BROAD STOCK MARKET UPDATE and COMMENT ON JEROME POWELL'S PRESS CONFERENCE
(3:30 pm EDST)
Yesterday new Federal Reserve Chairman Jerome Powell gave a press conference in which he delivered generally upbeat comments on the state of the U.S. economy and also stated that the central bank plans to continue raising interest rates once every three months, at least "for now". These statements were likely intended to ease Wall Street fears and "talk up" a jittery stock market, and it seems they were effective, at least short-term, as equity markets had a healthy rally yesterday. We need to note here that Powell's inclusion of "for now" in his statement indicates the possibility of pulling back on rate hikes and perhaps even stopping them if economic conditions require it. Another cautious note was struck when he commented on the uncertain outcome of current trade wars and fiscal policies being implemented by the Trump administration. Perhaps Wall Street was salivating a bit at the prospect of slower rate hikes (or even no hikes) and this inspired yesterday's rally. The next several days will tell us how confident the market is and whether or not trade wars and other fears will reassert themselves in the investor psyche.
From the standpoint of technical analysis, yesterday's and today's rally in the DOW has taken this index up to a strong resistance area around 25,200 - 25,280, and the DOW is still below its June high of 25,403 while the S&P 500 and NASDAQ have already exceeded their June highs (bearish divergence). At the time of this writing (3:30 pm EDST) it seems that these latter two indices are reluctant to rally so there is still a chance this market could turn down at this resistance area in the DOW. The alternative scenario (also very possible) is to see all three indices continue rallying into the next reversal zone July 27 - August 6 (which starts on next week's Friday). If that happens, we will watch for another strong case of bearish divergence which is already setting up as the NASDAQ is now making new all-time highs but the S&P 500 and especially the DOW are well below their all-time highs (that would be 26,617 in the DOW and 2,873 in the S&P 500 - both made on Jan. 26 this year). For now, I am going to use a close above 25,280 as a stop loss for my short position in the DOW. Holding my short position in the DOW today.
Gold and silver prices are continuing to break down today. It looks like we may be back on track for a longer-term downturn in the precious metals. I will analyze and discuss in more detail what is going on in this market over the upcoming week-end. We are now out of both gold and silver.
(3:30 pm EDST)
Yesterday new Federal Reserve Chairman Jerome Powell gave a press conference in which he delivered generally upbeat comments on the state of the U.S. economy and also stated that the central bank plans to continue raising interest rates once every three months, at least "for now". These statements were likely intended to ease Wall Street fears and "talk up" a jittery stock market, and it seems they were effective, at least short-term, as equity markets had a healthy rally yesterday. We need to note here that Powell's inclusion of "for now" in his statement indicates the possibility of pulling back on rate hikes and perhaps even stopping them if economic conditions require it. Another cautious note was struck when he commented on the uncertain outcome of current trade wars and fiscal policies being implemented by the Trump administration. Perhaps Wall Street was salivating a bit at the prospect of slower rate hikes (or even no hikes) and this inspired yesterday's rally. The next several days will tell us how confident the market is and whether or not trade wars and other fears will reassert themselves in the investor psyche.
From the standpoint of technical analysis, yesterday's and today's rally in the DOW has taken this index up to a strong resistance area around 25,200 - 25,280, and the DOW is still below its June high of 25,403 while the S&P 500 and NASDAQ have already exceeded their June highs (bearish divergence). At the time of this writing (3:30 pm EDST) it seems that these latter two indices are reluctant to rally so there is still a chance this market could turn down at this resistance area in the DOW. The alternative scenario (also very possible) is to see all three indices continue rallying into the next reversal zone July 27 - August 6 (which starts on next week's Friday). If that happens, we will watch for another strong case of bearish divergence which is already setting up as the NASDAQ is now making new all-time highs but the S&P 500 and especially the DOW are well below their all-time highs (that would be 26,617 in the DOW and 2,873 in the S&P 500 - both made on Jan. 26 this year). For now, I am going to use a close above 25,280 as a stop loss for my short position in the DOW. Holding my short position in the DOW today.
Gold and silver prices are continuing to break down today. It looks like we may be back on track for a longer-term downturn in the precious metals. I will analyze and discuss in more detail what is going on in this market over the upcoming week-end. We are now out of both gold and silver.
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