SILVER TRADE ALERT and MARKETS UPDATE (2:00 pm EDT)
Silver and gold prices have rallied strongly this week, but both could now be making a top in this week's reversal zone. It looks like both metals could have started new medium-term cycles on May 9, but what bothers me is the lack of bullish divergence (they both made new lows) which is often present at significant bottoms. Silver is reversing sharply today and its directional momentum is still nearly 100% bearish (gold is mixed bullish and bearish). For these reasons I think it is possible for silver to make a new low or maybe a double bottom over the next two weeks while gold remains above its May 9 low. This would give us intermarket bullish divergence and a stronger signal to buy. We are still above our entry point for silver on May 8 so we can sell that position today with a small profit. We will look to buy back silver if we get the bullish divergence set-up mentioned above. Unloading (selling) my long position in silver today. Still holding my long position in gold.
As I've mentioned in recent blogs, the U.S. Dollar Index chart is looking very bearish. The dollar plunged this week and broke below another important support level; however, it may now be finding at least temporary support just above the 97 area. The greenback's rally today turned down gold and silver prices, but the severely bearish chart for the dollar suggests this rally may be short-lived.
At the time of time of this writing (1:30 pm EDT) the broad stock market seems to have halted yesterday's dramatic plunge (caused by a news frenzy questioning the integrity and stability of the Trump presidency) so we will need to wait and see if this panic was just a "flash in the pan" or if Wall Street sentiment is seriously turning against Trump. We also need to be aware of the fact that an equity sell-off in May is not unusual ("sell in May and go away"), but the strength of the sell-off is our main concern here. We were expecting a reversal, but we can ride out any correction that stays above 20,379 in the DOW and 2,322 in the S&P 500. Holding my long position in the broad stock market.
Crude oil prices have not backed down much from Monday's high of $49.66 (June contract chart) and may be aiming for another high in this week's reversal zone (centered on Friday). As I mentioned in Tuesday's blog, we may be switching to a more bullish trading strategy for crude and could be looking to buy any sub-cycle correction now that stays above $44 (ideally in the $46 area). Still on the sidelines of crude oil.
Silver and gold prices have rallied strongly this week, but both could now be making a top in this week's reversal zone. It looks like both metals could have started new medium-term cycles on May 9, but what bothers me is the lack of bullish divergence (they both made new lows) which is often present at significant bottoms. Silver is reversing sharply today and its directional momentum is still nearly 100% bearish (gold is mixed bullish and bearish). For these reasons I think it is possible for silver to make a new low or maybe a double bottom over the next two weeks while gold remains above its May 9 low. This would give us intermarket bullish divergence and a stronger signal to buy. We are still above our entry point for silver on May 8 so we can sell that position today with a small profit. We will look to buy back silver if we get the bullish divergence set-up mentioned above. Unloading (selling) my long position in silver today. Still holding my long position in gold.
As I've mentioned in recent blogs, the U.S. Dollar Index chart is looking very bearish. The dollar plunged this week and broke below another important support level; however, it may now be finding at least temporary support just above the 97 area. The greenback's rally today turned down gold and silver prices, but the severely bearish chart for the dollar suggests this rally may be short-lived.
At the time of time of this writing (1:30 pm EDT) the broad stock market seems to have halted yesterday's dramatic plunge (caused by a news frenzy questioning the integrity and stability of the Trump presidency) so we will need to wait and see if this panic was just a "flash in the pan" or if Wall Street sentiment is seriously turning against Trump. We also need to be aware of the fact that an equity sell-off in May is not unusual ("sell in May and go away"), but the strength of the sell-off is our main concern here. We were expecting a reversal, but we can ride out any correction that stays above 20,379 in the DOW and 2,322 in the S&P 500. Holding my long position in the broad stock market.
Crude oil prices have not backed down much from Monday's high of $49.66 (June contract chart) and may be aiming for another high in this week's reversal zone (centered on Friday). As I mentioned in Tuesday's blog, we may be switching to a more bullish trading strategy for crude and could be looking to buy any sub-cycle correction now that stays above $44 (ideally in the $46 area). Still on the sidelines of crude oil.
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