MARKETS UPDATE (11:15pm EST)
When we went long in the Swiss Franc on April 3rd I stated that, "...a good stop loss and support price for the Swiss Franc would be its March 14 low at 1.0463." Unfortunately, this currency broke through that price last Friday and closed the week just below it. A strong bearish momentum signal also appeared in the Swiss Franc price chart late last week which confirms that this market has now turned bearish. Because of this, I am going to exit long positions in the Swiss Franc on Monday. (Currency conversion is often delayed a day which may allow the price to recover a bit from last week's steep fall.) This sudden downturn in directional momentum so early in a new cycle is a little unusual and is not surprisingly occurring as the U.S. Dollar seems to be breaking out of a strongly bearish chart pattern that had been developing over the last several months. A strong dollar rally will drive down the Swiss Franc. I normally try to avoid trading the Swiss Franc short-term (see Alternative Investor Strategy page), but the technical signals here are indicating a potentially strong downturn that would be too risky to "ride out". This is yet another market that seems to be getting more volatile these days and thus more difficult to trade. If this dollar breakout succeeds, it could also push precious metal prices down again as these two markets usually move in opposite directions.
Even though a dollar breakout has bearish implications for silver and gold, there are also several bullish factors supporting the precious metals market now. These mixed signals are why I abandoned my silver short position last week. I maintained my short position in gold because it was purchased relatively close to $1500 which is strong resistance and a good stop loss point now, and gold may yet fall some more as momentum indicators are still strongly bearish. The precious metals are now trading in a narrow range between resistance around $1500 in gold and $26 in silver and the recent crash lows at $1321 in gold and $22 in silver. Until prices break above or below these levels, the short to medium-term direction of this market will not be easy to call. Still holding short positions in gold but out of silver for now.
The broad stock market did not offer any correction to buy into last week so I am still on the sidelines here. I will continue to wait for a corrective entry point into this market as long as momentum remains bullish.
Crude oil also did not correct to the support level I wanted to see last week (around $91- $92) so I am going to wait here as well before buying into this market.