Today's mystery to ponder is the market proverb, "Bull markets always climb a wall of worry."
I thought the US dollar index had plumb fallen off the cliff when I saw it closed down 45 basis points (0.56%) to 79.68. Then I peered at the chart a little closer, drew another line, and durned if it hadn't traced out a falling wedge, which generally (but NOT always) resolves with an upside breakout, i.e., the opposite of the way it points (ditto a rising wedge).
Well, that better be the answer, because at 79.68 the dollar index is at its December low (79.50) and closing in on its low since October (79.06). Behold, the limb of decision. Either the dollar index bounces up from here, or the limb breaks & it hits the ground many points below.
The euro played mirror image of the US dollar index today, rising 0.9% to $1.3860.
I have the same aversion to the euro that I do to cheap shyster lawyers with greasy hair and a smooth line of patter. Doesn't matter how smooth you talk, beneath that pinstriped vest beats no heart and he is way too clever for his own good or mine. Euro is a gallon jug of trinitrotoluene being transported over a bombing range held to the back of a four-wheeler by old rubber bands. One day it'll blow everything to kingdom come. But for today, my, my, it is all shine. It popped way up to the old overhead uptrend boundary & closed up there. If indeed it passes roughly 1.3875, it would run to $1.4000.
But there in that chart appeareth the inverse of the dollar index' falling wedge, namely, a rising wedge. I confess, the euro did break through the top of that wedge today, but that may amount to no more than a fake-out, a false break out that quickly reverses. Euro rose today on news from the European Central Bank commissar's meeting that they would keep their interest rate at 0.25%, & that everythin' in Euroland is jes' hunky-dory peachy, economy-wise. I reckon we'll see.
Yen gave up the ghost today and gapped down 0.74% to 97.03 cents/y100. This takes it below its 20 day moving average and to its 50 DMA, and pierces the lower boundary of its short-lived trading range. Part of this plunge was no doubt occasioned by the euro's quick rise, so let's see if it holds below 97.5 tomorrow.
Stocks behaved oddly today. Always makes me a bit leery when a market jumps way up but give up most of the day's gains by the close. Lack of commitment there. S&P500 made a new all time high close at 1,877.03, up 3.22 (0.17%). It's on its way, it seemeth, to validating a breakout over an earlier high (exceeding 1,888). High today was 1,881.94.
Dow still lags the other indices. Rose 61.71 (0.38%) to 16,421.89. Reason I keep harping on the Dow not confirming the other indices is I remember 2000 so well. Dow topped in January, others didn't top till March, but it blew the warning all that time. Dow showed similar behavior in January this year when for several days before the big drop it refused to confirm new highs in other indices.
Dow in Gold kept on dropping today, down 0.74% to 12.15 oz (G$251.16 gold dollars). Momentum is down, & 200 DMA stands nearby at 11.99 oz.
Dow in silver crossed again below its 20 DMA (763.21 oz) today, falling 1.39% to 761.19 oz. Come to think of it, we may have seen the upper limit of the upward correction two days ago.
On to our meditation, "Bull markets always climb a wall of worry." Plainly spoken, "As bull markets climb, there are always hundreds of reasons that argue they should rise further." However, in a bull (rising) market, all questions eventually resolve at higher prices, so the bull climbs that wall of worry.
Yes, I do have a purpose other than philosophizing. I'm thinking about silver & gold. Lo, ponder, & be still: gold mounted $11.50 (0.9%) today to close at a new high for the move, $1,351.70. The gain we attributed to the Ukraine war scare has not evaporated. Silver trotted right alongside & outpaced gold, jumping 30.3% (1.4%) to 2154.2c.
Only think that makes my heart race the least little bit about gold is that the high at $1,352.50 did not quite meet Monday's $1,355. Still, the close was higher. It's also trading in the high half of the Bollinger Bands, but not as smack-up against the top line as it was all through February. And for all the pause at the old $1,360 resistance, the move off the December low does not look complete.
I need not figure this out, as the market will tell us tomorrow by falling sharply away from $1,350 or punching right through it. In that case, you ought to buy it.
Silver's better performance today took the gold/silver ratio back below 63:1 for the first time in four days, to 62.747. This is also faint, but hopeful.
Silver has now twice hit the 200 day moving averages (2101c) twice bounced off, and now soared away. It needs only to close above 2218c (the recent high) to launch another rally leg. That, too, would be a spot to buy.
On 6 March 1836 after 13 days of fighting, the siege of the Alamo ended when Santa Anna's Mexican army of 3,000 defeated, overran, and killed the 189 Texas volunteers. But in one of history's oft- repeated turnarounds, 46 days later the victors became the vanquished when General Sam Houston defeated Santa Anna in an 18 minute battle at San Jacinto. About 630 Mexican soldiers were killed and 730 captured, but only 9 Texans died. The Alamo defenders managed to delay Santa Anna long enough to enable militia to gather under Sam Houston.
My favorite flag of the Texas War for Independence is called the Gonzalez Flag. Under a lone star it pictures a cannon over the motto, "Come and take it." It was the Texians' response to the Mexican commander's demand for the surrender of the weapon. The ensuring fight was the first of the war. The motto directly translates the response of Spartan King Leonidas to the Persian army's demand they surrender their weapons: "Molon labe -- Come and take 'em." It's the same response free men always make.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger