MARKETS UPDATE (11:30 pm EDT)
The Federal Reserve has recently changed its tune a bit on interest rates. Recent comments from the Fed show more worry about inflation and a possibility of a delay in interest rate cuts. This hawkish development seems to be giving a boost to the U.S. Dollar as it turns down the recent sharp rally in precious metals and equities.
Gold and especially silver have rallied strongly this month with both exceeding their previous highs from April 12 early this week. It is, however, late in their medium-term cycles, and this week's highs were likely the final tops in those cycles (especially as they happened in the center of our general reversal zone, which ends tomorrow). We now want to watch for a 2-5 week decline to the final bottom of these cycles. That bottom could easily happen in our next strong general reversal zone coming up around June 11. That will likely be a good spot to buy as both metals continue to look very bullish. For now, we are still on the sidelines of gold and silver.
Crude oil prices fell sharply this week and are now in the center of a reversal zone specifically for crude (May 22 - 31). Today crude tested last week's low of $76.36 (July contract chart). Let's see if it can make a lower low tomorrow or next week. If it does, we may be looking to buy. We are still on the sidelines of crude.
The Fed's recent hawkish rhetoric has turned the broad stock market south. The DOW has broken below its 15-day moving average, but the S&P 500 ad NASDAQ are lagging behind and have not. We expect the 15-day and possibly the 45-day moving averages to be tested in any significant sub-cycle correction. Let's wait to see if at least two or all three indices can do that. We are still on the sidelines of this market.
The Federal Reserve has recently changed its tune a bit on interest rates. Recent comments from the Fed show more worry about inflation and a possibility of a delay in interest rate cuts. This hawkish development seems to be giving a boost to the U.S. Dollar as it turns down the recent sharp rally in precious metals and equities.
Gold and especially silver have rallied strongly this month with both exceeding their previous highs from April 12 early this week. It is, however, late in their medium-term cycles, and this week's highs were likely the final tops in those cycles (especially as they happened in the center of our general reversal zone, which ends tomorrow). We now want to watch for a 2-5 week decline to the final bottom of these cycles. That bottom could easily happen in our next strong general reversal zone coming up around June 11. That will likely be a good spot to buy as both metals continue to look very bullish. For now, we are still on the sidelines of gold and silver.
Crude oil prices fell sharply this week and are now in the center of a reversal zone specifically for crude (May 22 - 31). Today crude tested last week's low of $76.36 (July contract chart). Let's see if it can make a lower low tomorrow or next week. If it does, we may be looking to buy. We are still on the sidelines of crude.
The Fed's recent hawkish rhetoric has turned the broad stock market south. The DOW has broken below its 15-day moving average, but the S&P 500 ad NASDAQ are lagging behind and have not. We expect the 15-day and possibly the 45-day moving averages to be tested in any significant sub-cycle correction. Let's wait to see if at least two or all three indices can do that. We are still on the sidelines of this market.
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