Critical point for oil, gold & bonds.
Thursday, March 28, 9:25 a.m. Commodity prices including oil, and gold, peaked in 2011 and have been in patterns of lower highs on rally attempts since. But they’ve also been pulling back to higher lows on the pullbacks. Bonds peaked in August of last year, and were also in a pattern of lower highs on [...]

Thursday, March 28, 9:25 a.m.

Commodity prices including oil, and gold, peaked in 2011 and have been in patterns of lower highs on rally attempts since. But they’ve also been pulling back to higher lows on the pullbacks.

Bonds peaked in August of last year, and were also in a pattern of lower highs on the rally attempts since, but also of higher lows on the pullbacks.

That has had them in usually negative symmetrical triangle formations.

Gold broke out of the triangle formation to the downside.

But it has continued to follow a pattern of attempting to rally each time it became short-term oversold beneath its short-term 30-day m.a., and is doing so again.

In its previous attempts it moved above its 30-week m.a. but soon ran into the trendline resistance and the rally attempts continued to halt at lower highs.

But will that happen again this time? 

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Bonds also broke out of the triangle formation to the downside, and like gold have continued their pattern of attempting to rally each time they became oversold beneath their 30-day m.a.

They also have been doing so again.

Like gold, bonds have also managed to move above their 30-day m.a. on each rally attempt, but soon halted their rally at lower highs.

And in this rally attempt they are now at a point where they will soon either fail again or break the pattern of lower highs.  

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And now we have oil at an important juncture in its symmetrical triangle formation, where its latest rally attempt will either fail or it will break out of the formation to the upside. The direction of the breakout usually determines the direction for a while.

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We know what our intermediate-term indicators are predicting for each, but interesting short-term situations for all three.

Early signs of economic recovery stumbling again this summer?

New Home Sales unexpectedly fell 4.6% in February, the biggest monthly decline in two years. Consumer Confidence fell sharply in March, dropping from 68.0 in February to 59.7 in March. Pending Home Sales declined 0.4% in February. New weekly unemployment claims were up 16,000 last week to 357,000. FedEx reported an unexpected 31% decline in quarterly earnings and warned that global trade has slowed to levels not seen since the last two significant economic downturns. Caterpillar, also a bellwether for global economic conditions, reported a 13% plunge in orders for the three-month period from December to February.

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Yesterday in the U.S. Market.

It was a mixed day, with an afternoon recovery from quite negative morning declines that had the Dow down 120 points in the first half hour. Volume was again light with just 0.6 billion shares traded on the NYSE, 1.4 billion on the Nasdaq.

The Dow closed down 33 points, or 0.2%. The S&P 500 closed down 0.1%. The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.1%. The Nasdaq 100 closed up 0.1%. The Russell 2000 closed up 0.1%. The DJ Transportation Avg. closed up 0.2%. The DJ Utilities Avg closed up 0.3%.

Gold closed up $6 an ounce at $1,607.

Oil closed up $.15 a barrel at $96.58.

The U.S. dollar etf UUP closed up 0.4%.

The U.S. Treasury bond etf TLT closed up 0.8%.

Yesterday in European Markets.

European markets closed down yesterday in reaction to the flare-up of political uncertainties in Italy again. The overall Europe Dow closed down 1.0%. Among individual countries, the London FTSE closed down 0.2%. The German DAX closed down 1.2%. France’s CAC closed down 1.0%. Belgium closed down 0.6%. Italy closed down 0.9%. Portugal closed down 1.8%. Spain closed down 1.1%. Russia closed up 1.0%.

Asian Markets were up Tuesday night and down last night.

The Asia Dow closed up 0.5% Tuesday night and down 0.6% last night.

Among individual markets last night:

Australia closed down 0.5%. China plunged 2.8%. Hong Kong closed down 0.7%. India closed up 0.7%. Indonesia closed up 0.3%. Japan closed down 1.3%. Malaysia closed up 0.2%. S. Korea closed down 0.1%. Singapore closed down 0.1%. Taiwan closed down 0.4%. Thailand closed down 1.0%.

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Markets This Morning:

European markets are bouncing back this morning. The Europe Dow is up 0.9%. Among individual countries the London FTSE is up 0.8%. The German DAX is up 0.4%. France’s CAC is up 0.4%. Norway is down 0.2%. Portugal is down 0.4%. Spain is up 0.3%. Switzerland is up 0.5%. Italy is up 0.7%. Russia is up 0.5%.

Oil is up $.02 a barrel at $96.50.

Gold is down $9 an ounce at $1,598.

This Morning in the U.S. Market:

This week will be a holiday-shortened week in the U.S. with the stock market closed on Friday for the Good Friday holiday. But it will still see quite a number of potential market-moving economic reports, including Durable Goods Orders, New Home Sales, Consumer Confidence, another revision to 4th quarter GDP, etc. To see the full list click here, and look at the left side of the page it takes you to.

Monday’s reports were that the Chicago Fed’s National Business Index swung sharply back into positive territory in February, jumping to +0.44 from –0.49 in January. But the three-month moving average, which smooths out the monthly volatility, slid to a reading of +0.09 from +0.28 in January. And the Dallas Fed Mfg Index rose solidly in March, rising to 9.9 from 6.2 in February. The percentage of manufacturers reporting a decrease in production fell to its lowest level in two years.

Tuesday’s reports were that Durable Goods Orders jumped 5.7% in February, but thanks to a big spike in volatile monthly commercial aircraft orders after a big plunge in January. Excluding transportation orders durable goods orders actually declined. The Case-Shiller Home Price Index showed home prices edged up only 0.2% in January, but that was enough to have the year-over-year gain at 8.1%, better than forecasts. New Home Sales unexpectedly fell 4.6% in February, the biggest monthly decline in two years. Sales were up 13.7% in the Midwest, but declined 13.3% in the Northeast, 9.7% in the South, and 2.1% in the West. And Consumer Confidence fell sharply in March, dropping from 68.0 in February to 59.7 in March.

Yesterday’s only report was that Pending Home Sales declined 0.4% in February.

This morning’s reports are that new weekly unemployment claims were up 16,000 last week to 357,000. The 4-week m.a. was up 2,250 to 343,000. And the final revision of Fourth quarter GDP Growth showed growth of 0.4%, an improvement over the previous revision of 0.1%, but not quite reaching the consensus forecast of 0.5%.

Still to come is the Chicago PMI Index, which will be released at 9:45 a.m.

Our pre-open indicators have been unchanged by the reports.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 25 points or so in the early going this morning.

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I’ll be back with the next regular blog post on Saturday morning, as usual later than on the week-days, probably around 11 a.m.

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