The Alternative Investor

Trading Blog Thursday (evening), June 12, 2025

6/12/2025

BROAD STOCK MARKET and GOLD TRADE ALERTS (10:00 pm EDT)

The broad stock market seems reluctant to rally this week, and it may be rolling over after yesterday's highs in all three indices (DOW, S&P 500, NASDAQ). Next week's strong reversal zone (June 13 - 23) actually begins tomorrow (Friday). I was anticipating a stronger rally into this time window creating a top followed by a significant sub-cycle correction. That may still happen, but the market could also turn down now and make a significant sub-cycle bottom inside the reversal zone. Either way, a strong correction could be imminent, and I'm going to play it safe and sell my long DOW position at tomorrow's market open. I entered a long position in the DOW on May 7 around 41,000, so we should have a small profit on this trade even if it falls tomorrow.

Gold prices remained below $3400 today, but it looks like they are breaking above there on the overnight market. Even though I am still expecting a deeper correction in gold, there is plenty of time for prices to move higher into next week's gold and silver reversal zone (June 16 - 25) to make a new high before resuming a correction. Here too, I am going to play it safe with my short position in gold and unload it while it's still below the price I bought it on April 22.
I am entering an order to sell (unload) my short position in gold at tomorrow's market open. If prices rise sharply into the reversal zone, I may consider selling short again over the next eight trading days. We are still on the sidelines of silver.

Crude oil prices have been rising (and are soaring on tonight's overnight market) due to rising tensions in the Middle East. It looks like a new medium-term cycle in crude began with the deep low of $54.33 (July contract chart) on April 9, and the cycle's trend looks bullish. It is too late to chase this rally, so our strategy now will be to wait for a significant sub-cycle correction to buy. We may get that soon if this current rally pushes a bit higher into the general reversal zone that starts tomorrow (June 13 -23). For now, we are still on the sidelines of crude oil.

Trading Blog Wednesday (late night), June 11, 2025

6/11/2025

UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:30 pm EDT)

It seems clear that all three of our broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles with their lows on April 7. All three then rallied from there and took their first sub-cycle corrections with a modest dip into May 23. From there, another rally has been progressing. In my last blog (May 27), I wrote:

"The next significant reversal zone is coming up in two weeks (June 13 - 23), so we can anticipate a rally into that time frame that should soon exceed those May 19 highs and possibly test the all-time highs of both indices."

Well, we are now approaching that reversal zone (it starts Friday), and the rally has exceeded the May 19 highs in all three indices; however, it is still below the all-time highs. The DOW is near 43,000 which is well below its all-time high of 45,073 from Dec. 4, 2024. The S&P 500 and NASDAQ are much closer to their all-time highs. If these latter two indices (or just one of them) can make a new all-time high without the DOW, we will have a strong bearish divergence signal. That might happen in this upcoming strong reversal zone (June 13 - 23), and if it does, it will be a good time to sell our current long position in the DOW. As I wrote in my last blog:

"...we have to be on guard as the market could turn down again. April 7 could have been the start of a new 3-year cycle in the broad stock market, but until that is confirmed, there is the danger of another steep correction before the year is over."

For now, I am holding that long DOW position, which I entered on May 7.

I entered a short position in gold on April 22 - the day it nearly touched $3500 ( it made an all-time high at $3496). In my May 27 blog I wrote:

" I am still looking for a deeper longer-term cycle correction to the $3000 level, or even a bit lower before we see gold rally to another new all-time high... but if prices rally back up and close above $3400, I may cover this short position."

This still applies. Gold prices fell sharply from that April 22 all-time high to $3127 on May 15, but then they rallied back up. They tested $3400 last week and may do so again this week or next. We enter a strong reversal zone for the precious metals next week (June 16 - 25). If resistance at $3400 holds, we might see prices plunge to a new low inside that time frame. But gold could also push up to a new high in that same window and THEN reverse back down. For now, I am holding my short gold position with a stop loss on a close above $3400.

Unlike gold, silver blasted off last week, and on Monday prices made a new 12 year high. While this is bullish, we note that if another high is made in the upcoming reversal zone, we could get a significant correction back down. We also note that silver's new high was made without a new high in gold, and this gives us a strong bearish divergence signal. I am staying out of silver for now. A corrective dip into next week's reversal zone might give us a buying opportunity.

Trading Blog (#2) Tuesday (late night), May 27, 2025

5/27/2025

MARKETS UPDATE (11:30 pm EDT)

It's most likely the DOW and S&P 500 started new medium-term cycles with their lows on April 7. Both indices rallied from there to highs on May 19 and then corrected modestly down 4 days to last Friday's lows, testing their 15-day moving averages on the last trading day of our strong reversal zone. Today they both shot back up and closed above those moving averages. Friday's low was most likely the first significant sub-cycle correction in the medium-term cycle, which seems to be bullish. The next significant reversal zone is coming up in two weeks (June 13 - 23), so we can anticipate a rally into that time frame that should soon exceed those May 19 highs and possibly test the all-time highs of both indices. This is why I entered a long DOW position earlier today (see trade alert below). Yes, the broad stock market looks bullish now, but we have to be on guard as the market could turn down again. April 7 could have been the start of a new 3-year cycle in the broad stock market, but until that is confirmed, there is the danger of another steep correction before the year is over.

Gold's medium-term cycle is still unclear. Last Monday I wrote:

"If prices fall to a new low this week closer to $3100 inside this current reversal zone, I will take profits in my short gold position. If they edge up, however, we could instead see an isolated high (top) and another reversal back down to new lows."

Prices didn't fall but did edge up to an isolated high on May 23 - the last trading day of a reversal zone for the precious metals - and then edged back down yesterday and today. I am still looking for a deeper longer-term cycle correction to the $3000 level, or even a bit lower before we see gold rally to a new all-time high. For now, I am holding my short position in gold, but if prices rally back up and close above $3400, I may cover this short position.

Silver most likely started a new medium-term cycle on April 7 (at $28.56). After a two week steep rise from that low, prices stabilized and now seem to be caught in a congestion zone between $32 and $33.50. It's not yet clear if this cycle is bullish or bearish, but last Thursday's high was in a reversal zone (now ended), so a significant correction down could be in progress. The depth of any sub-cycle correction may tell us the trend and whether prices are headed lower or higher. For now we are staying on the sidelines of silver.

Crude oil's medium-term cycle is not clear. If it started on March 5, the cycle is bearish and prices are headed lower. But if a new cycle started on April 9 with the deep low at $54.33 (July contract price), prices could be ready to rally significantly. Last week's isolated high ($64.19) was at the dead center of a strong reversal zone which suggests prices could continue lower, supporting the bearish view. I am staying on the sidelines of crude until we have more clarity on the cycle labeling.

Trading Blog Tuesday, May 27, 2025

5/27/2025

BROAD STOCK MARKET TRADE ALERT (3:30 pm EDT)

It looks like the broad stock market has made a sub-cycle bottom and is set to rally again. I am entering a long position in a DOW index fund today. An initial stop loss for this trade could be set at a close below last Friday's low. Traders may also go long tomorrow assuming the market doesn't break that stop.

I will post another blog later today with more detail on this and the other markets.

Trading Blog Wednesday (late night), May 21, 2025

5/21/2025

MARKETS UPDATE (11:30 pm EDT)

Today we hit the center of our strong general reversal zone (May 16 - 26), and all three of our broad stock market indices (DOW, S&P 500, NASDAQ) took a steep dive (esp. the DOW). Our anticipated sub-cycle corrective drop may be starting. We expect a 3 - 8 day correction down to at least test the 15-day or 45-day moving averages. If support is found there, we may be looking to go long for another rally, but for now, we remain on the sidelines.

Both gold and silver pushed higher today. Silver is testing its April 25 high ($33.66). If it can exceed that over the next few days with gold staying below its April 22 all-time high ($3496) or even its May 7 high ($3432), we will have a strong intermarket bearish divergence signal inside our reversal zone and a good place for a top and a significant correction down. We will watch for that now. I am holding my short position in gold as a correction seems imminent. I am still on the sidelines of silver.

Crude oil seems to have made a top today as it tested resistance around $64 (July contract chart) before falling back and closing at $61.57. Because we are at the dead center of our reversal zone, it seems likely a correction has begun and prices will go lower. The depth of any sub-cycle correction now will make more clear the labeling of the current medium-term cycle. A "triple-bottom" formation near $56 would be a bullish sign that a new medium-term and longer-term cycle has started. I am currently on the sidelines of crude.

Trading Blog Monday (late night), May 19, 2025

5/19/2025

MARKETS UPDATE (11:30 pm EDT)

In last Monday's blog on the broad stock market I suggested it was likely a new medium-term cycle had started in this market, and maybe even a 3-year longer-term cycle as well. I also wrote:

"If that's the case, we should be seeing their [DOW, S&P 500, NASDAQ] all-time highs being tested and possibly exceeded soon. Nevertheless, we are already four weeks into the cycle, so a sub-cycle peak and correction could be imminent. If this cycle is super bullish, we may not see a top until we enter the next strong reversal zone (May 16 - 26),"

Well, here we are approaching the center of this strong reversal zone, and all three indices are rallying to new highs. A correction could (should) be imminent. If the trend is to remain bullish (likely), then we should see a modest correction down to at least test the 15-day and possibly the 45-day moving averages. If the correction stays in that range, it may be a good spot to buy. For now, we remain on the sidelines of this market.

Gold prices made an isolated low last week just outside the May 16 - 26 reversal zone (which applies to the precious metals), but the rally from there has been weak. If prices fall to a new low this week closer to $3100 inside this current reversal zone, I will take profits in my short gold position. If they edge up, however, we could instead see an isolated high (top) and another reversal back down to new lows. I am currently holding my short position in gold.

Silver prices have been staying within a narrow range ($32 - $33) for the last two weeks. The isolated low on May 1 ($31.68) was too early for a sub-cycle correction (following the rally off the deep $27.54 low of April 7). I suspect prices will fall lower this week. I am staying on the sidelines of silver for now.

Crude oil's medium-term cycle could have started with the March 5 isolated low at $64.16 (July contract chart). If that's the case, the cycle has turned bearish (as prices have already fallen below the starting price), and we expect prices to head lower towards the $52 area. A less likely possibility is the start of a new medium-term cycle from the $54.33 low on April 9. With that labeling, this market could see some more rallying. My guess is the former and that prices will go lower. An isolated high in this week's reversal zone could be a top from which prices will fall. I am remaining on the sidelines of crude for now.

Trading Blog Monday (late night), May 5, 2025

5/5/2025

MARKETS UPDATE (11:00 pm EDT)

The DOW and S&P 500 have been rallying strongly off their deep lows on April 7 (36,611 and 4,835, respectively), and both have succeeded in breaking above their 15-day and 45-day moving averages. This strongly suggests they have started new medium-term cycles, and maybe even a new 3 year cycle. If that's the case, we should be seeing their all-time highs being tested and possibly exceeded soon. Nevertheless, we are already four weeks into the cycle, so a sub-cycle peak and correction could be imminent. If this cycle is super bullish, we may not see a top until we enter the next strong reversal zone (May 16 - 26), but it could also peak before then and make its final corrective low in that same time frame. We will have to wait and see how this play out. Any modest correction that stays well above the April 7 lows will probably be a good place to buy for a rally that should at least test this market's all-time highs. We are still on the sidelines of the broad stock market.

A significant low formed in both gold and silver on April 7, and both metals rallied sharply from there. Gold made a new all-time high at $3496 on April 22, but silver's rally to $33.66 on April 25 failed to even exceed its March high of $34.54. This creates a strong case of bearish divergence between the two metals, and indeed, both have fallen sharply from those highs. Today, however, gold is rallying sharply (but silver not so much). We will keep our eye on gold (as we sold it short at the price peak on April 22), but I suspect both metals will continue to fall lower - probably into our next reversal zone coming up May 16 - 26. A good stop loss for our short position in gold would be any break and close above $3500. I am maintaining my short position in gold (we are on the sidelines of silver) as I expect prices to fall at least to the 45-day moving average (now at $3125 and rising) and possibly even lower ($2900 - $3000).

Today crude oil made a double-bottom to its recent (April 9) low near $56 (July contract chart). As I've pointed out in recent blogs, it appears crude's trend has turned bearish, at least short-term, so it looks like prices could go lower. Although we may see a short-term bounce in prices from this support around $56, we are not in any reversal zones for two more weeks, so I suspect prices will turn back down and break that support.

President Trump is now promising a significant drop in gasoline prices (and the price of oil), and I think it would be foolish at this point to not take him seriously. Cycle analysis shows that crude could get as low as the $30 - $40 range by early next year. This market, however, could turn bullish again if the low from April 9 ($54.33) holds and prices can rally back above the 15-day and 45-day moving averages. I don't think this is likely, but anything seems to be possible these days. I am staying on the sidelines of crude for now.

Trading Blog Thursday (evening), May 1, 2025

5/1/2025

MARKETS UPDATE (9:30 pm EDT)

In my April 21 post on the broad stock market I wrote:

"These indices (DOW, S&P 500, NASDAQ) are now approaching those deep lows from April 7. Because we are in the center of another reversal zone (April 14 - 25), we might get a "double-bottom" formation this week which would support the idea of a new medium-term cycle and a new longer-term 3-year cycle starting together."

It looks like this may have happened with a double-bottom low around 38,000 for the DOW on April 21. All three indices have been rallying from that date with the S&P 500 and NASDAQ breaking above their 15-day and 45-day moving averages today. The DOW, however, may be hesitating beneath its 45-day moving average which could be a bearish sign. For now, I am remaining on the sidelines of this market.

We were expecting a sharp drop in gold, and we finally got it last Wednesday and again today with prices nearly touching $3200. That's a $300 drop from the April 22 high at $3495. We are not currently inside any reversal zones, and we were estimating a $400 - $600 fall in prices, so they could still fall lower. I am going to hold my current short position in gold for now.

Silver prices have also been falling and finding some support near $32, but they could also go lower before turning back up. I am staying on the sidelines of silver.

It was a good idea to bail out of our long crude position on April 22 as prices turned down the next day and have been falling since then. There may be some support near $56 (July contract chart), but as I pointed out in earlier blogs, it looks like this market's trend has turned bearish for now, and prices could go lower. We will stay on the sidelines of crude for now.

Trading Blog Tuesday, April 22, 2025

4/22/2025

GOLD TRADE ALERT (3:00 pm EDT)

Gold looks like it's forming a top today, and a deep correction down may be starting (as described in yesterday's blog). I am going to enter s short position in gold today. We are still on the sidelines of silver.

Trading Blog Monday (evening), April 21, 2025

4/21/2025

UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (10:30 pm EDT)

After rallying sharply off the deep low of April 7 (36,611), the DOW encountered resistance near its 15-day moving average last week and is now falling again. The S&P 500 is showing a similar pattern. These indices are now approaching those deep lows from April 7. Because we are in the center of another reversal zone (April 14 - 25), we might get a "double-bottom" formation this week which would support the idea of a new medium-term cycle and a new longer-term 3-year cycle starting together. A lower low this week could also define the start of these new cycles, but if these indices continue falling past this week (Friday is the last day of the reversal zone), then we may have to wait a bit longer for the bottom to a medium-term (and 3-year) cycle. The current medium-term cycle could have started on Jan. 13 or March 13 or April 7 (see my April 10 blog). If we do get a significant bottom this week, it may be a good spot to buy as a significant rally would be expected at the start of a new 3-year cycle. For now, I am still on the sidelines of the broad stock market.

As with the broad stock market, gold's medium-term cycle is not clear at the moment. A new cycle could have started with the $2835 low on Feb. 28 or the $2961 low on April 7. This may not be that relevant as either way, a longer-term 31 month cycle top is now due (overdue), and gold prices are now within the price range for such a top ($3400 - $3600, or even $3700). From this top, we anticipate a correction down of $400 - $600. Thus, a good short-selling opportunity may be imminent.

Today gold made a new all-time high at $3430 as silver barely made a new weekly high while remaining well below its yearly high (so far) of $34.54 on March 28. This creates a bearish divergence signal. Although we just exited a reversal zone specifically for the precious metals (it ended last Friday), we are still near the center of a general reversal zone that applies to both metals through the end of this week, so a top could be imminent. We will watch for a possible short-selling opportunity over the next few days.

Silver may have started a new medium-term cycle with its April 7 deep low of $28.56. Its sharp rise from there is now encountering some resistance around $33 (and the 45-day moving average) in the middle of a general reversal zone. If prices roll over here, they may head back down towards $30 and form a "double-bottom (not uncommon at the beginning or end of a cycle). If that happens, it may be a good buy spot, but if prices fall below $28, it would mean the cycle is turning bearish and we would stay on the sidelines. We are currently on the sidelines of silver.

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