GOLD TRADE ALERT and MARKETS UPDATE (10:45 pm EDT)
On Friday gold prices broke below our stop loss at $1180 but closed just a whisker beneath that support around $1179. Because this was so close to $1180, I did not sell my long position Friday, but after analyzing the charts this weekend, I have decided that it would be wise to do so as a strong bearish signal appeared in gold's chart which makes directional momentum now 100% bearish for this metal. While it is possible to get a short-term bounce here, the medium-term picture is starting to look bearish, and the bounce would probably not get very far before turning down again. There is a chance now of gold dropping towards support at $1162 or even the $1142 area. (A clear break below $1140 would be a very bearish sign implying lower prices for at least eight more weeks.) Gold prices are still above our buy price around $1160 so we should be able to get out of our gold longs with at least a small profit on Monday (if your stop loss has not been triggered already). Based on all this I am putting in an order tonight to sell my gold long position at Monday morning's open. Fortunately, we already unloaded our silver longs early last week in anticipation of the market turning down. If gold (and silver) do bounce this week, and gold moves back up towards $1200 by the end of the week, I may consider short positions in both metals as we could see a sharp reversal back down. On the other hand, if gold and silver fall steeply into Friday and make new lows, it might end up being a good spot to go long again. The Fed meeting next week could have an effect on precious metal prices so we will watch that carefully in the middle of the week. Selling my gold long position tomorrow (Monday morning) and on the sidelines of both gold an silver for now.
The U.S. Dollar Index is now breaking below the parabolic uptrend line that it had been maintaining since last summer. Normally, bearishness in the dollar is bullish for precious metals, but Friday's drop in the dollar was accompanied by a steep fall in gold prices. This implies a weakness in the precious metals now, and it also suggests that the dollar could find some support (perhaps around 96) and possibly rally a bit (back towards that uptrend line) before breaking down again. We will have to wait and see.
The broad stock market is still giving us mixed signals, but those signals are starting to look more bullish than bearish. We now want to watch how this market moves into the end of this week (and possibly early the following week). If the DOW stays below its all-time high of 18,288, we will continue to have a case of bearish intermarket divergence (as the S&P 500 and NASDAQ have already made new highs) and the market could turn down (and possibly continue down for many more weeks). On the other hand, the DOW breaking above 18,288 (this week or over the next three weeks) would confirm a bullish trend being suggested by the current (100% bullish) directional momentum of the S&P 500 and NASDAQ (the DOW is still mixed bullish and bearish). I am currently favoring the bullish scenario, but in any case if the DOW moves down towards the 17,650 area by the end of this week or into the start of the following week, I will be looking to go long. A clear break below 17,550 would negate that bullish trading strategy and would start to look bearish. Because of the Fed meeting, we could see some erratic index movements next week so we will have to be cautious in all our trading. Still on the sidelines.
We are still watching for a good spot to buy in crude oil as a new cycle began in mid-March and the current trend is bullish. I am looking for a modest correction from a high that may have occurred on April 16 at $58.82 and should be headed down to the $52 area. So far the correction has not broken $55 so it is possible we could see another high closer to $61-$62 before the real correction begins. Either way we want to buy the bottom of this short-term correction. If prices fall this week, we may get to that $52 buy spot by Friday or the following Monday. If prices instead rise into the Friday/Monday time frame, we could get that new high near $60 at the end of the week instead of a low. In that case, we might have a good spot to sell short. Our main focus, however, will be to buy the bottom of any short-term correction whether it happens at the end of this week or into the first half of May. On the sidelines of this market for now.
On Friday gold prices broke below our stop loss at $1180 but closed just a whisker beneath that support around $1179. Because this was so close to $1180, I did not sell my long position Friday, but after analyzing the charts this weekend, I have decided that it would be wise to do so as a strong bearish signal appeared in gold's chart which makes directional momentum now 100% bearish for this metal. While it is possible to get a short-term bounce here, the medium-term picture is starting to look bearish, and the bounce would probably not get very far before turning down again. There is a chance now of gold dropping towards support at $1162 or even the $1142 area. (A clear break below $1140 would be a very bearish sign implying lower prices for at least eight more weeks.) Gold prices are still above our buy price around $1160 so we should be able to get out of our gold longs with at least a small profit on Monday (if your stop loss has not been triggered already). Based on all this I am putting in an order tonight to sell my gold long position at Monday morning's open. Fortunately, we already unloaded our silver longs early last week in anticipation of the market turning down. If gold (and silver) do bounce this week, and gold moves back up towards $1200 by the end of the week, I may consider short positions in both metals as we could see a sharp reversal back down. On the other hand, if gold and silver fall steeply into Friday and make new lows, it might end up being a good spot to go long again. The Fed meeting next week could have an effect on precious metal prices so we will watch that carefully in the middle of the week. Selling my gold long position tomorrow (Monday morning) and on the sidelines of both gold an silver for now.
The U.S. Dollar Index is now breaking below the parabolic uptrend line that it had been maintaining since last summer. Normally, bearishness in the dollar is bullish for precious metals, but Friday's drop in the dollar was accompanied by a steep fall in gold prices. This implies a weakness in the precious metals now, and it also suggests that the dollar could find some support (perhaps around 96) and possibly rally a bit (back towards that uptrend line) before breaking down again. We will have to wait and see.
The broad stock market is still giving us mixed signals, but those signals are starting to look more bullish than bearish. We now want to watch how this market moves into the end of this week (and possibly early the following week). If the DOW stays below its all-time high of 18,288, we will continue to have a case of bearish intermarket divergence (as the S&P 500 and NASDAQ have already made new highs) and the market could turn down (and possibly continue down for many more weeks). On the other hand, the DOW breaking above 18,288 (this week or over the next three weeks) would confirm a bullish trend being suggested by the current (100% bullish) directional momentum of the S&P 500 and NASDAQ (the DOW is still mixed bullish and bearish). I am currently favoring the bullish scenario, but in any case if the DOW moves down towards the 17,650 area by the end of this week or into the start of the following week, I will be looking to go long. A clear break below 17,550 would negate that bullish trading strategy and would start to look bearish. Because of the Fed meeting, we could see some erratic index movements next week so we will have to be cautious in all our trading. Still on the sidelines.
We are still watching for a good spot to buy in crude oil as a new cycle began in mid-March and the current trend is bullish. I am looking for a modest correction from a high that may have occurred on April 16 at $58.82 and should be headed down to the $52 area. So far the correction has not broken $55 so it is possible we could see another high closer to $61-$62 before the real correction begins. Either way we want to buy the bottom of this short-term correction. If prices fall this week, we may get to that $52 buy spot by Friday or the following Monday. If prices instead rise into the Friday/Monday time frame, we could get that new high near $60 at the end of the week instead of a low. In that case, we might have a good spot to sell short. Our main focus, however, will be to buy the bottom of any short-term correction whether it happens at the end of this week or into the first half of May. On the sidelines of this market for now.
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