COMMENT ON ECB MEETING and BROAD STOCK MARKET UPDATE (5:00 pm EST)
A minority of hawkish European Central Bank policymakers at today's ECB meeting objected to the bank's current easy-money policy, but they were outnumbered by those who voted to continue QE (quantitative easing) bond buying at least into September 2018 and to keep interest rates rock-bottom well beyond that. This dovish decision from the ECB pushed the euro down and boosted the U.S. dollar a bit. We will have to wait and see if this is just a short-term knee-jerk reaction to the news. If the dollar starts rallying again, it could force gold and silver prices lower. Still on the sidelines of precious metals.
More "easy money" for Europe's sagging economy did not inspire much buying on Wall Street. All three indices (DOW, S&P 500, and NASDAQ) fell steeply today, and although the NASDAQ attempted a weak rally early in the day, it was still not able to break above its 6,914 high from Nov. 28. Thus our intermarket bearish divergence signal is still valid. Does this mean that this market has topped out and is now rolling over for a correction down to the medium-term cycle bottom? It could very well be doing that as we move into the last two weeks of December which has two reversal zones for the broad stock market (a weak one next week and a stronger one the following week). This would be a good time to see a final cycle bottom. Let's continue to hold our short position here.
A minority of hawkish European Central Bank policymakers at today's ECB meeting objected to the bank's current easy-money policy, but they were outnumbered by those who voted to continue QE (quantitative easing) bond buying at least into September 2018 and to keep interest rates rock-bottom well beyond that. This dovish decision from the ECB pushed the euro down and boosted the U.S. dollar a bit. We will have to wait and see if this is just a short-term knee-jerk reaction to the news. If the dollar starts rallying again, it could force gold and silver prices lower. Still on the sidelines of precious metals.
More "easy money" for Europe's sagging economy did not inspire much buying on Wall Street. All three indices (DOW, S&P 500, and NASDAQ) fell steeply today, and although the NASDAQ attempted a weak rally early in the day, it was still not able to break above its 6,914 high from Nov. 28. Thus our intermarket bearish divergence signal is still valid. Does this mean that this market has topped out and is now rolling over for a correction down to the medium-term cycle bottom? It could very well be doing that as we move into the last two weeks of December which has two reversal zones for the broad stock market (a weak one next week and a stronger one the following week). This would be a good time to see a final cycle bottom. Let's continue to hold our short position here.
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