It appears that Iran's missile strikes to U.S. military bases in Iraq yesterday were precise, strategic hits that inflicted minimal damage. Although Iran claims Americans were killed, the U.S. military reported no casualties as troops had ample warning before the strikes to seek shelter in underground bunkers. President Trump is announcing new sanctions on Iran, but it doesn't seem any direct military action against that country is imminent as Mr. Trump stated the U.S. is "ready to embrace peace".
Wall Street breathed a sigh of relief as military tensions cooled and the broad stock market rallied with the DOW gaining a healthy 161 points. The S&P 500 and NASDAQ both made new weekly highs, but the DOW fell just short of doing so. We thus have an intermarket bearish divergence signal in our new reversal zone. Will the market turn down now? Possibly, but if the DOW can make a new high tomorrow, we could see more rallying into next week before it reverses. Let's stay on the sidelines for now.
Deescalating geopolitical tension also pushed gold, silver and crude oil prices back down. After hitting a new high of $65.65, crude prices plummeted and closed around $59 (Feb. contract chart). Gold peaked at $1609 before dropping and closing at $1555. Silver dropped from $18.72 to $18.07. All of these highs are happening in our reversal zone (Jan. 7 - 16) so these commodities could be starting significant corrections now. If so, we will be looking to buy soon. Still on the sidelines of gold, silver and crude oil.