Thursday Commodities & Currencies
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
IBD flipped to a bull signal today. It sure did seem like a good day in the market with lot's of technical evidence of strength. The rate-sensitive sectors such as homebuilders, financials, discretionary all appear to be building solid bases, and some important large caps show breakout strength such as GE, Walmart and others.
I'm not ready to turn bull despite the fact that, like a lot of people, I try to follow the IBD buy signals. I would hate to miss the early stage of a good rally in stocks. It's just that new lows increased and were at high levels for both exchanges on a day when the market advanced on strong volume.
Also, the TBill rate dropped yet again to .5% after touching all the way to .2% intraday... as in almost to zero. Does that seem right? And, the 10% drop in gold prices this week apparently gave bond investors confidence to buy the long end of the yield curve again. So long bonds advanced while the equity market also advanced. I guess money flowed out of commodities into both stocks and bonds.
This isn't news to anyone, commodities sold off since last week. Some currencies have shifted as well. The US Dollar was finally able to touch a low and bounce up while a couple currencies shifted below the 40-week. Finally the currencies are coming back from their extremes.
We are entering the weak time of year for gold and silver. Usually, the summer offers some really good buying opportunities. Also, keep in mind that the last major selloff in gold resulted in a high consolidation that lasted a year or so. I'm planning to dollar-cost average back into gold and silver over time and just hang on through the ups and downs. I missed the big move at the end by taking profits too early.
The CRB and the major currencies are highly correlated as shown in this chart. The CRB is already about halfway to the initial target at the 40-week, while the currencies have a way to go. I have some small commodity ETF positions in my retirement accounts that I plan to hold through the correction because I'm not at all sure where prices are going from here. Will it be a quick correction until the US Dollar falters again, or a major correction after just about everyone on the planet has become bullish like the dotcom era?
