MARKETS UPDATE and COMMENT ON THE FOMC MEETING (11:00 pm EDT)
After this week's FOMC meeting concluded on Wednesday, Fed Chairman Jerome Powell left short-term interest rates unchanged. Despite recent pressure from President Trump to lower rates, Mr. Powell cited economic uncertainty surrounding Trump's recent tariffs as one of the reasons for holding back on a rate cut. Two FOMC members voted to cut rates, which was a rare display of dissent at the Fed - something not seen since 1993.
All three market indices (DOW, S&P 500, NASDAQ) headed lower after the Fed's interest rate announcement (not surprising if they had expected a cut), but today both the S&P 500 and NASDAQ rebounded to make new weekly and all-time highs. The DOW, however, continued to fall today keeping our intermarket bearish divergence signal intact. As I described in Tuesday's blog, we are waiting for the final correction in the medium-term cycles of these indices. That final bottom may end up in our next strong general reversal zone coming up Aug. 6 - 13. If instead we see the S&P 500 and NASDAQ continue higher next week, we could see a final high in that time frame instead of a low and then a sharp correction to the final bottom. We will have to wait and see how this plays out. I am still on the sidelines of this market.
Gold and silver both took sharp dives on Wednesday, and prices appear to be headed down into next week's general reversal zone as well as a reversal zone specifically for precious metals that begins on Tuesday ( Aug. 5 - 14). As I stated on Tuesday, we are looking for a significant bottom close to $3000 in gold and $35 in silver. That could happen over the next two weeks. We will be watching for buy spots near those price levels. For now, we are still on the sidelines of both metals.
Crude oil's longer-term cycles are a little unclear at the moment. The labeling of these cycles has been complicated by recent price volatility due to instability in the Middle East. We know a new medium-term cycle started with the April 9 low at $54.01 (Sept. contract chart), so it is late in that cycle. The problem is we don't know if the cycle's trend has turned bearish. The sharp price drop on June 24 put a damper on the previously bullish trend. Prices have been reluctant to rally and recover from that drop. If crude can break back above $76 soon, it would restore the bullish trend. But right now it seems more likely prices will roll over and turn the trend bearish. If that happens, the final cycle bottom could end up below the $54 low that started the cycle. I think it is best to stay on the sidelines of crude until this market and the geopolitics of the Middle East become a little more stable.
After this week's FOMC meeting concluded on Wednesday, Fed Chairman Jerome Powell left short-term interest rates unchanged. Despite recent pressure from President Trump to lower rates, Mr. Powell cited economic uncertainty surrounding Trump's recent tariffs as one of the reasons for holding back on a rate cut. Two FOMC members voted to cut rates, which was a rare display of dissent at the Fed - something not seen since 1993.
All three market indices (DOW, S&P 500, NASDAQ) headed lower after the Fed's interest rate announcement (not surprising if they had expected a cut), but today both the S&P 500 and NASDAQ rebounded to make new weekly and all-time highs. The DOW, however, continued to fall today keeping our intermarket bearish divergence signal intact. As I described in Tuesday's blog, we are waiting for the final correction in the medium-term cycles of these indices. That final bottom may end up in our next strong general reversal zone coming up Aug. 6 - 13. If instead we see the S&P 500 and NASDAQ continue higher next week, we could see a final high in that time frame instead of a low and then a sharp correction to the final bottom. We will have to wait and see how this plays out. I am still on the sidelines of this market.
Gold and silver both took sharp dives on Wednesday, and prices appear to be headed down into next week's general reversal zone as well as a reversal zone specifically for precious metals that begins on Tuesday ( Aug. 5 - 14). As I stated on Tuesday, we are looking for a significant bottom close to $3000 in gold and $35 in silver. That could happen over the next two weeks. We will be watching for buy spots near those price levels. For now, we are still on the sidelines of both metals.
Crude oil's longer-term cycles are a little unclear at the moment. The labeling of these cycles has been complicated by recent price volatility due to instability in the Middle East. We know a new medium-term cycle started with the April 9 low at $54.01 (Sept. contract chart), so it is late in that cycle. The problem is we don't know if the cycle's trend has turned bearish. The sharp price drop on June 24 put a damper on the previously bullish trend. Prices have been reluctant to rally and recover from that drop. If crude can break back above $76 soon, it would restore the bullish trend. But right now it seems more likely prices will roll over and turn the trend bearish. If that happens, the final cycle bottom could end up below the $54 low that started the cycle. I think it is best to stay on the sidelines of crude until this market and the geopolitics of the Middle East become a little more stable.
RSS Feed