The stalemate continues today in the U.S. congressional fight over the funding of Obamacare and especially the funding of the government before the deadline to pass these bills expires at midnight tonight. The DOW (never comfortable with political uncertainty) showed its nervousness by dropping 128 points by the end of the day, but the precious metals seemed only slightly affected - dropping a bit but still maintaining their positions above support levels around $1300 in gold and $21 in silver. It seems like these metals are also holding off to the "11th hour" to make their decision to either rally or fall and test new lows. It is possible that an emergency government funding plan could emerge at the last minute, but even if it doesn't, legislation could be passed to make a shutdown very short-term. Congress can be very creative when under severe pressure. Should a shutdown occur, however, markets could panic, so we need to be especially alert tomorrow for any breakdown in gold and silver prices that could compel us to abandon our long position in these metals. Still holding long positions in gold and silver.
The broad stock market is also approaching some support just above 15,000, so this would be a good spot to reverse up again if some compromise can be worked out by Congress for government funding. Of course, a full shutdown might cause the market to break support and plunge, so we cannot rule out that possibility. Overall momentum in the DOW, S&P 500 and NASDAQ charts continues to be bullish, but this could change abruptly if the market panics and starts to plunge. Because of these mixed signals and the potential market volatility from congressional politics this week, I am remaining on the sidelines for now.
Technical and cycle factors are showing a very good buying set up in crude oil right now, with prices finding a strong support around $100-101 from which a strong and steep rally could commence. As with the broad stock market, however, the political situation in Washington this week could cause oil prices to break this support and plunge lower.
Momentum in this market is mixed bullish and bearish right now so this bearish scenario is quite possible. I am going to watch crude prices carefully this week, and should Congress find a way to not shut down the government, I may consider going long in crude if support at $100-101 can hold. Although the U.S. conflict with Syria has cooled in recent weeks, any reemergence of military tension there would be a wind in the back of any crude oil rally, so the normally "wildcard" factor of the Middle East on oil prices would be in our favor should we go long. On the sidelines for now but possibly looking to go long soon.