The Alternative Investor
  • Home
  • TRADING BLOG
  • Current Positions
  • Alternative Investor Strategy
  • ETFs
  • About Alternative Investor
  • Contact

Trading Blog          Monday,  June 6,  2016

6/6/2016

 
MARKETS  UPDATE  (4:30 pm EDT)

The U.S. Labor Department's jobs report on Friday was very disappointing. The U.S. economy created just 38,000 jobs in May, the weakest level of hiring in nearly six years. This unusually low number apparently frightened investors as equity markets dropped steeply in early trading on Friday, but that fear was short-lived, and the markets recovered by late afternoon. Of course, this dismal economic data may now curb the Fed's enthusiasm for raising interest rates. Wall Street investors most likely had this in mind today as equity markets rallied strongly. In fact, the DOW's directional momentum switched from mixed bullish and bearish to 100% bullish today. This means that the DOW, S&P 500 and NASDAQ are all 100% bullish now. This Wednesday is technically the last day of the current reversal period for the broad stock market and these markets continue to rise into it. The S&P 500 today broke above its yearly high of 2,111 while the DOW stayed below its yearly high of 18,167 so we are getting an intermarket bearish divergence signal in this reversal zone (until that 18,167 level is breached). In last Thursday's blog I wrote:

"I am going to wait and see how these markets respond to tomorrow's jobs report. If the data is disappointing, equities may rally and we could still see intermarket bearish divergence if the S&P 500 breaks above 2,111 and the DOW stays below 18,167 (or vice-versa). That could give us a good spot to sell short, but I am starting to think that any correction now will be minimal so we will also be looking to go long at any corrective bottom."

This is all happening, but today's strong bullish signals are making me reluctant to sell short right now. I may do it over the next two days if the DOW can stay under 18,167. If the DOW exceeds that high, however, we may just get a minor correction into the end of June which we will look to buy.  Still on the sidelines of this market.

I also wrote in Thursday's blog:

"Tomorrow's jobs data may also have an effect on precious metal prices...
 A disappointing report could ease rate hike fears, push down the dollar and encourage a rally in the precious metals."

This is also happening. The U.S. Dollar Index plunged on Friday and this triggered a surge in gold and silver prices. 
Unfortunately, this price movement is not clarifying the cycle pattern in these metals just yet. If gold continues to rally into the end of this week or early next week and stays under $1,290, we may have a good spot to sell short for a final correction into the end of the month. There is a possibility, however, that gold ended its old medium-term cycle and started a new one on May 29 with the low of $1,200. If this is the case, gold could be very bullish now and any rally would likely exceed $1,300. Silver's situation is similar to gold's and silver may also rally now, but if that rally stalls later this week or early next week, prices could fall again into a corrective low. Directional momentum is now mixed bullish and bearish for both metals which gives us no clue as to directional trend at the moment. Let's wait and see if gold prices can rally this week and watch how high they go. There is resistance in the $1,280 - $1,290 area. If gold gets there and stalls, and if the U.S. Dollar Index falls to a support zone around 92 - 93, we could see the precious metals reverse back down (and an opportunity to go short). On the other hand, if gold and silver prices edge downwards this week, we may look to buy for a reversal back up and a potentially bullish rally. Stay tuned. On the sidelines of gold and silver for now.

Crude oil
prices are edging a bit higher today but are still below last week's high of $50.10 (July contract chart). The cycle picture for crude shows that a top is due and a sharp correction to the medium-term cycle bottom could start any time now (a correction could take prices to the $42 area). Next week is another reversal zone specifically for crude so it's possible prices could make a double top to last week's high or even make a new high into that time. We will try and maintain a stop loss for our current short position in crude around $51, but I may tolerate a slightly higher price, especially as we approach next week's reversal zone
.  Maintaining my short position in crude oil.



​



Comments are closed.

    RSS Feed

    Archives

    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

                                                                                                                                                            LEGAL and DISCLAIMER

All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

The Alternative Investor is an independent researcher and analyst and receives no compensation of any kind from any individuals, groups, companies or institutions discussed on this website.