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THE SHORT-TERM CONSENSUS HOTLINE - SAMPLE
JUNE BONDS 100^20 (-0^): Despite the recent pullback in the stock market and indications of further rate cuts ahead, bonds have been unable to sustain a rally of any consequence. However, bonds continue to hold above recent lows (near 100) despite signs that the economy may be on the verge of a recovery, probably now discounting a healthier economy to some extent. March Durable Goods up .3% was the first improvement in this data since December. Also, new home sales are showing signs of life. Meanwhile, the tech sector remains quite soft with many areas of technology unlikely to report much improvement for a few months. We figure bonds are entitled to a bit more of a bounce, to correct the recent decline and to narrow the gap a bit between the long and short ends of the yield curve. Fed Funds futures have now priced in a 50% chance of another 50 basis point cut in May, which is probably priced into T-Bills and notes, but not bonds.
Steven Hochberg looks for a "one- to 2-week upward correction" in the bond market. Adding that a more severe decline from current levels is unlikely "until prices have a chance to correct some of the recent slide."
Glenn Neely, likewise, is on a short-term buy signal in bonds. He sees the current rebound as "wave-4 up of a terminal c-wave down." He recommends exiting ½ of his position on a rebound to 102.
WE REMAIN SHORT JUNE BONDS FROM 106¾. OUR STOP HAS BEEN TIGHTENED TO 103¼, STILL LOCKING IN A DECENT PROFIT WHILE REDUCING THE ODDS OF BEING STOPPED OUT. As suggested last week, our best advice is to take partial profits into this decline at current levels. But, officially, we want to give this position some room.
JUNE GOLD $262.60 (-$2.10): June gold has been treading water until yesterday when it sold off. Gold is still having difficulty managing a sustained advance.
Steven Hochberg notes that the recent series of higher highs and higher lows "defines the near-term trend as up," but he figures the larger trend remains down. Steven looks for resistance from $268.00-$271.50, likely to put a lid on a further advance. Only a close above $274.80, which he doesn't expect, would suggest that this recovery may be for real.
Glenn Neely says "it is obvious the rally in April is struggling (previous advances were larger and much faster). That suggests the daily uptrend may be ending." While Glenn expects another selloff, he will only sell short if June gold breaks $257.00.
While we suspect that a short-term low may be near, HERE WE REMAIN CONTENT TO STAND ASIDE.
MAY SILVER $4.39.70 (-$0.09.20): Silver, even more so than gold, had begun a decent recovery, and again, more so than gold, broke down yesterday. Steven Hochberg figured that silver could be headed to resistance at $4.52-$4.58, toward the 38% retracement level of the decline from the January 19 high ($4.92). Steven says "it would still take a drop beneath last Wednesday's $4.32.50 low to negate the near-term bullish potential and signal another leg down is underway."
We are still waiting for a further pullback to establish a long position with limited risk. WE WILL BUY MAY SILVER AT $4.33 RISKING $.08 TO $4.25.
I'll be back Sunday.
H. Schiller
Released Thursday at 11:00 am eastern