MARKETS UPDATE and COMMENT ON CRUDE OIL'S PRICE JUMP (11:00 pm EDST)
Although Alternative Investor relies heavily on cycle and technical analysis to predict market trends and reversals, we also factor in geopolitical events, especially in the crude oil market where geopolitics is a major "wild card' variable that can strongly influence prices. Today was a good example of that as prices jumped nearly 6% this morning in response to OPEC's surprise announcement on Sunday of a drastic cut in oil production.
With crude prices now above $80 (May contract chart), we can pretty much confirm that we are in a new medium-term cycle that started with the low of $64.36 on March 20. Prices are now approaching the previous cycle's high of $83.04. A break above there would turn this cycle's trend bullish. Right now, our best trading strategy would be to wait for a sub-cycle correction to buy, and waiting would also be prudent in a geopolitical environment that's creating the kind of volatility we are seeing today.
Despite complaints from the Biden Administration, OPEC seems determined to curtail its crude production as “a precautionary measure aimed at supporting the stability of the oil market” according to a statement released by OPEC today. Apparently, OPEC members had been worried that prices were falling too low over the last few months, and some analysts are speculating that OPEC would prefer to keep prices at least in the $80 - $90 range. If that's true, we probably won't see any serious price corrections any time soon. Let's remain on the sidelines of crude for now.
The broad stock market continued to rally today, although the NASDAQ is now testing its February high at 12,270 and encountering some resistance there. The DOW and S&P 500 are further below their February highs and both had significant gains today. As I mentioned in my last blog on Friday, we don't expect much resistance to this rally until later this week and then again in our reversal zone coming up next week (April 11 - 20), so we will continue to hold our long position in this market for now.
Gold and silver both made new weekly highs today, but gold remains below its March high while silver is well above its high from last month. We also note that gold's March high was a new high for the year but silver has yet to surpass its Feb. high. This gives us two cases of intermarket bearish divergence in place right now and suggests an imminent correction down. We will hold our short position in gold for now, but we are prepared to cover that position if prices should start closing above $2000. We are still on the sidelines of silver.
Although Alternative Investor relies heavily on cycle and technical analysis to predict market trends and reversals, we also factor in geopolitical events, especially in the crude oil market where geopolitics is a major "wild card' variable that can strongly influence prices. Today was a good example of that as prices jumped nearly 6% this morning in response to OPEC's surprise announcement on Sunday of a drastic cut in oil production.
With crude prices now above $80 (May contract chart), we can pretty much confirm that we are in a new medium-term cycle that started with the low of $64.36 on March 20. Prices are now approaching the previous cycle's high of $83.04. A break above there would turn this cycle's trend bullish. Right now, our best trading strategy would be to wait for a sub-cycle correction to buy, and waiting would also be prudent in a geopolitical environment that's creating the kind of volatility we are seeing today.
Despite complaints from the Biden Administration, OPEC seems determined to curtail its crude production as “a precautionary measure aimed at supporting the stability of the oil market” according to a statement released by OPEC today. Apparently, OPEC members had been worried that prices were falling too low over the last few months, and some analysts are speculating that OPEC would prefer to keep prices at least in the $80 - $90 range. If that's true, we probably won't see any serious price corrections any time soon. Let's remain on the sidelines of crude for now.
The broad stock market continued to rally today, although the NASDAQ is now testing its February high at 12,270 and encountering some resistance there. The DOW and S&P 500 are further below their February highs and both had significant gains today. As I mentioned in my last blog on Friday, we don't expect much resistance to this rally until later this week and then again in our reversal zone coming up next week (April 11 - 20), so we will continue to hold our long position in this market for now.
Gold and silver both made new weekly highs today, but gold remains below its March high while silver is well above its high from last month. We also note that gold's March high was a new high for the year but silver has yet to surpass its Feb. high. This gives us two cases of intermarket bearish divergence in place right now and suggests an imminent correction down. We will hold our short position in gold for now, but we are prepared to cover that position if prices should start closing above $2000. We are still on the sidelines of silver.
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