MARKETS UPDATE (5:15 pm EDT)
Fed officials have thankfully been silent today and will likely be so until the next FOMC meeting Sept. 20-21. The week or two leading up to a meeting is usually a "blackout" period for the Fed. After throwing out mixed signals about raising interest rates over the last several days (and turning equity markets into a seesaw), the Fed will likely be tight lipped for the next eight days while investors and traders are left in the dark to speculate on what they will announce at the end of their September meeting.
Markets do not like uncertainty so it is not surprising that equities are continuing their seesaw action with another strong plunge today following yesterday's surge. The DOW and S&P 500 moved back down close to Monday's lows but stopped short of making new lows. The broad stock market may find support here for a reversal, but in terms of timing we could still see new lows into the middle of next week and be within the current reversal zone. I am still anticipating a bullish reversal as long as the DOW stays above 17,800 and the S&P 500 above 2,040. We were able to sell our long positions early this morning before most of today's plunge and thus preserve some profit from that July 6th trade. We will now wait and see if the market drops further or starts to rise and overcome that "gap down" resistance at 18,400 - 18,450 in the DOW. Now on the sidelines of the broad stock market.
The U.S. Dollar Index snapped back up today after yesterday's move down (which had been triggered by dovish rhetoric from the Fed). This put more downward pressure on the precious metals. Gold prices are still staying above $1,300, but silver is breaking below our stop loss level of $19. I am going to stretch that stop loss down to $18.50 as we are now in the center of a strong reversal zone for these metals and a reversal is likely over the next day or two. We are also in the center of a reversal zone for currencies so the current dollar rally could turn down and kick off a rally in gold and silver. What we don't want to see is gold close below $1,300 as that could mean the trend is turning bearish. Holding my long positions in both gold and silver.
Crude oil prices have also been "seesawing" and are down sharply today after yesterday's price surge. I would still like to see a bottom in the $43 - $44 range by the end of this week which could be a good spot to buy. Today's low was $44.77 (October contract chart) so we are getting there. On the sidelines of crude oil for now.
Fed officials have thankfully been silent today and will likely be so until the next FOMC meeting Sept. 20-21. The week or two leading up to a meeting is usually a "blackout" period for the Fed. After throwing out mixed signals about raising interest rates over the last several days (and turning equity markets into a seesaw), the Fed will likely be tight lipped for the next eight days while investors and traders are left in the dark to speculate on what they will announce at the end of their September meeting.
Markets do not like uncertainty so it is not surprising that equities are continuing their seesaw action with another strong plunge today following yesterday's surge. The DOW and S&P 500 moved back down close to Monday's lows but stopped short of making new lows. The broad stock market may find support here for a reversal, but in terms of timing we could still see new lows into the middle of next week and be within the current reversal zone. I am still anticipating a bullish reversal as long as the DOW stays above 17,800 and the S&P 500 above 2,040. We were able to sell our long positions early this morning before most of today's plunge and thus preserve some profit from that July 6th trade. We will now wait and see if the market drops further or starts to rise and overcome that "gap down" resistance at 18,400 - 18,450 in the DOW. Now on the sidelines of the broad stock market.
The U.S. Dollar Index snapped back up today after yesterday's move down (which had been triggered by dovish rhetoric from the Fed). This put more downward pressure on the precious metals. Gold prices are still staying above $1,300, but silver is breaking below our stop loss level of $19. I am going to stretch that stop loss down to $18.50 as we are now in the center of a strong reversal zone for these metals and a reversal is likely over the next day or two. We are also in the center of a reversal zone for currencies so the current dollar rally could turn down and kick off a rally in gold and silver. What we don't want to see is gold close below $1,300 as that could mean the trend is turning bearish. Holding my long positions in both gold and silver.
Crude oil prices have also been "seesawing" and are down sharply today after yesterday's price surge. I would still like to see a bottom in the $43 - $44 range by the end of this week which could be a good spot to buy. Today's low was $44.77 (October contract chart) so we are getting there. On the sidelines of crude oil for now.
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