MARKETS UPDATE (4:30 pm EDST)
Today President Trump and Iranian officials are "saber-rattling" over an unmanned U.S. surveillance drone that was shot down by Iran's military. This is following last week's news of a pair of oil tankers attacked near the coast of Iran which the U.S. blamed on Tehran. Earlier this morning, Mr. Trump's cryptic reply to the press asking him if we are going to retaliate for the drone strike was "you'll soon find out". But now he is saying that he feels it was just a mistake by someone "loose and stupid". The broad stock market opened dramatically higher this morning until Trump's original comment caused it to plummet. His later comment tempered the first one and halted the plunge. The DOW then snapped back, regained its upward momentum and closed the day with a near 250 point gain.
We are now in the center of an overlap between two reversal zones (June 7 - 24 and June 18 - 27) and all three major market indices (DOW, S&P 500, NASDAQ) are rising sharply. The DOW and S&P 500 both made new all-time highs this morning while the NASDAQ did not. This gives us a bearish divergence signal in the center of a reversal zone which means we could see a top here followed by a significant correction down. Nevertheless, today's rapid snap-back in the DOW (and the S&P 500) is bullish behavior so I am not comfortable selling short today. If the NASDAQ stays below it's all-time high tomorrow, I will consider short-selling this market. Even if we miss this short sell, any correction here will likely be short-term (but possibly steep), and we will be looking to buy the bottom of the correction as the new medium-term cycles in all three indices are still looking bullish. Still on the sidelines.
After Monday's slight price dip in gold and silver (which was not low enough to encourage us to buy), yesterday's dovish rhetoric from the Fed punished the U.S. dollar and dramatically kicked precious metal prices up. This week is the end of a reversal zone for these metals so the new highs we are seeing today could easily be a top to be followed by a sharp sub-cycle correction (due now in gold). If we get this, we will use it as buying opportunity as both metals recently started new medium-term cycles and are bullish. Still on the sidelines of gold and silver and looking to buy.
This morning's news of a U.S. military drone shot down by Iran and Mr. Trump's cryptic reply to the press caused the price of crude oil to shoot up dramatically as traders were reminded of the current tensions between Iran and the U.S. I have recently mentioned on this blog the possibility of a U.S./Iran conflict being the trigger for a strong rally in crude due to the fact that crude is now starting a new medium-term cycle and looks very bullish. We may be seeing this now as it looks like this new medium-term cycle started with last week's low of $51 (July contract chart) on June 12. If the "saber-rattling" between Trump and Iran settles down, we may see prices back down a bit for a good spot to buy. On the sidelines of crude for now.
The U.S. Dollar Index dropped sharply after yesterday's Fed statement and is also down today. Tuesday's peak at 97.76 may have been a significant top (in a reversal zone), but the greenback is now at a support level around 96.60. It could make a short-term relief rally here before resuming a deeper correction. If that happens, it could depress gold and silver prices into a good spot for us to buy. We will watch for that.
Today President Trump and Iranian officials are "saber-rattling" over an unmanned U.S. surveillance drone that was shot down by Iran's military. This is following last week's news of a pair of oil tankers attacked near the coast of Iran which the U.S. blamed on Tehran. Earlier this morning, Mr. Trump's cryptic reply to the press asking him if we are going to retaliate for the drone strike was "you'll soon find out". But now he is saying that he feels it was just a mistake by someone "loose and stupid". The broad stock market opened dramatically higher this morning until Trump's original comment caused it to plummet. His later comment tempered the first one and halted the plunge. The DOW then snapped back, regained its upward momentum and closed the day with a near 250 point gain.
We are now in the center of an overlap between two reversal zones (June 7 - 24 and June 18 - 27) and all three major market indices (DOW, S&P 500, NASDAQ) are rising sharply. The DOW and S&P 500 both made new all-time highs this morning while the NASDAQ did not. This gives us a bearish divergence signal in the center of a reversal zone which means we could see a top here followed by a significant correction down. Nevertheless, today's rapid snap-back in the DOW (and the S&P 500) is bullish behavior so I am not comfortable selling short today. If the NASDAQ stays below it's all-time high tomorrow, I will consider short-selling this market. Even if we miss this short sell, any correction here will likely be short-term (but possibly steep), and we will be looking to buy the bottom of the correction as the new medium-term cycles in all three indices are still looking bullish. Still on the sidelines.
After Monday's slight price dip in gold and silver (which was not low enough to encourage us to buy), yesterday's dovish rhetoric from the Fed punished the U.S. dollar and dramatically kicked precious metal prices up. This week is the end of a reversal zone for these metals so the new highs we are seeing today could easily be a top to be followed by a sharp sub-cycle correction (due now in gold). If we get this, we will use it as buying opportunity as both metals recently started new medium-term cycles and are bullish. Still on the sidelines of gold and silver and looking to buy.
This morning's news of a U.S. military drone shot down by Iran and Mr. Trump's cryptic reply to the press caused the price of crude oil to shoot up dramatically as traders were reminded of the current tensions between Iran and the U.S. I have recently mentioned on this blog the possibility of a U.S./Iran conflict being the trigger for a strong rally in crude due to the fact that crude is now starting a new medium-term cycle and looks very bullish. We may be seeing this now as it looks like this new medium-term cycle started with last week's low of $51 (July contract chart) on June 12. If the "saber-rattling" between Trump and Iran settles down, we may see prices back down a bit for a good spot to buy. On the sidelines of crude for now.
The U.S. Dollar Index dropped sharply after yesterday's Fed statement and is also down today. Tuesday's peak at 97.76 may have been a significant top (in a reversal zone), but the greenback is now at a support level around 96.60. It could make a short-term relief rally here before resuming a deeper correction. If that happens, it could depress gold and silver prices into a good spot for us to buy. We will watch for that.
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