The Alternative Investor
  • Home
  • TRADING BLOG
  • Current Positions
  • Alternative Investor Strategy
  • ETFs
  • About Alternative Investor
  • Contact

Trading Blog          Thursday,  May 12,  2022

5/12/2022

 
UPDATES ON THE BROAD STOCK MARKET, PRECIOUS METALS, AND THE U.S. DOLLAR  (4:00 pm EDST)

Today is technically the last day of our strong general reversal zone (May 3 - 12), but I'm going to extend this into Friday, and perhaps even Monday, as we enter s period of high volatility and possible false signals and breaking of normal technical boundaries from May 10 - June 2. (Financial astrologers identify this as a "Mercury retrograde" period.)

The broad stock market is falling steeply into the end of this reversal zone. Usually this means a bottom and reversal back up is imminent. But if downward momentum is strong (as it is here), reversal zones can sometimes correspond to a breakdown instead of a reversal. I am going to allow this market two more trading days to form a possible bottom. If we get a bullish divergence signal on Monday (i.e. one or two - but not all three - of our market indices - DOW, S&P 500, NASDAQ - making a new low), that might signal the formation of a bottom. If equities continue to fall past Monday, however, we will have to assume that the market is bypassing a reversal and is breaking down.

Even if a sub-cycle bottom forms by Monday, I would not be enthusiastic about going long. This market is starting to look very bearish, and the chances of another rally to challenge the all-time highs are starting to look slim (but not impossible). Today the U.S. senate confirmed Jerome Powell as Fed Chairman for a second term. Powell's aggressively hawkish plan to raise interest rates is certainly contributing to Wall Street's fears of a stock market sell-off.

I think our strategy now should be looking to sell short any short-term rallies, as a long-term correction in the broad stock market may already be in progress. We are staying on the sidelines of the broad stock market for now.


Gold and silver prices continued to push lower today. As with the broad stock market, I think I will expand the reversal zone for this market into next Monday. It's possible that one or both metals are now forming a bottom to an older medium-term cycle. If that's true, it would be nice to see a bullish divergence signal with one but not both metals making a new weekly low. We're not getting that this week, but it could happen next week on Monday, and it may be a good spot to buy. For now, we will remain on the sidelines of gold and silver.

Today the U.S. Dollar Index broke and closed above 104. Friday is the end of a reversal zone specifically for currencies (May 5 - 13), and it is also very late in the current medium-term cycle for the U.S. dollar. This index is either making a top here and is about to take a steep correction back down or it is "breaking out" and signaling that the political cycle in the U.S. dollar is going to override the normal long-term 15-16 year cycle (please see my discussion of the U.S. Dollar Index in blog posts from April 9 and April 27). As I mentioned at the start of this blog, we are now in a period of high volatility and possible false signals in the markets through June 2 (Mercury retrograde). It would not surprise me to see this dollar "breakout" turn into a "fake-out". On the other hand, if the broad stock market is breaking down, it would also not surprise me to see investors fleeing equity markets and investing in the U.S. dollar as a safe haven as they did during the 2008-2009 equity sell-off.  A dollar breakout would likely be bearish for the precious metals.







Comments are closed.

    RSS Feed

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

                                                                                                                                                            LEGAL and DISCLAIMER

All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

The Alternative Investor is an independent researcher and analyst and receives no compensation of any kind from any individuals, groups, companies or institutions discussed on this website.