Friday's jobs report showed 252,000 new jobs created in December which was a little more than ADP's estimate of 240,000 but far less than some investor's expectations of 300,000 or more. The nation's unemployment rate also fell more than expected, so the overall report was positive news for the economy. Wall Street, however, did not seem pleased with the report and the DOW dropped 170 points for the day. There were many reasons given by market analysts for Wall Street's displeasure (negative wage growth, worries about a collapsing European economy) but the major reason could be that a robust economy raises fears of an early interest rate hike.
The broad stock market continued its fall today with the DOW dropping another 122 points. I had been anticipating this market making new highs soon, but some technical signals are now turning bearish again so this idea may be in question now. Another turning point for this market may be early next week so if the DOW continues falling into the end of this week but stays above the Jan. 6 low of 17,262, we could still get a good spot to buy. If instead we rally into next week, we might have a good setup to sell short. If the DOW now starts to break below that Jan. 6 low then the broad stock market could be in trouble and the DOW could possibly plunge below 16,000. There are several possibilities here so I am staying on the sidelines until directions are more clear.
Crude oil prices made a new low today at $45.85. In terms of timing, it would have been better if the previous low on Jan. 7 ($ 46.83) had held, but this market is still forming an important cycle low now, and as long as prices hold above $44 we should still be looking to buy. I continue to watch for short-term buy signals here. Any new bottom by the end of this week could be a good buy spot. Still on the sidelines and waiting to buy.
Gold and silver are starting to look more bullish. It looks like gold's low on Jan. 2 was a major turning point for this market so we should be looking for a spot to go long now. Any dip now in gold prices that holds above $1200, especially into the end of this week, would be a good buy spot. On the sidelines for now.
The U.S. Dollar index is finally showing some signs of weakness as it backs off a bit from it's 92.50 high on Friday.
The dollar is extremely overbought and is now manifesting some short-term bearish technical signals. Any correction in the dollar now will help drive any rally in the precious metals.