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Weekend Market Analysis 23 Apr 2017

Apr 23rd, 2017

Conclusion

World equity markets continue to move sideways with US equities particularly restricted by a down-sloping resistance line since early March. This is somewhat energised by increased volatility due to geo-political-terror events and the first round French election today. The gold price is holding up but silver has broken down (which usually leads) indicating the precious metals complex is still moving down to a 6-month cycle low in May / Jun, with exciting prospects after that. This view is further supported by miners looking more negative than the metals.

This primary interpretation has been delayed slightly by the increased geo-political-terror events and should further events cause further volatility then the delay may be further exaggerated. The US Dollar looks set to weaken over the medium term (with the less likelihood now of rate hikes as planned) but equally set to strengthen slightly first in the short term, providing credence to the gold cycle low soon.

 

US$ 

The Dollar Index is creating a bullish reducing wedge in the ‘head & shoulders’ pattern which suggests short term strength before medium term weakness. The Dollar has not broken down below the neckline and instead has moved up. To remain bullish it needs to break up through the resistance trendline at 101.4, with a prior small hurdle at 100.

 

The long term picture for the Dollar indicates significant downside potential, with the first stage target at about 94.5.

 

Treasuries

Recent increased volatility caused bond markets to rise with yields dropping below their recent horizontal trading range. This reversed slightly at the end of the week.

 

Gold Price

Gold has reached long term resistance and is poised to turn down lower, moving potentially into a 6-month cycle low with exciting buying opportunities thereafter.

Short term indications for gold moving down before up are supported by significant divergence with the miners. Also. silver is retreating more than gold which adds to negativity, and the gold oscillators are trending down.

 

 

Silver price

Silver continues to underperform gold (negative) and has broken back below the 9 month megaphone resistance line, with accompanying declining oscillators (negative).

Silver has a confirmed top and continues reacting down from the bearish double top formation. Like gold, price is likely to move down to a 6-month cycle low in May / Jun with exciting buying opportunities thereafter.

 

US General Equities

The Dow Jones Industrial Ave. continues down, reacting from negative divergence (pink area) as it hovers at support within the green trading channel en route to the 200-Dema.

However, the short term chart illustrates the normally bullish reducing wedge pattern which could see a break up through resistance.

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