MARKETS UPDATE (5:30 pm EDST)
In Monday's blog on gold and silver I wrote:
"Let's see if prices can push a bit lower by Wednesday and give us that bullish divergence signal we like to see at a significant bottom. This market is very tricky now as there is the potential for a strong rally, but also a strong plunge."
Well, prices are pushing lower today in both metals, but both spot prices are still staying just (barely) above their early March lows ($1281 in gold and $14.90 in silver), and we still have no intermarket bullish divergence signal. We are generally looking to buy at or near the bottom at the end of a medium-term cycle in either metal. We had been thinking that could have already happened with those early March lows (especially in gold), but now prices are touching those lows again in both metals. We could be seeing a "double bottom" end to the cycle (and start of a new one), and if that's the case, both metals could rally strongly now. But gold's directional momentum just turned from 100% bullish to mixed bullish and bearish (silver has been mixed since early March), and we are not currently in a reversal zone for any market. This makes a case for prices pushing lower. Our next reversal zone for the broad stock market and crude oil starts next Tuesday (April 9 - 17), and it could also influence the precious metals. It would be nice to see one or both metals form a cycle bottom in that time period (especially with a bullish divergence signal). As I stated on Monday, there is the potential for a strong move now, but it's still not clear if it will be up or down. Let's stay on the sidelines of both metals for now.
The broad stock market has turned very bullish this week. All three indices (DOW, S&P 500, NASDAQ) are making new highs for the year and directional momentum in all three is now 100% bullish. This market should have no trouble rallying into next week's reversal zone, but then we should be watching carefully for a top to form. Any new highs in this reversal zone would very likely be the final top to medium-term cycles in all three indices which means a steep correction could follow. We will be watching for a good opportunity to sell short and ride that potentially steep correction down to the final cycle bottom. Please note here that my general view of this market is still bullish and that if we do get this correction we will most likely be covering our shorts and buying aggressively at the bottom (as long as it doesn't go too deep) as I still feel we will have another strong rally (possibly a "blow-off top") into the summer as a prelude to a potentially very severe correction. Still on the sidelines of this market.
It is very late in the current medium-term cycle of crude oil. The final cycle top is due this week and may have already happened with the $62.90 high we saw on Tuesday. Ideally, we would now like to see prices fall to a final cycle bottom in next week's reversal zone (April 9 - 17). But if the broad stock market continues to rally, we may see crude prices follow suit and push higher to form a high in that time period instead of a low (and then start falling). Either way, we are waiting for the final cycle bottom to buy. If Tuesday was the high, a good target for that bottom would now be around $57 - $58. As with the broad stock market, my longer-term view (into the summer) of crude is still bullish.
On the sidelines here but looking to buy soon.
The U.S. Dollar Index is looking at least short-term bullish and may be finding some support at the 97 level. If this is the case, it could rally now and push gold and silver prices lower. Any rally, however, would quickly find strong resistance around 97.60. That could turn out to be a top for the greenback in next week's reversal zone and also a bottom in the precious metals (and a potential buy spot). We will keep an eye on this.
In Monday's blog on gold and silver I wrote:
"Let's see if prices can push a bit lower by Wednesday and give us that bullish divergence signal we like to see at a significant bottom. This market is very tricky now as there is the potential for a strong rally, but also a strong plunge."
Well, prices are pushing lower today in both metals, but both spot prices are still staying just (barely) above their early March lows ($1281 in gold and $14.90 in silver), and we still have no intermarket bullish divergence signal. We are generally looking to buy at or near the bottom at the end of a medium-term cycle in either metal. We had been thinking that could have already happened with those early March lows (especially in gold), but now prices are touching those lows again in both metals. We could be seeing a "double bottom" end to the cycle (and start of a new one), and if that's the case, both metals could rally strongly now. But gold's directional momentum just turned from 100% bullish to mixed bullish and bearish (silver has been mixed since early March), and we are not currently in a reversal zone for any market. This makes a case for prices pushing lower. Our next reversal zone for the broad stock market and crude oil starts next Tuesday (April 9 - 17), and it could also influence the precious metals. It would be nice to see one or both metals form a cycle bottom in that time period (especially with a bullish divergence signal). As I stated on Monday, there is the potential for a strong move now, but it's still not clear if it will be up or down. Let's stay on the sidelines of both metals for now.
The broad stock market has turned very bullish this week. All three indices (DOW, S&P 500, NASDAQ) are making new highs for the year and directional momentum in all three is now 100% bullish. This market should have no trouble rallying into next week's reversal zone, but then we should be watching carefully for a top to form. Any new highs in this reversal zone would very likely be the final top to medium-term cycles in all three indices which means a steep correction could follow. We will be watching for a good opportunity to sell short and ride that potentially steep correction down to the final cycle bottom. Please note here that my general view of this market is still bullish and that if we do get this correction we will most likely be covering our shorts and buying aggressively at the bottom (as long as it doesn't go too deep) as I still feel we will have another strong rally (possibly a "blow-off top") into the summer as a prelude to a potentially very severe correction. Still on the sidelines of this market.
It is very late in the current medium-term cycle of crude oil. The final cycle top is due this week and may have already happened with the $62.90 high we saw on Tuesday. Ideally, we would now like to see prices fall to a final cycle bottom in next week's reversal zone (April 9 - 17). But if the broad stock market continues to rally, we may see crude prices follow suit and push higher to form a high in that time period instead of a low (and then start falling). Either way, we are waiting for the final cycle bottom to buy. If Tuesday was the high, a good target for that bottom would now be around $57 - $58. As with the broad stock market, my longer-term view (into the summer) of crude is still bullish.
On the sidelines here but looking to buy soon.
The U.S. Dollar Index is looking at least short-term bullish and may be finding some support at the 97 level. If this is the case, it could rally now and push gold and silver prices lower. Any rally, however, would quickly find strong resistance around 97.60. That could turn out to be a top for the greenback in next week's reversal zone and also a bottom in the precious metals (and a potential buy spot). We will keep an eye on this.
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