MARKETS UPDATE (3:30 pm EST)
The U.S. Dollar Index is making a new two week low today as we enter a reversal zone specific to currencies (March 6 - March 15). There is also a sub-cycle bottom due in this market this week which means that a reversal back up could start over the next two days. Any rally now would quickly encounter that strong resistance in the 90 - 91 area and would probably be short-lived and turned back down again. Should the greenback succeed in breaking above 91, however, it would be a bullish sign and would suggest at least a postponement of any dollar breakdown. Right now I don't think that will happen, but in today's volatile economic environment anything is possible.
Precious metal prices are backing down a bit today. It is still possible we could see one of these metals (probably silver) make a new weekly low without the other (bullish divergence), and that would be a good sign of an imminent strong rally. We don't want to see both metals make new weekly lows as that would be bearish. Gold and silver's reversal zone technically ends tomorrow, but because it overlaps with the broad stock market reversal, we can extend it into March 13 (next Tuesday) which gives us a little more time to see a sub-cycle bottom and possibly bullish divergence. A short-term rally in the dollar (as discussed above) could push these metal prices lower. I am going to hold my long position in gold for now and remain out of silver. If we get that bullish divergence set up this week or next, we will look to buy silver.
The broad stock market continues to oscillate wildly. There is still time for this market to make a double bottom to those Feb. 9 lows within the current reversal zone (which ends early next week) and then reverse back up for a strong multi-month rally. Should those Feb. 9 lows break, however, we could see a multi-month correction instead. If equities rally into next week (before touching those Feb. 9 lows) and make new weekly (or even all-time) highs early in the week with a bearish divergence signal, the market could be setting up for a severe fall. There are several possibilities here and we will keep a close eye on this market for any trading opportunities (long and short). Still on the sidelines.
The U.S. Dollar Index is making a new two week low today as we enter a reversal zone specific to currencies (March 6 - March 15). There is also a sub-cycle bottom due in this market this week which means that a reversal back up could start over the next two days. Any rally now would quickly encounter that strong resistance in the 90 - 91 area and would probably be short-lived and turned back down again. Should the greenback succeed in breaking above 91, however, it would be a bullish sign and would suggest at least a postponement of any dollar breakdown. Right now I don't think that will happen, but in today's volatile economic environment anything is possible.
Precious metal prices are backing down a bit today. It is still possible we could see one of these metals (probably silver) make a new weekly low without the other (bullish divergence), and that would be a good sign of an imminent strong rally. We don't want to see both metals make new weekly lows as that would be bearish. Gold and silver's reversal zone technically ends tomorrow, but because it overlaps with the broad stock market reversal, we can extend it into March 13 (next Tuesday) which gives us a little more time to see a sub-cycle bottom and possibly bullish divergence. A short-term rally in the dollar (as discussed above) could push these metal prices lower. I am going to hold my long position in gold for now and remain out of silver. If we get that bullish divergence set up this week or next, we will look to buy silver.
The broad stock market continues to oscillate wildly. There is still time for this market to make a double bottom to those Feb. 9 lows within the current reversal zone (which ends early next week) and then reverse back up for a strong multi-month rally. Should those Feb. 9 lows break, however, we could see a multi-month correction instead. If equities rally into next week (before touching those Feb. 9 lows) and make new weekly (or even all-time) highs early in the week with a bearish divergence signal, the market could be setting up for a severe fall. There are several possibilities here and we will keep a close eye on this market for any trading opportunities (long and short). Still on the sidelines.
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