It seems like the broad stock market wants to rally this week, and we could get a breakout of all three indices (DOW, S&P 500 and NASDAQ) very soon. In Tuesday's blog I wrote: "Today a strong bullish momentum signal appeared in the charts of the NASDAQ making directional momentum in this index now 100% bullish. (The DOW and S&P 500 remain mixed bullish and bearish). This is a bullish sign, but the DOW and S&P 500 will have to follow suit soon to confirm a bullish trend in equities." Well, today the S&P 500 followed suit with a strong bullish signal and directional momentum is now 100% bullish in that index as well. The DOW, however, is still mixed bullish and bearish, but that could change quickly. On the bearish side, today the NASDAQ and S&P 500 both made a new yearly high, but the DOW is still about 200 points away from its all-time high of 18,288. This could be a case of intermarket bearish divergence if the the DOW cannot exceed this high soon. We will have to wait and see. Still on the sidelines.
The U.S. Dollar Index is teetering on the brink of breaking down from its parabolic uptrend. Today it is backing down sharply from resistance at 98, and short-term technical signals in its chart do not look good at the moment. Could the dollar suddenly break upside from here? Anything is possible in the volatile (and often manipulated) market environment we have these days, but right now it looks like the dollar could be heading lower. If the dollar breaks down it would be a boost to gold and silver prices which are looking a bit weak at the moment and need to start rallying soon to avert a breakdown themselves. Holding my long position in gold but out of silver for now.
After correcting down to the $55-$56 area over the last several days, crude oil prices are rising today. The ideal correction to buy now would be towards the $52 level so I am not comfortable going long just yet in crude. The news of a potential conflict between U.S. and Iranian warships near Yemen this week is likely kicking up oil prices and creating potential volatility in this market. On the sidelines for now.