In yesterday's blog on the broad stock market I wrote:
"A disintegrating U.S. "trade deal" with China seems to be a major factor tanking these markets now. If Trump can turn this around quickly, equities might resume their bullish rally, but that doesn't seem likely at the moment."
I may have underestimated Mr.Trump's ability to "wheel and deal" trade negotiations with China. Today the U.S. announced that it would delay tariffs on some Chinese goods and scheduled further talks in an effort to resolve recent trade disputes between the two countries. Equity markets responded with a big rally of over 400 points in the DOW. But can this rally be sustained? We shall see. If it can, we may see the bullish scenario I mentioned yesterday unfold:
"If we don't get new lows this week, and a rally continues into next week, we might get a good opportunity to sell short a top in our next reversal zone (Aug. 21 - 29), especially if that top stays below the all-time highs of these indices."
We will watch this market carefully now. With Mr.Trump calling the shots, anything is possible. On the sidelines of the broad stock market.
After making new highs early in the day, both gold and silver prices dropped significantly. Many analysts are attributing this to investors taking money from their "safety" accounts (i.e. precious metals) and buying equities on today's optimistic news about the U.S./China trade deal. Perhaps this is true, but based on our cycle analysis, we were also expecting a top and significant turn-down. This may be the start of it. On the sidelines of the precious metals for now.