BROAD STOCK MARKET and GOLD TRADE ALERT and MARKETS UPDATE (3:00 pm EST)
We have yet another meeting of the U.S. Federal Reserve this week (Tuesday-Wednesday), but there is not much concern in the markets as most analysts don't expect the next interest rate hike for at least several more months. Nevertheless, equity markets did get spooked today, probably in response to some of Trump's executive orders on trade and immigration. This "Trumphoria" rally might turn out to be more fragile than originally thought as investors start to realize that Mr. Trump can be unpredictable, quick, and strong in his decision making.
In Friday's blog on the broad stock market I wrote:
"...it looks like Trumphoria has turned this market back up and could keep it up for at least several more weeks. A strong rally into the last week of February could set up another opportunity to sell short, but we will deal with that if and when it comes. For now, our strategy is bullish and we will look to buy any short-term dips that stay above the lows I mentioned above (19,678 in the DOW and 2,257 in the S&P 500)."
Today the DOW dropped to the 19,900 area and the S&P 500 to 2,268. This appears to be a good place to go long. Nervousness concerning the Fed meeting might push these indices a bit lower, but if the Fed keeps interest rates unchanged (most expect this), markets should resume their rally, and the DOW should be able get back above 20,000. Based on cycles, I would suggest that anyone using index funds go with a DOW fund rather than a fund tied to the S&P 500 as there currently seems to be more potential gain with the DOW. We can set a close stop loss for this trade on a weekly close below 19,800 in the DOW (and especially below 19,678), but we would also be concerned if the DOW can't close back above 20,000 by the end of the week. Going long in the broad stock market today.
Gold and silver appear to be ready to rally this week. As I stated in Friday's blog, this depends on both metals having started new cycles in December. That seems to be the case; however, if gold prices start closing below $1,170, it may be an older cycle that will send prices lower over the next several weeks. What we can do here is enter a long position in gold with a stop loss on a weekly close below $1,170. Let's stand aside silver for now. (If silver prices drop a bit tomorrow, we may consider buying). Going long in gold today.
Crude oil prices are still trapped in a congestion between $52 - $54. Let's remain on the sidelines of this market until the cycle pattern becomes more clear. Still out of crude oil.
We have yet another meeting of the U.S. Federal Reserve this week (Tuesday-Wednesday), but there is not much concern in the markets as most analysts don't expect the next interest rate hike for at least several more months. Nevertheless, equity markets did get spooked today, probably in response to some of Trump's executive orders on trade and immigration. This "Trumphoria" rally might turn out to be more fragile than originally thought as investors start to realize that Mr. Trump can be unpredictable, quick, and strong in his decision making.
In Friday's blog on the broad stock market I wrote:
"...it looks like Trumphoria has turned this market back up and could keep it up for at least several more weeks. A strong rally into the last week of February could set up another opportunity to sell short, but we will deal with that if and when it comes. For now, our strategy is bullish and we will look to buy any short-term dips that stay above the lows I mentioned above (19,678 in the DOW and 2,257 in the S&P 500)."
Today the DOW dropped to the 19,900 area and the S&P 500 to 2,268. This appears to be a good place to go long. Nervousness concerning the Fed meeting might push these indices a bit lower, but if the Fed keeps interest rates unchanged (most expect this), markets should resume their rally, and the DOW should be able get back above 20,000. Based on cycles, I would suggest that anyone using index funds go with a DOW fund rather than a fund tied to the S&P 500 as there currently seems to be more potential gain with the DOW. We can set a close stop loss for this trade on a weekly close below 19,800 in the DOW (and especially below 19,678), but we would also be concerned if the DOW can't close back above 20,000 by the end of the week. Going long in the broad stock market today.
Gold and silver appear to be ready to rally this week. As I stated in Friday's blog, this depends on both metals having started new cycles in December. That seems to be the case; however, if gold prices start closing below $1,170, it may be an older cycle that will send prices lower over the next several weeks. What we can do here is enter a long position in gold with a stop loss on a weekly close below $1,170. Let's stand aside silver for now. (If silver prices drop a bit tomorrow, we may consider buying). Going long in gold today.
Crude oil prices are still trapped in a congestion between $52 - $54. Let's remain on the sidelines of this market until the cycle pattern becomes more clear. Still out of crude oil.
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