MARKETS UPDATE (3:30 pm EDT)
The broad stock market indices (DOW, S&P 500, and NASDAQ), though edging higher, appear to be leveling off and may be "rounding over" to form a top. We are still in a reversal zone (which could extend into next week) so I am expecting some sort of correction to begin any day now. Because the current cycle appears to be turning bullish, that correction may only be towards 16,700 in the DOW and 1960 in the S&P 500, but it would give us a good opportunity to cover our short position and possibly go long. Next week's FOMC meeting may be a major factor in determining how the markets behave over the next two weeks. Despite weak economic data, a majority of economists are now expecting the Fed to begin raising U.S.interest rates this year. Any talk of a rate hike usually spooks equity markets so this may be the trigger for a correction. Holding my short position in the broad stock market for now.
Precious metal investors may also be cautiously eyeing next week's Fed meeting. The Fed may decide to begin hiking interest rates to help boost the U.S. dollar. The dollar's strong rally early this year was partly the result of global investors fleeing failing European and Asian economies for the sanctuary of a U.S. dollar which seemed strong due to the Fed "talking up" an imminent hike in interest rates. Of course, that hike has been continuously postponed, and the dollar has been faltering a bit over the last two months. If the Fed does decide to raise rates this year, the dollar could surge, and this would likely push down the price of gold and silver. We are currently on the sidelines of both metals. Cycle studies point to a possible brief but significant drop in silver prices this week or next which may give us a good spot to buy, especially if gold prices hold above $1164. Any trading I do in the precious metals will be short-term until cycle patterns are a little more clear in this market. Out of both gold and silver for now.
Last Thursday crude oil prices appeared to make a bottom at $45.23 and then rallied a bit into Friday. Prices are down again this week, however, and may go lower than last week, especially if the broad stock market starts to turn down. Crude's cycle pattern shows that a drop into the $40 - $45 range is possible this week or next. If that happens, it may be a good place to buy for a strong short-term rally. Out of crude oil for now.
The broad stock market indices (DOW, S&P 500, and NASDAQ), though edging higher, appear to be leveling off and may be "rounding over" to form a top. We are still in a reversal zone (which could extend into next week) so I am expecting some sort of correction to begin any day now. Because the current cycle appears to be turning bullish, that correction may only be towards 16,700 in the DOW and 1960 in the S&P 500, but it would give us a good opportunity to cover our short position and possibly go long. Next week's FOMC meeting may be a major factor in determining how the markets behave over the next two weeks. Despite weak economic data, a majority of economists are now expecting the Fed to begin raising U.S.interest rates this year. Any talk of a rate hike usually spooks equity markets so this may be the trigger for a correction. Holding my short position in the broad stock market for now.
Precious metal investors may also be cautiously eyeing next week's Fed meeting. The Fed may decide to begin hiking interest rates to help boost the U.S. dollar. The dollar's strong rally early this year was partly the result of global investors fleeing failing European and Asian economies for the sanctuary of a U.S. dollar which seemed strong due to the Fed "talking up" an imminent hike in interest rates. Of course, that hike has been continuously postponed, and the dollar has been faltering a bit over the last two months. If the Fed does decide to raise rates this year, the dollar could surge, and this would likely push down the price of gold and silver. We are currently on the sidelines of both metals. Cycle studies point to a possible brief but significant drop in silver prices this week or next which may give us a good spot to buy, especially if gold prices hold above $1164. Any trading I do in the precious metals will be short-term until cycle patterns are a little more clear in this market. Out of both gold and silver for now.
Last Thursday crude oil prices appeared to make a bottom at $45.23 and then rallied a bit into Friday. Prices are down again this week, however, and may go lower than last week, especially if the broad stock market starts to turn down. Crude's cycle pattern shows that a drop into the $40 - $45 range is possible this week or next. If that happens, it may be a good place to buy for a strong short-term rally. Out of crude oil for now.
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