MARKETS UPDATE (5:30 pm EST)
This week is the last timing window for major market reversals in the volatile month of April, and we need to be especially alert for the possibility of significant directional changes in all markets. (The next time period with a high probability for major reversals will be in late May).
Overall directional momentum in the broad stock market is now mixed bullish and bearish, but it is leaning a little more to the bearish side at the moment. Cycle and timing patterns are suggesting an imminent significant short-term correction if the DOW cannot exceed and close above its recent April 4th all-time high (16,631) by the end of this week. Based on this I will be looking to sell the market short sometime this week for what could be a sharp move down. If the DOW turns bullish, however, and does break through and close above its April 4th high along with the S&P 500 and the NASDAQ (its high was on April 2), then we may have to wait until late May for any significant correction. On the sidelines for now.
Like the broad stock market, the precious metals market's overall directional momentum is mixed bullish and bearish right now, but short-term technical signals are suggesting more bearishness. This market is a bit tricky to call at the moment. If gold can hold above the $1270 level this week we could see a reversal to the upside and the start of a significant rally. Until we see more bullish signals in directional momentum, however, it seems more likely that gold and silver will move lower and prices may be headed for new lows sometime next month. Still on the sidelines here.
The behavior of the U.S. Dollar Index over the next few weeks may help us predict the direction of precious metals (as they usually move in opposite directions). The dollar index has been range-bound between 79 and 81.5 since last October, and many financial analysts feel a break out of this range could happen soon. There is strong support at 78-79, so a clear break below 78 would be bad news for the dollar but would likely kick-start a strong rally in gold and silver. On the other hand, if the dollar breaks clearly above 81.5, it could send precious metal prices considerably lower. (There is also significant resistance for the dollar around 80.6 which could turn any rally in this index back down and minimize damage to gold and silver prices). We will be keeping a watchful eye on the U.S. Dollar Index to help clarify the directional trend of precious metals over the next several weeks.
We may have seen a significant top in crude oil prices last Wednesday at $105, but prices could still go higher before the end of this week. Directional momentum is 100% bullish, but cycle and timing factors are suggesting a peak and correction now. If prices fail to exceed last week's high by Friday I may consider a short position as this could mean the market's momentum is about to turn bearish. On the geopolitical front tensions between Russia and Ukraine do not appear to be subsiding and this may drive oil prices to new highs over the next several days. Still out of this market.
This week is the last timing window for major market reversals in the volatile month of April, and we need to be especially alert for the possibility of significant directional changes in all markets. (The next time period with a high probability for major reversals will be in late May).
Overall directional momentum in the broad stock market is now mixed bullish and bearish, but it is leaning a little more to the bearish side at the moment. Cycle and timing patterns are suggesting an imminent significant short-term correction if the DOW cannot exceed and close above its recent April 4th all-time high (16,631) by the end of this week. Based on this I will be looking to sell the market short sometime this week for what could be a sharp move down. If the DOW turns bullish, however, and does break through and close above its April 4th high along with the S&P 500 and the NASDAQ (its high was on April 2), then we may have to wait until late May for any significant correction. On the sidelines for now.
Like the broad stock market, the precious metals market's overall directional momentum is mixed bullish and bearish right now, but short-term technical signals are suggesting more bearishness. This market is a bit tricky to call at the moment. If gold can hold above the $1270 level this week we could see a reversal to the upside and the start of a significant rally. Until we see more bullish signals in directional momentum, however, it seems more likely that gold and silver will move lower and prices may be headed for new lows sometime next month. Still on the sidelines here.
The behavior of the U.S. Dollar Index over the next few weeks may help us predict the direction of precious metals (as they usually move in opposite directions). The dollar index has been range-bound between 79 and 81.5 since last October, and many financial analysts feel a break out of this range could happen soon. There is strong support at 78-79, so a clear break below 78 would be bad news for the dollar but would likely kick-start a strong rally in gold and silver. On the other hand, if the dollar breaks clearly above 81.5, it could send precious metal prices considerably lower. (There is also significant resistance for the dollar around 80.6 which could turn any rally in this index back down and minimize damage to gold and silver prices). We will be keeping a watchful eye on the U.S. Dollar Index to help clarify the directional trend of precious metals over the next several weeks.
We may have seen a significant top in crude oil prices last Wednesday at $105, but prices could still go higher before the end of this week. Directional momentum is 100% bullish, but cycle and timing factors are suggesting a peak and correction now. If prices fail to exceed last week's high by Friday I may consider a short position as this could mean the market's momentum is about to turn bearish. On the geopolitical front tensions between Russia and Ukraine do not appear to be subsiding and this may drive oil prices to new highs over the next several days. Still out of this market.
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