U.S. equity markets finished down on Friday and barely avoided a closing price reversal top which would have signaled the start of a possible retracement to the downside. The March E-mini S&P 500 and NASDAQ made new highs for the year while all three indices closed higher for the week. Friday saw the indices spike higher then break lower following a better than expected U.S. Retail Sales Report. As long as interest rates remain low, there is no other game in down. If the Dollar weakens next week versus the Euro, then look for the rally to continue.
Early Friday, demand for higher risk along with a friendly retail sales report pressured the June Treasury Bonds, but this market recovered when the U.S. equity markets weakened. Once again the inability to break the low of the week at 115’27 triggered a short-covering rally. Technically, this market formed a closing price reversal bottom which could lead to the start of a short-term retracement rally. Watch for a follow-through to the upside on Monday.
April Gold tried to rally after the Dollar opened weaker, but by the mid-session it was clear that the buyers had abandoned this precious metal. The current downside momentum is likely to trigger a further decline to the recent bottom at $1088.50. A break through this price will turn the main trend down so the bulls are likely to mount a strong defense following a test of this level. The strong stock market rally appears to be taking speculative money away from gold.
June Crude Oil posted both a daily and weekly closing price reversal top, setting up the possibility of a correction back to 77.28 over the near-term. Demand for higher risk assets appears to be drying up which is helping to trigger the sell-off. The daily chart indicates that this market has plenty of room to the downside.
