MARKETS UPDATE (3:45 pm EST)
Those of us holding long positions in gold and silver are justifiably a little nervous right now as precious metal prices dropped sharply yesterday and are down today. If you've been following the blog over the last month, however, you will know that this drop was not unexpected and we had decided to ride out any dips as long as the support levels around $1500-1530 in gold and $26-27 in silver are not broken. Today's price drops are getting close (especially silver) but are still holding, so we are remaining long. There are still very strong cycle and technical data that indicate we are close to an important bottom in both gold and silver.
Our profit taking in our crude oil long positions yesterday was timely as the price of crude dropped significantly today. We will now see how low this correction goes and may look to get long again soon if this market's overall trend remains bullish. On the sidelines for now.
The broad stock market continues to be ambiguous and refuses to give clear signals as to its short-term and medium-term direction. I suspect we are seeing a top forming now and can expect some sort of correction. The extent of the correction will likely give us some indication as to the bullish or bearish nature of this market right now. As I mentioned in the last markets update, we may see a correction down to the 14,000 level in the DOW. If that level holds, we will consider going long. Still on the sidelines here.
I think we have a bullish enough picture now in the Swiss Franc to go long in this currency. I am therefore buying the Swiss Franc today. (Because it is late in the day, any buy orders or currency conversions may not take effect until tomorrow. This is not a problem and one could even buy or convert tomorrow as this is a long-term trade and we are not worried about any daily changes in value.) I mentioned in the last markets update that a good stop loss and support price for the Swiss Franc would be its March 14 low at 1.0463. We will therefore keep a watchful eye on that price level should this currency move back down to that area.
I should mention here that I do not do short-term currency trading on the website. When I suggest buying a foreign currency (usually the Swiss Franc) it is because my analysis is indicating the start of a potential long-term rally of significance. I primarily buy foreign currency to periodically hedge savings accounts against a falling U.S.Dollar (see Alternative Investor Strategy ). Technically, this is not "trading" as I simply convert my savings dollars into francs during the dollar downturn and then convert back into dollars when I feel the rally in the franc is over. The main reason I avoid frequent currency trading is that, in terms of percentages, currency moves are usually small compared to the other markets we follow on the website (precious metals, crude oil, broad stock market), and I feel more profit can be realized by focusing most of our resources on those markets.