November 8, 2018
The election results evolved pretty much as expected… and the markets reacted accordingly.
Here’s what’s happening…
The stock market surged on the election news. Stocks are jumping up from very oversold levels and they’re poised to head higher. The big question now is, will the stock market be able to hit new highs… or not?
Currently, most of the stock indexes are back above their 65-week moving averages, which is bullish. The Dow Industrials stayed above it, and it’s now bouncing up from it, with room to rise further. We’ll be watching this rise closely (see chart). Dow Theory is still bullish and so is the Primary Trend Index (PTI). Walt Disney (DIS) posted record profits for the year. Keep your position, but sell if it closes below 113. If you have other stock positions, hold them while the stock market stays technically bullish.
The Federal Reserve left interest rates unchanged today with indirect hints of a hike next month. Yet interest rates are strong. Long rates are holding near their highs, with mortgage rates at an 8 year high, while short rates are reaching new highs for the move, especially the leading Libor rate. The T-Bill rate is following. They’re still set to rise further, and the 10 and 30 year yields will stay strong by holding above 3.10% and 3.30%, respectively. This continues keeping downward pressure on bond prices overall, so it’s still best to stay on the sidelines.
The U.S. dollar index has softened this week, after reaching a new high last Thursday. It remains firm above 96, but if the dollar index declines and stays below 96, it’ll be an indication that it could be headed lower, despite higher interest rates. Meanwhile, most of the major currencies are bearish but they’ll probably rebound in the weeks ahead. The Australian & New Zealand dollars are starting to show some strength, which is a good sign for the resource sector. For now, continue to keep your cash in U.S. dollars.
Gold’s C rise stalled this week with the election results but the rise is still underway, see chart. Gold has room to rise further, and it’ll remain firm by staying above $1200. A rise above $1240 would show good strength for the rise. Platinum is rising and looking good. This bodes well for gold, and so does gold in other currency terms; it’s strong. Silver and gold shares are sluggish but still forming a solid bottom. They have promise.
The resource sector is looking better, and especially with the infrastructure potential in the U.S. Copper is stable, but crude oil fell to an eight month low today with energy shares weighing on the market today.
We thought you’d enjoy reading Richard Russell’s wisdom on truth. Click here to see it.
Thanks, best wishes and until next week,
Pamela and Mary Anne
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