic interpretation of what's taking place, I'm going to leave that to others. Instead, I'm going to share how I see the market and how I'm trading it as someone who primarily scalps and takes directional shots. Is it the traditional tasty approach? No, not at all. But I am who I am and maybe I can offer a slightly varied view.

Markets have moving targets in terms of catalysts. Sometimes it's earnings. Sometimes it can be inflation. Sometimes, it can be more than one thing. Right now, however, the main catalyst seems to be risk appetite. And the product which I believe best expresses that is bitcoin.

The 30% fall from grace we've seen in bitcoin feels a bit different than previous corrections. The Michael Saylors of the world, who restructured business models around bitcoin, are seeing the flaws in those models. Selling is compounding selling, and there aren't many people stepping in to buy. With equities near all-time highs and the end of the year just a few weeks away, maybe that isn't surprising. Why take on highly volatile risk in bitcoin when you can take on a more normal level of risk with equities? If we were simply seeing bitcoin weak and equities strong, I'm not sure there would be much to worry over. But there are other variables at play.

Over in the world of silver and gold, there's an insatiable appetite. Silver is up 120% this year. Gold is up 63% in the same time span. That strikes me as odd. Both gold and silver are considered safe havens and inflation hedges. The gains and the volatility we're seeing in both metals isn't what most are accustomed to. Safe havens don't move 2–5% per day, usually.

Adding oil to the mix, you get the sense that maybe the lack of risk appetite in bitcoin is because oil (along with the weakening labor market) is hinting at a slowing economy. We haven't seen oil fall to these levels since tariffs were announced back in April, and the world thought the economy was going to come to a sudden halt.

As a trader, it's our job to look at all that's going on and try discerning where there is greatest opportunity. There are always caveats and this or that could happen, but at some point, directional traders like me have to take a position. Here is how I've been trading it.

Gold has been in a range of $4200–4300. I've been buying when it dips down into the lower third of that range and looking to get out when it reaches the upper third. The gold-to-silver ratio is also at an extreme, which makes me think there is likely better upside potential in gold. Today, it looks as if gold wants to break above that $4300 level, and as of this writing, I'm out of my position for now.

Bitcoin seems sickly. I don't have a position in it, but I don't think it's out of the realm of possibilities we see this in the mid to upper $70K range in the near future. Should that happen, I may take a small shot, but otherwise, I'm not interested.

As for equities, I primarily trade in the S&P 500 futures. We've tried to break above 6900 this week but haven't quite managed to do so and hold. While I don't have a position at the moment, I have been trading it from the short side. The upside potential in the short run doesn't excite me, however, with volatility contracting, maybe we'll get a move higher with a close over 6900. Should that happen, I'd be more inclined to take a shot to the downside if we can get up near 7000.

At the end of the day, I don't see much reason for upside optimism in a market where oil and macro data are pointing to a slowing economy. That's not to say equities can't run higher; I'm just not interested in what I perceive as poorly skewed risk of a sustainable move higher. I like gold on pullbacks, and if we get another pullback of roughly 15% in bitcoin, I think the risk-reward looks attractive.

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