Image Source: Pixabay

Fundamentals

The Consumer Price Index inflation rate slowed at 8.3 percent, but inflation is still at high levels and it has risen over a short time period. The 10-Year note is at 3.01, moving back above 3 percent. We may have reached a strong resistance level for the 10-Year Note at about 3.13. The ceiling seems to be at about 3.25. This is causing a reversal in the market, with the Nasdaq and S&P moving back up.

The 10-Year Note trading at 3 percent puts the Dow Jones at about 4100 as fair value, so trading at around 4,000 makes it somewhat undervalued in terms of both the Nasdaq and the S&P.

The Variable Changing Price Momentum Indicator (VC PMI) appears to be indicating that we are looking at a bottom unfolding in stocks. Nasdaq is building a bullish price momentum within the bigger downtrend. The floor appears to be around 12,015. It could gain momentum up to 12,600 or even up to 13,092. There is resistance around 12,550 to 12,700, which needs to be broken. The odds appear to be that the Nasdaq will move up with more short covering.

We appear to be building a bottom in gold, silver, the Nasdaq, and S&P. If the 10-Year Note goes below 2.75, it would confirm that the inflation numbers have peaked and interest rates have also peaked, which would be bullish for commodities and stocks.
 

More Supply Chain Disruptions

One thing that the mainstream media appears to be missing is the closure of the Black Sea ports, which cuts Ukraine off from the world, and Ukraine is a breadbasket for the world. Russia is bombing silos and fields in Ukraine, which reduces grain and other agricultural exports from Ukraine. Sanctions are also keeping Russian agricultural products out of the global market. Poorer nations, especially in Africa and the Middle East, are dependent on such exports to keep food prices down.

We are in the midst of not only a war in Ukraine but an economic war between Russia and the West, with China dealing with its COVID lockdowns. The supply situation appears to be destined to get worse, which will raise food prices even more. Western sanctions against Russia appear to be contributing to increasing inflation. The balance is between the economy and the war, with Russia seeking to control the oil and gas in the Black Sea region, which is a major producer.

In terms of rates, the Feds face the risk of rising interest rates too fast, too soon, but the market has already moved the 10-Year Note above 3 percent, while the Fed talks about tapering and rising interest rates. The market, in a sense, is doing the Fed’s job.
 

Price Direction and Standard Deviation

Silver

Silver is at $25.85. We recommended long silver at the weekly Buy 2 level of $21.37 and Buy 1 level of $21.87. We have a conflicted picture. The weekly numbers for silver indicate that we have a lot of support in this area. This is where you want to accumulate supply, even if the market gives us a short signal short term. We are at an extreme level below the mean, where the odds greatly favor the market reverting back up. We are probably going to get more short covering in silver. We are trading above the weekly level of $21.87. This is now a support area.

The daily market momentum is bullish, and the weekly target is $22.61 according to the artificial intelligence of the VC PMI. Yesterday we seemed to put in the low for this movement at $21.15. We have buyers coming into the market and the market may be changing to a bullish trigger point with $22.61 as the weekly target.

Gold

Gold came back up above the weekly Buy 2 level at $1821. $1851 is the weekly Buy 1 level with a daily target of $1856, which was completed. Now we are backtesting the $1851 level. We appear to be building a bullish price momentum. We hit $1856, so now a close above $1846 will activate another daily bullish trend momentum. If we break it down, we could reach $1827, which is the daily Buy 1 level. However, the weekly numbers are in a major area of support, where you should accumulate long positions.

We have been buying the dips in gold to add to our long-term position in gold.