UPDATES ON THE BROAD STOCK MARKET, GOLD, and SILVER (11:30 pm EDST)
Yesterday's FOMC meeting concluded with the Fed leaving rates unchanged (as expected). The Fed also reaffirmed that there would be three rate cuts in 2024; however, Fed Chairman Jerome Powell expressed caution in going too fast with rate cutting as he pointed out that lowering inflation was still a "bumpy road to 2%". This somewhat hawkish tone was reflected in the fact that Fed officials cut their proposed number of rate cuts for next year from four to three. Nevertheless, Wall street shrugged off any inflation concerns and charged full speed ahead with confidence in their anticipation of this year's cuts.
The DOW gained 400 points yesterday, and another 269 points today, closing at a new all-time high. The S&P 500 and NASDAQ are also making new all-time highs this week, so all of our bearish divergence signals are now negated. Our current reversal zone continues through tomorrow, so we could still see a final medium-term cycle top either today or tomorrow in these indices, although the lack of a bearish divergence signal is now putting a slight damper on that scenario. As I mentioned in my last blog on the broad stock market, there's a chance that the DOW started a new medium-term cycle with its March 5 low at 38,458. If this market continues to rally strongly into next week, we will have to consider that possibility. We remain on the sidelines of the broad stock market for now.
While Wall Street seemed to ignore Mr. Powell's slightly hawkish rhetoric, the U.S. Dollar Index seemed to appreciate it as it surged back up to 104 and closed back above its 15-day and 45-day moving averages. This, in turn, put a damper on the closing prices of gold and silver. Although gold rallied to a new weekly (and all-time) high above $2200 in early morning trading, prices quickly fell back down and closed around $2181. Silver also made a new weekly high ($25.74) early, but then fell sharply to close at $24.76. These highs were made in the center of a potential "pivot point" for both metals. This could be a significant sub-cycle high for silver because this metal only dropped slightly from last Friday's high for three days and stayed well above its 15-day moving average. In after hour trading, silver is now approaching that 15-day moving average, so we could see it fall further over the next several trading days. We will continue to hold our long position in silver as long as the drop remains modest. Let's set a stop loss on a close below $24 for now.
Gold may have finished its sub-cycle correction from its high on March 8 ($2193) with its March 18 low ($2146) six trading days later. If so, it is starting a new sub-cycle and should be bullish. But if today's high was the top of the first sub-cycle (instead of March 8), then a corrective drop could be starting to again test the 15-day moving average. We went long in gold yesterday, so as with silver, we will try to ride out any corrective dips that fall below $2146, as long as they don't go TOO low. If gold gets below the 15-day moving average, the next line of support would be around $2100. We can use that as our initial stop loss point as we hold our long position in gold.
Yesterday's FOMC meeting concluded with the Fed leaving rates unchanged (as expected). The Fed also reaffirmed that there would be three rate cuts in 2024; however, Fed Chairman Jerome Powell expressed caution in going too fast with rate cutting as he pointed out that lowering inflation was still a "bumpy road to 2%". This somewhat hawkish tone was reflected in the fact that Fed officials cut their proposed number of rate cuts for next year from four to three. Nevertheless, Wall street shrugged off any inflation concerns and charged full speed ahead with confidence in their anticipation of this year's cuts.
The DOW gained 400 points yesterday, and another 269 points today, closing at a new all-time high. The S&P 500 and NASDAQ are also making new all-time highs this week, so all of our bearish divergence signals are now negated. Our current reversal zone continues through tomorrow, so we could still see a final medium-term cycle top either today or tomorrow in these indices, although the lack of a bearish divergence signal is now putting a slight damper on that scenario. As I mentioned in my last blog on the broad stock market, there's a chance that the DOW started a new medium-term cycle with its March 5 low at 38,458. If this market continues to rally strongly into next week, we will have to consider that possibility. We remain on the sidelines of the broad stock market for now.
While Wall Street seemed to ignore Mr. Powell's slightly hawkish rhetoric, the U.S. Dollar Index seemed to appreciate it as it surged back up to 104 and closed back above its 15-day and 45-day moving averages. This, in turn, put a damper on the closing prices of gold and silver. Although gold rallied to a new weekly (and all-time) high above $2200 in early morning trading, prices quickly fell back down and closed around $2181. Silver also made a new weekly high ($25.74) early, but then fell sharply to close at $24.76. These highs were made in the center of a potential "pivot point" for both metals. This could be a significant sub-cycle high for silver because this metal only dropped slightly from last Friday's high for three days and stayed well above its 15-day moving average. In after hour trading, silver is now approaching that 15-day moving average, so we could see it fall further over the next several trading days. We will continue to hold our long position in silver as long as the drop remains modest. Let's set a stop loss on a close below $24 for now.
Gold may have finished its sub-cycle correction from its high on March 8 ($2193) with its March 18 low ($2146) six trading days later. If so, it is starting a new sub-cycle and should be bullish. But if today's high was the top of the first sub-cycle (instead of March 8), then a corrective drop could be starting to again test the 15-day moving average. We went long in gold yesterday, so as with silver, we will try to ride out any corrective dips that fall below $2146, as long as they don't go TOO low. If gold gets below the 15-day moving average, the next line of support would be around $2100. We can use that as our initial stop loss point as we hold our long position in gold.
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