The broad stock market continues to rise this week bolstered by a eurozone bailout extension for Greece and Federal Reserve Chairwoman Janet Yellen's statements to Congress that interest rates will likely not be raised before the middle of the year. Of course, the need for more bailout money for any country is not really good news, but equity markets are short-sighted and love quick fixes. The DOW, S&P 500 and NASDAQ are all making new highs as we approach next week's big reversal zone. The first week of March (+/- several days on both ends) could be a significant turning point for many markets. If the DOW now pushes into the 18,300 - 18,500 area (or perhaps higher) and stalls (especially towards the middle of next week), we may have a good spot to sell short. We will be watching for this. Still on the sidelines.
In Monday's blog post on gold I wrote: "There is, however, a technical configuration in the charts this week that could lead to a sudden surge in prices from a bottom anytime this week. If this happens, we could get a high into next week instead of a low and we would then be looking to sell short from that high."
That might be happening as both gold and silver prices are now rising from their Monday lows. This rally, however, does not seem strong (so far) and there is still time for prices to drop back down to new lows into next week. Ideally, that is what I would like to see (lows next week) as it would be an ideal setup to go long. Should this rally gain more momentum, however, prices could surge into next week. In that case, we would be looking for a top to sell short.
Out of gold and silver for now.
As with gold, it is not clear if crude oil prices will fall or rise into next week's reversal zone. If prices fall and make a new low below $45 (or even stall in the $45 -$47 area), it will likely be a good spot to buy. On the other hand, we should be looking to sell short any rally into next week, especially one that stalls at the $55 level. We will wait to see what happens. On the sidelines.