MARKETS UPDATE (7:30 pm EST)
As expected, the Federal Reserve left interest rates unchanged on Wednesday. Nervous equity markets fell a bit before the release of the Fed statement at 2:00 pm but then rallied afterwards. That rally, however, is not continuing today as the DOW closed the day with a slight loss (6 points). Markets are being rattled by the startling speed with which newly elected President Trump is enacting some of his controversial policies as well as his testy exchanges with leaders from several countries including Mexico and Iran. Needless to say, Wall Street is not comfortable when the "status quo" is shaken up, especially the geopolitical status quo, and Mr. Trump is certainly shaking things up. The "Trumphoria" rally in equity markets could morph into a "Trumphobia" meltdown if things get really heated. Let's hope that's not happening.
Despite all the chaos, the DOW is staying above the 19,800 level (so far). We need to see rallying from here, however, in order to justify our current long position in the broad stock market. If the DOW closes beneath 19,800 tomorrow we may have to bail out as the risk of more downside will be high. A break below 19,677 would be an especially bearish signal. Holding my long position here with a stop loss on a close below 19,800.
Gold and silver prices are breaking to new weekly (and monthly) highs this week which supports our idea that both metals started new medium-term cycles from their lows in December. This is bullish and implies more rallying, but we still need to see gold close above $1,220 (it broke above today but closed at $1,216) or we run the risk of seeing prices turning down again. The second half of next week may be a significant turning point for gold and silver so let's hope it is a top and we see more rallying into that time. Unfortunately, silver prices did not dip earlier this week and give us a chance to buy so we missed out on a strong rally (but remember, prices could have gone in the other direction!). Holding my long position in gold, but still out of silver.
The U.S. Dollar Index is looking very weak at the moment, and this is supporting our current bullish view of the precious metals (as the dollar usually moves opposite gold and silver prices). The dollar recently broke below strong support at 101 and then 100 (those levels now act as resistance to any rallies). The next major reversal zone relevant to the dollar is coming up in the last week of February. That could turn out to be a significant cycle bottom and the pivot point for a reversal up from a new low, but until then it is unlikely the greenback will muster the strength to break through resistance in the 100 - 102 area.
Crude oil prices remain in a narrow range between $52 - $54 (March contract chart). A reversal zone for crude may be coming up in the second half of next week so we will watch for a possible new low or high to trade from at that time. Still on the sidelines of crude oil.
As expected, the Federal Reserve left interest rates unchanged on Wednesday. Nervous equity markets fell a bit before the release of the Fed statement at 2:00 pm but then rallied afterwards. That rally, however, is not continuing today as the DOW closed the day with a slight loss (6 points). Markets are being rattled by the startling speed with which newly elected President Trump is enacting some of his controversial policies as well as his testy exchanges with leaders from several countries including Mexico and Iran. Needless to say, Wall Street is not comfortable when the "status quo" is shaken up, especially the geopolitical status quo, and Mr. Trump is certainly shaking things up. The "Trumphoria" rally in equity markets could morph into a "Trumphobia" meltdown if things get really heated. Let's hope that's not happening.
Despite all the chaos, the DOW is staying above the 19,800 level (so far). We need to see rallying from here, however, in order to justify our current long position in the broad stock market. If the DOW closes beneath 19,800 tomorrow we may have to bail out as the risk of more downside will be high. A break below 19,677 would be an especially bearish signal. Holding my long position here with a stop loss on a close below 19,800.
Gold and silver prices are breaking to new weekly (and monthly) highs this week which supports our idea that both metals started new medium-term cycles from their lows in December. This is bullish and implies more rallying, but we still need to see gold close above $1,220 (it broke above today but closed at $1,216) or we run the risk of seeing prices turning down again. The second half of next week may be a significant turning point for gold and silver so let's hope it is a top and we see more rallying into that time. Unfortunately, silver prices did not dip earlier this week and give us a chance to buy so we missed out on a strong rally (but remember, prices could have gone in the other direction!). Holding my long position in gold, but still out of silver.
The U.S. Dollar Index is looking very weak at the moment, and this is supporting our current bullish view of the precious metals (as the dollar usually moves opposite gold and silver prices). The dollar recently broke below strong support at 101 and then 100 (those levels now act as resistance to any rallies). The next major reversal zone relevant to the dollar is coming up in the last week of February. That could turn out to be a significant cycle bottom and the pivot point for a reversal up from a new low, but until then it is unlikely the greenback will muster the strength to break through resistance in the 100 - 102 area.
Crude oil prices remain in a narrow range between $52 - $54 (March contract chart). A reversal zone for crude may be coming up in the second half of next week so we will watch for a possible new low or high to trade from at that time. Still on the sidelines of crude oil.
RSS Feed