MARKETS UPDATE (10:00 pm EDST)
The Federal Reserve's statement released yesterday afternoon at the conclusion of this month's FOMC meeting was pretty much in line with the predictions of Wall Street analysts. It looks like benchmark interest rates will remain near zero probably through 2023, and the Fed will continue its monthly purchase of $120 billion in bonds. Almost in a contradiction to this dovish stance, the Fed also expressed a very optimistic view of an accelerating economy with upgraded forecasts for growth and inflation. This is causing some Fed officials to foresee a rate hike in 2023 and maybe even as early as 2022. These kinds of mixed signals from the Fed are not unusual.
Ambiguous messages from the Fed always make Wall Street nervous. All three broad stock market indices (DOW, S&P 500, NASDAQ) rallied a bit after yesterday's Fed meeting, but the S&P 500 and especially the NASDAQ were down strongly today. The DOW managed to make a new high this morning, but it too closed with a loss at the end of the day. We are now out of our reversal zone, so some kind of top might be in, and this could be the start of a significant correction. We note, however, that the S&P 500 never cleared our 4,000 target and is still well above 3,760, so I am not so sure the equity rally is over. We will remain on the sidelines and wait to see if this corrective "dip" gains any legs as investors and traders mull over the Fed's rhetoric.
Gold and silver charts are also looking ambiguous. The cycle labeling for both metals is still not clear (old or newer cycles). Prices for both are rallying weakly this week as they move into a reversal zone specifically relevant to the precious metals (March 17 - 26), and both made a new weekly high today. If we see a top soon, a correction could follow that might take prices down to an older cycle bottom and a good spot to buy (especially in gold). Let's stay on the sidelines for now.
Crude oil prices took a big drop today which probably confirms that the $67.98 high (April contract chart) on March 8 was the final medium-term cycle top (it is late in this cycle), and prices are now falling to the final cycle bottom. That bottom could happen next week, and if this market is still bullish (it does look that way), the corrective drop should not go too far and may give us a good buying opportunity (the start of a new cycle). Let's remain on the sidelines for now.
The Federal Reserve's statement released yesterday afternoon at the conclusion of this month's FOMC meeting was pretty much in line with the predictions of Wall Street analysts. It looks like benchmark interest rates will remain near zero probably through 2023, and the Fed will continue its monthly purchase of $120 billion in bonds. Almost in a contradiction to this dovish stance, the Fed also expressed a very optimistic view of an accelerating economy with upgraded forecasts for growth and inflation. This is causing some Fed officials to foresee a rate hike in 2023 and maybe even as early as 2022. These kinds of mixed signals from the Fed are not unusual.
Ambiguous messages from the Fed always make Wall Street nervous. All three broad stock market indices (DOW, S&P 500, NASDAQ) rallied a bit after yesterday's Fed meeting, but the S&P 500 and especially the NASDAQ were down strongly today. The DOW managed to make a new high this morning, but it too closed with a loss at the end of the day. We are now out of our reversal zone, so some kind of top might be in, and this could be the start of a significant correction. We note, however, that the S&P 500 never cleared our 4,000 target and is still well above 3,760, so I am not so sure the equity rally is over. We will remain on the sidelines and wait to see if this corrective "dip" gains any legs as investors and traders mull over the Fed's rhetoric.
Gold and silver charts are also looking ambiguous. The cycle labeling for both metals is still not clear (old or newer cycles). Prices for both are rallying weakly this week as they move into a reversal zone specifically relevant to the precious metals (March 17 - 26), and both made a new weekly high today. If we see a top soon, a correction could follow that might take prices down to an older cycle bottom and a good spot to buy (especially in gold). Let's stay on the sidelines for now.
Crude oil prices took a big drop today which probably confirms that the $67.98 high (April contract chart) on March 8 was the final medium-term cycle top (it is late in this cycle), and prices are now falling to the final cycle bottom. That bottom could happen next week, and if this market is still bullish (it does look that way), the corrective drop should not go too far and may give us a good buying opportunity (the start of a new cycle). Let's remain on the sidelines for now.
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