MARKETS UPDATE (2:30 pm EDST)
"CRASH" UPDATE
After a close approach to 19,000 this morning, the DOW seems to be recovering a bit at the time of this writing (2:00 pm EDST) and pushing above the 20,000 mark. The S&P 500 dipped briefly below 2,300 but is now back near 2,400. We designated 20,000 and 2,300 as general support levels in last Thursday's blog. If they hold tomorrow, we may be seeing a baseline that could be a platform for a significant rebound rally. We enter a new strong reversal zone tomorrow (March 20 - April 6). This wide time band gives this market plenty of time to find a bottom for a reversal up. It could be as early as tomorrow, but it could also push lower into next week. We'll stay on the sidelines of the broad stock market for now.
Gold and especially silver prices have dropped significantly this week. Surprisingly, prices are fairly stable today in spite of a dramatic spike in the U.S. dollar. This could indicate that a significant bottom is imminent in the precious metals. That bottom could easily come in the reversal zone mentioned above. Let's remain on the sidelines of gold and silver for now.
Speaking of that spike in the greenback, the U.S. Dollar Index has surged to 102.60 at the time of this writing. It is getting awfully close to its Jan. 2017 high of 103.82. If this index can break and close above that 2017 high, we could see a strong rally that could take it as high as 120. This bullish U.S. dollar is being fueled by a flight of capital from equities into the "safe haven" greenback as traders and investors panic over the coronavirus epidemic. As in the 2008 - 2009 financial crisis, investors seem to be choosing the U.S. dollar for safety and bypassing (even liquidating) the precious metals (at least for now). We should remember here that precious metal prices took off like a rocket from the bottom of the 2008-2009 crash - they recovered within a few months and quickly surged to dramatic new highs. This tells us that even if gold and silver prices are dragged lower by a plunging equity market, the final bottom should be a "golden opportunity" to buy these metals - especially as that bottom will likely be the start of a new 23 year cycle in gold (see GOLD UPDATE 9/2/19 on the Homepage). Thus, despite gold's recent bearish turn, "goldbugs" can still be looking forward to that time to buy (though it may be a few years down the road).
Crude oil prices touched $20 (April contract chart) yesterday. Today prices are rebounding a bit from that "round number" low, which is to be expected. But as with the other markets, it's possible prices could push lower into next week's reversal zone. It is still possible that crude began a new medium-term cycle on Feb.4 at $49.50. If that's the case, this market is VERY bearish and prices could be down for many more weeks (even months). Let's remain on the sidelines of crude.
"CRASH" UPDATE
After a close approach to 19,000 this morning, the DOW seems to be recovering a bit at the time of this writing (2:00 pm EDST) and pushing above the 20,000 mark. The S&P 500 dipped briefly below 2,300 but is now back near 2,400. We designated 20,000 and 2,300 as general support levels in last Thursday's blog. If they hold tomorrow, we may be seeing a baseline that could be a platform for a significant rebound rally. We enter a new strong reversal zone tomorrow (March 20 - April 6). This wide time band gives this market plenty of time to find a bottom for a reversal up. It could be as early as tomorrow, but it could also push lower into next week. We'll stay on the sidelines of the broad stock market for now.
Gold and especially silver prices have dropped significantly this week. Surprisingly, prices are fairly stable today in spite of a dramatic spike in the U.S. dollar. This could indicate that a significant bottom is imminent in the precious metals. That bottom could easily come in the reversal zone mentioned above. Let's remain on the sidelines of gold and silver for now.
Speaking of that spike in the greenback, the U.S. Dollar Index has surged to 102.60 at the time of this writing. It is getting awfully close to its Jan. 2017 high of 103.82. If this index can break and close above that 2017 high, we could see a strong rally that could take it as high as 120. This bullish U.S. dollar is being fueled by a flight of capital from equities into the "safe haven" greenback as traders and investors panic over the coronavirus epidemic. As in the 2008 - 2009 financial crisis, investors seem to be choosing the U.S. dollar for safety and bypassing (even liquidating) the precious metals (at least for now). We should remember here that precious metal prices took off like a rocket from the bottom of the 2008-2009 crash - they recovered within a few months and quickly surged to dramatic new highs. This tells us that even if gold and silver prices are dragged lower by a plunging equity market, the final bottom should be a "golden opportunity" to buy these metals - especially as that bottom will likely be the start of a new 23 year cycle in gold (see GOLD UPDATE 9/2/19 on the Homepage). Thus, despite gold's recent bearish turn, "goldbugs" can still be looking forward to that time to buy (though it may be a few years down the road).
Crude oil prices touched $20 (April contract chart) yesterday. Today prices are rebounding a bit from that "round number" low, which is to be expected. But as with the other markets, it's possible prices could push lower into next week's reversal zone. It is still possible that crude began a new medium-term cycle on Feb.4 at $49.50. If that's the case, this market is VERY bearish and prices could be down for many more weeks (even months). Let's remain on the sidelines of crude.
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