MARKETS UPDATE (11:30 pm EST)
In my March 31st blog I mentioned that, based on cycle and timing factors, the month of April could be a difficult one for traders. This is due to the presence of several timing zones that have a high probability for significant market reversals. Markets are therefore especially prone this month to seesawing up and down in an indecisive manner. We are indeed seeing this now (along with mixed technical signals), and this lack of clear market direction has been keeping me on the sidelines of trading.
Directional momentum in the broad stock market is still conveying an unclear picture. While the DOW and nearby contract chart for the S&P 500 are mostly bullish, the NASDAQ remains stubbornly mixed bullish and bearish, and a strong bearish signal appeared on the cash chart for the S&P 500 on Monday, making its momentum now mixed as well. This ambiguous picture makes me reluctant to trade, but if the DOW rises into Friday or early next week without exceeding last week's high, I may consider a short position. It looks like this market wants to take a significant correction, but if the DOW breaks to a new all-time high soon, that correction may be delayed for several more weeks. Still on the sidelines.
Overall momentum in the precious metals markets is still mixed bullish and bearish, and I continue to watch for signs of a final long-term cycle bottom in both gold and silver between now and the end of May. One thing that has me concerned at the moment is what looks like a breakdown in the U.S. Dollar Index. Over the last five days this index has dropped abruptly from a peak at 80.59 on April 4 to today's low at 79.52. There is important support for the dollar at the 79 level. If this level breaks it could kick-start a major rally in gold and silver. Short-term technical and cycle patterns are suggesting that both these metals will move lower, but a dollar collapse could change that. For now, I am going to go with the idea that gold and silver are short-term bearish and keep a close eye on that 79 level in the U.S. Dollar Index. If precious metal prices can rise close to $1330 in gold and $20.50 in silver soon, it may be a good spot to set up short positions (for a short-term trade down). On the sidelines here.
Increased tensions between Ukraine and Russia this week have propelled the price of crude oil upwards. Significantly, directional momentum in this market has now turned 100% bullish. This means I will now adopt a bullish strategy in any trading and will be looking to buy any significant corrections. To maintain a bullish posture it is important for the price of crude to break through its early March high of $104.48. Based on the recent momentum change in crude charts, it seems likely this will happen. There could be a significant turning point for crude oil prices around April 21, so we will watch carefully to see if the market rises or falls into that important time. Still out of this market.
In my March 31st blog I mentioned that, based on cycle and timing factors, the month of April could be a difficult one for traders. This is due to the presence of several timing zones that have a high probability for significant market reversals. Markets are therefore especially prone this month to seesawing up and down in an indecisive manner. We are indeed seeing this now (along with mixed technical signals), and this lack of clear market direction has been keeping me on the sidelines of trading.
Directional momentum in the broad stock market is still conveying an unclear picture. While the DOW and nearby contract chart for the S&P 500 are mostly bullish, the NASDAQ remains stubbornly mixed bullish and bearish, and a strong bearish signal appeared on the cash chart for the S&P 500 on Monday, making its momentum now mixed as well. This ambiguous picture makes me reluctant to trade, but if the DOW rises into Friday or early next week without exceeding last week's high, I may consider a short position. It looks like this market wants to take a significant correction, but if the DOW breaks to a new all-time high soon, that correction may be delayed for several more weeks. Still on the sidelines.
Overall momentum in the precious metals markets is still mixed bullish and bearish, and I continue to watch for signs of a final long-term cycle bottom in both gold and silver between now and the end of May. One thing that has me concerned at the moment is what looks like a breakdown in the U.S. Dollar Index. Over the last five days this index has dropped abruptly from a peak at 80.59 on April 4 to today's low at 79.52. There is important support for the dollar at the 79 level. If this level breaks it could kick-start a major rally in gold and silver. Short-term technical and cycle patterns are suggesting that both these metals will move lower, but a dollar collapse could change that. For now, I am going to go with the idea that gold and silver are short-term bearish and keep a close eye on that 79 level in the U.S. Dollar Index. If precious metal prices can rise close to $1330 in gold and $20.50 in silver soon, it may be a good spot to set up short positions (for a short-term trade down). On the sidelines here.
Increased tensions between Ukraine and Russia this week have propelled the price of crude oil upwards. Significantly, directional momentum in this market has now turned 100% bullish. This means I will now adopt a bullish strategy in any trading and will be looking to buy any significant corrections. To maintain a bullish posture it is important for the price of crude to break through its early March high of $104.48. Based on the recent momentum change in crude charts, it seems likely this will happen. There could be a significant turning point for crude oil prices around April 21, so we will watch carefully to see if the market rises or falls into that important time. Still out of this market.
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