Lots of sideways, betwixt and between market action over the last couple of weeks. What does it mean? When will it end? What will be the next moves in gold, silver, the dollar, the Dow Industrials?
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Good morning. This is Larry Edelson for my Uncommon Wisdom video market update for Monday, April 2.
The markets, all of them literally, have been betwixt and between over the last couple of weeks. Chopping sideways. Looking at times like they are going to break out to the upside then failing. Moving lower, looking like they’re going to literally plunge at any minute. And then holding support and bouncing back.
This is very frustrating action for most traders and investors. However, I will tell you on a positive note that, when you see sideways action like you’ve seen in most of the markets, that of course is usually a prelude to a very big move.
And on another positive note, I do see this betwixt-and-between action — this sideways action — coming to an end very soon, probably by the end of this first week in April.
I want to go to the charts now. First, the gold chart. This is the gold chart that I’ve had up for the past month or so and been using to show you the action in gold. As you can see here, this is the rally that failed in February and failed to give a monthly buy signal.
Gold started to drift lower and is now pretty much in no-man’s land between support down here and resistance up here. I will tell you that the March closing for gold was not bullish, but it wasn’t very bearish either. So that’s indicative that gold is still in a sideways market, drifting lower.
I do expect as I just indicated that we will start to see some action soon in gold and all of my indicators point to a resolution of this sideways action to the downside.
Having said that, let’s now take a look at silver. Silver looks very similar to gold. The rally failed back here, which I showed you. Silver failed to give a monthly buy signal at the end of February. Since then, throughout March we’ve been drifting lower in a choppy, sideways slightly lower action.
It does look at times that silver’s going to collapse; yet it continues to hold support around the $32 level. Like gold, I expect a resolution to this sideways action in silver and very soon, probably by the end of this first week in April.
All of my indicators continue to suggest that another sharp decline in silver is the most likely outcome.
Now let’s move on to the U.S. Dollar Index. Again here, we’ve seen the dollar weaken to test support. But not a very impulsive decline here — rather, drifting lower. It looks kind of sharp on the chart, but it’s been a rather slow decline to support here.
I do believe we will hold this level of support and the next move in the dollar, which should come very soon, should be to the upside.
Now the Dow Industrials. The Dow Industrials are really holding support magnificently ever since we closed above the 12,849 level. The Dow being the only market that gave a monthly buy signal at the end of February, as I’ve indicated to you before, and now it’s consolidating.
Many of my indicators suggest the Dow and the broader stock markets in general are overbought and we should see some kind of correction. If you’re one of my trading subscribers who attended last week’s Resource Windfall Trader webinar, I did indicate to you that Dow 9,100 is now off the table.
I do expect some kind of shakeout in the Dow before the full force of the bull market of the Dow hits. So I wouldn’t be surprised to see a move down in the Dow. But it’s really quite fascinating how the Dow was holding this support area here and looking so rock-solid.
Even if we get a dip, a correction, in the Dow, there’s no question in my mind now that a new, long-term bull market in the Dow is forming. One that I’ve been talking about for some time now, and it will see the Dow and broader stock markets move substantially higher over the next few years as a result of the European sovereign debt crisis and the U.S. sovereign debt crisis.
The money that will be coming out of European bonds and U.S. government bonds has to go somewhere and it’s going to seek out safety, capital appreciation and income in the way of dividends and royalty in the stock market in addition to gold in a safe haven going forward. So keep that in mind.
Stay tuned to all my writings and have a good week.