BROAD STOCK MARKET and PRECIOUS METALS UPDATE (2:45 pm EDT)
In a speech given late in the day last Thursday U.S. Federal Reserve Chairwoman Janet Yellen stated that, "Most FOMC participants, including myself, currently anticipate…an initial increase in the federal-funds rate later this year, followed by a gradual pace of tightening thereafter." This comment was likely intended to temper any excessively dovish interpretation of the recent FOMC decision to delay an interest rate hike and to curb speculation that a first hike will be pushed into 2016 (even though it may be). Equity markets on Friday seemed buoyed by Ms. Yellen's slightly hawkish speech which may have eased investor anxiety a bit by clarifying the Fed's intentions. Today's market is falling sharply, however, so Wall Street's fear seems to be returning. This may in part be due to news today that the NASDAQ has produced a "death cross" chart pattern and joins the other three major market indices (DOW, S&P 500, Russell 2000 Index) which have also recently manifested death crosses. (A "death cross" is when the 50-day moving average crosses below the 200-day moving average, and this sometimes heralds a longer-term downtrend.) This death cross "grand slam" could be very bearish, and it's certainly in line with our projection of new market lows into late October. We are doing well with our short positions in the broad stock market (which we entered on Aug. 13 and Aug. 27) and will stay with them for now. Holding my short position here.
Gold and silver seem to be at a crossroads right now and have the potential to turn either very bearish (short-term) or very bullish. I am currently favoring the bearish view with the idea of both metals making new lows (gold below $1100 and silver below $14) into October/November. Today's steep drop in precious metal prices seems to be supporting this, but this could be a very volatile week for these metals so we could see prices surging up as well.
As long as gold stays below $1170 and silver stays below $15.90 (spot prices) I will maintain my bearish view. We currently have a short position in gold but are out of silver. Silver prices dropped sharply today so we may have missed a good opportunity to go short last week. If prices pop up again this week we may get another chance. Holding my short position in gold and on the sidelines of silver.
In a speech given late in the day last Thursday U.S. Federal Reserve Chairwoman Janet Yellen stated that, "Most FOMC participants, including myself, currently anticipate…an initial increase in the federal-funds rate later this year, followed by a gradual pace of tightening thereafter." This comment was likely intended to temper any excessively dovish interpretation of the recent FOMC decision to delay an interest rate hike and to curb speculation that a first hike will be pushed into 2016 (even though it may be). Equity markets on Friday seemed buoyed by Ms. Yellen's slightly hawkish speech which may have eased investor anxiety a bit by clarifying the Fed's intentions. Today's market is falling sharply, however, so Wall Street's fear seems to be returning. This may in part be due to news today that the NASDAQ has produced a "death cross" chart pattern and joins the other three major market indices (DOW, S&P 500, Russell 2000 Index) which have also recently manifested death crosses. (A "death cross" is when the 50-day moving average crosses below the 200-day moving average, and this sometimes heralds a longer-term downtrend.) This death cross "grand slam" could be very bearish, and it's certainly in line with our projection of new market lows into late October. We are doing well with our short positions in the broad stock market (which we entered on Aug. 13 and Aug. 27) and will stay with them for now. Holding my short position here.
Gold and silver seem to be at a crossroads right now and have the potential to turn either very bearish (short-term) or very bullish. I am currently favoring the bearish view with the idea of both metals making new lows (gold below $1100 and silver below $14) into October/November. Today's steep drop in precious metal prices seems to be supporting this, but this could be a very volatile week for these metals so we could see prices surging up as well.
As long as gold stays below $1170 and silver stays below $15.90 (spot prices) I will maintain my bearish view. We currently have a short position in gold but are out of silver. Silver prices dropped sharply today so we may have missed a good opportunity to go short last week. If prices pop up again this week we may get another chance. Holding my short position in gold and on the sidelines of silver.
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