Top technician Louise Yamada sees some troubling signs in the chart of the S&P 500, says the six-year market advance is now over.» Read More
Copper is just one of the commodities that has shown major weakness this week, and today it fell to the lowest level since October 2011.
Some worry that this could be bad news for the stock market. After all, the metal is sometimes called "Dr.Copper," because it is thought to check up on the market's health.
The checkup is not going so well.
Do you think copper is delivering a warning about stocks, or should investors not sweat it?
Vote in our poll and make your voice heard!
Is gold a valuable asset or a shiny relic from the past? That question reflects not just different opinions about a particular investment but a fundamental conflict in financial views.
Schiff, CEO of Euro Pacific Capital, is a well-known lover of gold—and its horrific plunge on Monday didn't change his mind one bit. Instead, he viewed it as a buying opportunity.
(Read More: Gold Settles Up After Prior-Session Plunge)
"I've been buying gold for about 12 years now," Schiff said. "I always buy more when the price is declining, because I'm confident that the price is going to continue to rise."
So what will drive it higher?
"These paper currencies are losing value, and people are going to look for a store of value," Schiff said. To him, that store of value will be gold.
Stocks rallied near session highs Tuesday, after major averages saw their biggest drop this year, boosted by a batch of upbeat earnings results and some better-than-expected economic reports.
(Read More: Look for More Downside on Stocks)
Brent crude futures were down $1.10 at $99.53 per barrel. It earlier hit $98.00, the lowest since July 2012.
U.S. light, sweet crude was down 69 cents to $88.02 a barrel after hitting a low of $86.06, its weakest since December 2012. Both were set for their longest losing streak since December.
Gold continued down its slippery slope on Monday and into Tuesday morning, as the market reached a low of $1,321.50.
After its steepest drop in 30 years, investors are finding value at these low levels, as the market is trading $70 up from the low and just below $1,400.
(Read More: Gold Rebounds After Previous Sessions's Rout)
On Monday morning, gold reached just above our first resistance at $1,428 before reversing course and continuing lower. Yesterday's early $1,385 low was taken out later in the session, as margin calls caused further liquidation.
It is no secret that gold is a fast market right now, and can trade $10 to $20 ranges in a less than a minute. We suggest using options to play this market right now, to make it easier to define your risk.
We expect to see some support at $1,355 to $1,360. The morning's high is just above $1,400—if we close back above here, it will signal a possible slowdown and consolidation. A close back above $1,424 to $1,428 will likely signal a consolidation higher, as investors find value. The major upside target is $1,474 to $1,478, and the major downside target is $1.300.90.
It goes without saying that we will be watching this market closely.
Markets trade in trends. On Monday, that trend flipped to negative.
So why was it such a pivotal day for determining short-term market direction?
The list of negative market factors begins with the dramatic sell-off in gold and other commodities. A market move of such magnitude, regardless of the underlying rationale, tends to be negative for the market, as the perception of instability pushes people into a risk-off mentality. Also, weak numbers out of China and Germany should add to the market weakness. The domestic terror event in Boston will also hurt overall sentiment.
After a 14 percent gain since Jan. 1, it is apparent that equities are due for a market pullback. If the current bounce in June S&P E-mini futures carries them up to 1,564, I would consider it a sell opportunity, with an objective of 1,532. A settle above 1,571 would stop me out of the trade.
U.S. drivers could see a further decline in gas prices at the pump, courtesy of world oil markets.
Crude oil on Monday hit its lowest level for the year. The tumble in black gold is leading to lower gas prices that may provide modest pocketbook relief just as the summer driving season arrives.
Halting economic growth in both the U.S. and China – the world's top two energy consumers – has sparked a deep sell-off that has driven Brent crude to a nine month low near $100 a barrel, with U.S. crude hitting its lowest since late December below $89. Analysts are concerned that sluggish global growth will undermine demand for oil.
Over the last three trading sessions alone, crude oil has lost over $5 per barrel, or approximately 6 percent of its value. So what's behind this move, and where is the bottom for Texas tea?
(Read More: Brent Crude Oil Tumbles Below $101)
Driving this move are the simple fundamentals of supply and demand. Last week, the Energy Information Administration once again downgraded its forecast for crude use around the world in 2013—and that was the third downgrade in the last few months. China also imported oil at a slower rate, which could be a sign that its economy is slowing. Meanwhile, Europe continues to struggle, and demand for Brent crude has also declined.
So while U.S. production has been strong, demand for gasoline and other crude products has been weak. The bottom line is that barrels of crude oil are starting to pile up, and that can only mean a drop in price.
However, I would be remiss if I did not mention the geo-political front, with North Korea causing the world the most stress at this point. I do not foresee a disruption in the supply of crude, or for that matter, in the production, Even if the North launches a missile, it will most likely fall into the ocean. But I did say "most likely." If the scenario is worse than this, then you could see a spike in prices, at least in the short-term.
So where is the bottom in crude? The next support area I see is at $88 to $87.50. Under that, there is strong support at $85.50 to $85.
Crude could soon correct because its drop has been so fast—but after that, a test of these areas seems probable.
Gold bugs have gotten zapped.
After trading below $1,500 for the first time since July 2011, gold entered into a free-fall on Sunday night and into Monday morning, as investors sold out of their holdings. A major psychological level, especially for bulls—$1,480—was a line in the sand.
(Read More: Gold Slumps to 2-Year Low Below $1,400)
After opening at $1,478.2 and trading to a high of $1,493, the metal skidded more than $100 to reach $1,385. The downtrend began last week after $1,526 was taken out, but disappointing GDP data out of China showing a slowing economy was a major catalyst Sunday night.
Two things put investors on edge last week. The first was the idea that a nation (Cyprus) will need to sell gold reserves to help finance a bailout, and the fear that this will become the norm. The second was that Goldman Sachs lowered its forecast amid moderating inflation in the U.S.
Traders must remember that this market is moving at a very fast pace. Sunday night, gold hit an initial low of $1,422, and that's where the market will find resistance. Above there, $1437.50 will be the next level of resistance.
(Read More: Gartman on Gold: We've Never Seen Anything Like It)
The bottom line is that gold is in an intermediate downtrend. However, it has reached a technically oversold level, which is why I am expecting a corrective bounce in the next few sessions. Since we have fallen over $200 in three sessions, we could bounce back to the $1,475 area.
If you want to play the long side of gold, consider the May $1,475 strike calls, which cost $1,050 each. This will give you 10 days of long exposure. And remember, as with any counter-trend trade, capitalize quickly. You might even consider getting short in the $1,475 area if that price is reached.
Unless JPMorgan Chase reports "blowout earnings" on Friday, CEO Jamie Dimon could be pushed out as chairman, especially following his failure of controls over mortgage foreclosures and the London Whale trading debacle, banking analyst Dick Bove said.
To Bove, the timing of this earnings report is critical, since JPMorgan will host its annual meeting on May 21.
"He can go in saying, 'Look at how much money we're making' and as a result of that, any thought of him being pushed out of the chairman's position will be eliminated," said Bove, an analyst with Rafferty Capital. "If JPMorgan does not have blowout earnings, then I think he goes into that meeting (with) a level of uncertainty about whether he holds onto the chairmanship position."
Last month, JPMorgan's board of directors said it "strongly endorses" keeping Dimon as both its chairman and CEO. The comment, contained in the opening pages of the company's proxy filing, is a more vigorous affirmation of the same view the panel took last year when it opposed an unsuccessful shareholder proposal to split the roles. (Read More: Jamie Dimon Warns of More Actions by Regulators)
It's earnings season.
And JPMorgan Chase will be among the first big U.S. banks to report earnings. The financial institution is scheduled to deliver its results before Friday's opening bell.
That said, we want to hear from you - do you think financials will lead the market higher this year?
Vote now in our "Futures Now" poll!
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