BRIEF MARKETS UPDATE (11:15 pm EDT)
On Friday the DOW dropped below 17,580 and made a new weekly low, but the S&P 500 did not break below its previous week's low of 2,039 (it came close) so we have a potential case of intermarket bullish divergence in effect (until the S&P 500 breaches 2,039). Other technical signals are bearish, however, so if that 2,039 support breaks we could see the broad stock market tumble some more into the end of this month (or possibly longer). I would prefer to see a rally into that time frame for an ideal spot to sell short, but a correction that will take us to the bottom of the current medium-term cycle may have already started (especially in the DOW). The cycle pattern continues to be ambiguous but may become more clear this week. On the sidelines for now.
Gold and silver charts also continue to give us mixed signals. Directional momentum in both metals is now strongly bullish as are other technical indicators, but the COT (Commitment of Traders) charts still show the Commercial positions (smart money) to be strongly bearish. There are some technical signals suggesting a strong price move next week, but it is not clear whether it will be up or down. It may be best to refrain from trading this market until we get closer to the next strong reversal zone around May 28. Volatility should be lower then, and we can be more confident of a significant turning point. It seems like the overall trend of the precious metals is turning bullish so if we see prices fall into that reversal zone, it will probably be a good spot to buy. On the sidelines of gold and silver for now.
On Friday the DOW dropped below 17,580 and made a new weekly low, but the S&P 500 did not break below its previous week's low of 2,039 (it came close) so we have a potential case of intermarket bullish divergence in effect (until the S&P 500 breaches 2,039). Other technical signals are bearish, however, so if that 2,039 support breaks we could see the broad stock market tumble some more into the end of this month (or possibly longer). I would prefer to see a rally into that time frame for an ideal spot to sell short, but a correction that will take us to the bottom of the current medium-term cycle may have already started (especially in the DOW). The cycle pattern continues to be ambiguous but may become more clear this week. On the sidelines for now.
Gold and silver charts also continue to give us mixed signals. Directional momentum in both metals is now strongly bullish as are other technical indicators, but the COT (Commitment of Traders) charts still show the Commercial positions (smart money) to be strongly bearish. There are some technical signals suggesting a strong price move next week, but it is not clear whether it will be up or down. It may be best to refrain from trading this market until we get closer to the next strong reversal zone around May 28. Volatility should be lower then, and we can be more confident of a significant turning point. It seems like the overall trend of the precious metals is turning bullish so if we see prices fall into that reversal zone, it will probably be a good spot to buy. On the sidelines of gold and silver for now.
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