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Trading Blog Wednesday (late night), February 26, 2025

2/26/2025

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

All three of our broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles on Jan. 13, and they are all currently taking their first significant sub-cycle corrections. That said, we note that the NASDAQ's cycle is looking bearish, while the S&P 500's cycle looks bullish. The DOW is somewhat in between.

The peak of the NASDAQ's first sub-cycle came early (Jan. 24) and it was notably not a new all-time high (bearish sign). The subsequent corrective drop nearly touched the start of the cycle (Jan. 13 low) yesterday. We are in the center of a general reversal zone, so that might be the sub-cycle bottom; however, we enter another, stronger, general reversal zone next week (March 3 - 18), so this index could push lower. If it breaks below that Jan. 13 low (18,831), the cycle trend will officially turn bearish and be pointed down for many more weeks.

In contrast to the NASDAQ, the S&P 500 made its first sub-cycle high quite late (Feb. 19), and it was an ALL-TIME high (bearish divergence to the NASDAQ and DOW). It has corrected down from that high, and it made an isolated low yesterday well above the Jan. 13 start of its cycle just below its 15-day and 45-day moving averages. There is a strong support line at 5,900 (which was almost touched yesterday). If this index turns up now and makes another all-time high, the trend will be officially bullish.

The DOW's first sub-cycle high was on Jan. 31, like the NASDAQ, it was not a new all-time high. It has corrected down about halfway, and it could either go back up for another high or continue down to a lower low.

Clearly, we have mixed signals in this market right now. Will the S&P 500 lift the other indices into a bullish trend or will the NASDAQ pull them down into a sell-off? I am staying on the sidelines until the directional momentum in this market is clear.

It is very late in gold's current medium-term cycle. This cycle has been very bullish, but a final top to the cycle is now due, and it could happen anytime over the next two weeks. (It may have already happened with Monday's all-time high at $2958.) Once the top is in, we expect a sharp 2 - 5 week decline to the final cycle bottom. The decline may be even longer (and stronger) than normal as we are also expecting the bottom to a longer-term 2.5 year cycle soon. Our trading strategy now is to wait for the bottom of this correction to buy. With the ongoing Trump tariffs and an expected audit of Fort Knox by his administration, we expect gold prices to continue to be bullish into the end of this year (especially if any audit reveals a gold deficit.) I am currently on the sidelines of gold.

Silver's medium-term cycle is younger than gold's, and it is too early for the current corrective drop from the Feb. 14 high at $33.34 to be approaching a final cycle bottom. But we ARE in a time frame for a sub-cycle bottom. Tuesday's low at $31.35 may have been it, but if gold's potentially imminent correction pans out, both metals could fall significantly. Although I am tempted to buy silver now, I am going to wait until its low corresponds to a more significant low in gold. I am staying on the sidelines of silver for now.

Trading Blog Tuesday, February 25, 2025

2/25/2025

UPDATE ON CRUDE OIL (10:30 pm EST)

After closing above the 15-day and 45-day moving averages last Thursday, crude oil dropped back below those averages on Friday. Today prices broke below $70 and closed near $69 (April contract chart). Although this commodity is taking a bearish turn here, this new low is being made near the center of a new general reversal zone (Feb. 21 - March 3) and also inside a new reversal zone specifically for crude (Feb. 24 - March 5). This means a reversal back up could be imminent. I am going to lower my stop loss for my long position in crude to a weekly close below $67.75 (this was the likely start of the current medium-term cycle) and hold that long position for now.

Trading Blog Thursday (late night), February 20, 2025

2/20/2025

MARKETS UPDATE (11:30 pm EST)

In last Thursday's blog on the broad stock market I stated:

"It seems like a new medium-term cycle started with the recent lows on Jan. 13 in the DOW and S&P 500, although there's still a chance a new cycle began on Nov. 4 in both indices. In both cases, a sub-cycle crest is due soon (probably this week or next) which should be followed by a significant sub-cycle correction over 3-8 days...
To maintain a bullish trend, I would ideally want to see all three indices make new all-time highs either this week or next."

Well, only one index - the S&P 500 - gave us a new all-time high this week. The NASDAQ has been relatively flat, and the DOW has been trending down. This gives us another bearish divergence signal. It's still hard to tell if these indices are ready to roll over. If they do that now, we could see a significant sell-off into our next two back-to-back general reversal zones - one coming up tomorrow (Feb. 21 - March 3) and then a second (stronger) one coming up March 3 - 18). Such a roll over would tell us that the cycle trend is turning bearish.

On the other hand, if the DOW can push up to a new all-time high into next week (perhaps with one or both of the other two indices), we could get a significant top in a reversal zone. Yes, that top would soon be followed by a correction down, but the new all-time highs would confirm the bullish cycle trend, and we would probably want to buy the bottom of any correction - as long as it stays above the lows of Jan. 13. We will stay on the sidelines of this market until the trend - bullish or bearish - can be confirmed.

Gold and silver prices continue to push higher this week with gold making yet a new all-time high today at $2954. We note, however, that silver is still below its high from last week ($33.34) and also below its $34.85 high from Oct. 2024. This gives us a bearish divergence signal between these metals. A correction down could be imminent, especially as we enter a new reversal zone tomorrow. We are still looking to buy any corrective drops in both metals, as long as they don't go TOO low. We are currently on the sidelines of both metals.

Crude oil prices are rising this week which is good news for our long position (entered on Jan. 24). We're still a bit in the red with this trade, but prices are now closing above the 15-day and 45-day moving averages, and this market's trend looks bullish. We need to see prices start closing above $74 and eventually above $78 to confirm a bullish cycle. I am holding my long position in crude for now.

Trading Blog Thursday, January 13, 2025

2/13/2025

UPDATE ON CRUDE OIL (2:30 pm EST)

After testing strong support near $70 (April contract chart) last week, crude oil prices rallied strongly and broke above the 15-day and 45-day moving averages this week on Tuesday, but today they are now again below those averages and retesting that $70 area.

As with other markets right now, the medium-term cycle labeling of crude is ambiguous. We may be in an older cycle that started with Dec. 6's low at $66.41. The alternate view is that a new cycle started with last week's low near $70. In that scenario, we are forming a 'double-bottom" to that low today, which has bullish implications. In both scenarios, we are now in a time frame for a significant low and a significant rally to follow. A good target for such a rally would be a test of January's high around $78. A close below $70 and especially a close below $66 would change my bullish view of this market.

I am still holding my long position in crude (which we entered on Jan. 24). I am maintaining a stop loss for this trade on a close below $70.

Trading Blog Wednesday (late night), February 12, 2025

2/11/2025

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

The broad stock market has been indecisive and stagnant over the last two weeks. It seems like a new medium-term cycle started with the recent lows on Jan. 13 in the DOW and S&P 500, although there's still a chance a new cycle began on Nov. 4 in both indices. In both cases, a sub-cycle crest is due soon (probably this week or next)
which should be followed by a significant sub-cycle correction over 3-8 days.

We should note, however, that we still have a bearish divergence signal in place because the S&P 500 made a new all-time high in January while the DOW and NASDAQ did not. All three indices have come down a bit from their January highs. If they continue to move down, we may have to assume the sub-cycle crests are already in and a correction may be underway that could exceed 8 days. That situation would turn the current trend of this cycle from bullish to bearish.

My preference is for the first - bullish - scenario where the sub-cycle crests are still ahead. To maintain a bullish trend, I would ideally want to see all three indices make new all-time highs either this week or next.. If that happens, we would probably wait for a 3-8 day corrective dip to buy. For now, I am remaining on the sidelines of this market.

Gold prices"broke out" at the end of January when they exceeded their all-time high from October 2024 ($2790). Prices have been rising steadily from there, and the overall trend in this metal is bullish. This is supported by the fact that we can now confirm gold's low of $2541 on Nov. 14, 2024 as the start of a new longer-term 50 week cycle, and it is still early in this cycle. Early stages of cycles are almost always bullish.

Despite this longer term bullish trend, we note that it is late in the current medium-term cycle (which also started on Nov. 14), and so a cycle peak is imminent and will be followed by a significant final correction to the medium-term cycle bottom. This means it's a bit late to be chasing this rally, and I am going to wait for the next corrective low for an opportunity to buy at the start of the next medium-term cycle.

The current vigorous rally in gold may be the result of some nervousness over President Trump's economic agenda and his implementation of tariffs on foreign countries which could make "safe haven" investments like gold more appealing (please note that I am not making a political statement here but simply observing market sentiments and reactions). If this is the case, gold prices could experience a sustained rally through most of this year. Cycle projections show that the current rally could accelerate up to $3000 or even higher, but as I stated above, it's late in the current medium-term cycle, and we are now in a time frame where a peak could happen, so the price could roll over anytime over the next 3-4 weeks. Today gold prices seem to be retreating from yesterday's high at $2940. This might be a turning point. If not, we enter a minor general reversal zone in the last week of February (Feb. 24 - March 3), so that could be another time window for a final peak. Either way, I am staying out of gold for now and anticipating a buying opportunity at the start of the next medium-term cycle.

Silver's current medium-term cycle is not quite as old as gold's, but it too is in a time frame for a significant peak and correction down. I am going to assume the current medium-term cycle started with the the low of $28.78 on Dec. 19 (with a "double-bottom" at $28.80 on Dec.31). The first sub-cycle correction came on Jan. 27 at $29.78. The peak of a second sub-cycle should be happening soon. It's possible it may have already happened with last week's high of $32.59 (that would be bearish). If not, we may see it peak near the end of this month and followed by a significant correction down. In that scenario we would look to buy the bottom of the correction. If prices continue to fall from last week's high, we could see a significant bottom at the end of the month instead of a top. That would also give us an opportunity to buy.

Like gold, silver's overall trend looks quite bullish right now. Our first price target could be a test of $35, and after that, $37 and possibly higher. I am on the sidelines of silver for now and waiting for a corrective low to buy.

Trading Blog Thursday (late night), February 6, 2025

2/6/2025

MARKETS UPDATE (11:00 pm EST)

Despite several bearish technical signals early this week, the broad stock market has been rallying strongly off Monday's lows. Monday was not inside any reversal zone, so the chances of this being a major turning point are slim (but not impossible). Right now, the DOW is very close to making a new all-time high while the S&P 500 and NASDAQ have a little more distance to cover before doing that. If the DOW does make a new all-time high without the other two (or even one) indices, it will give us yet another bearish divergence signal and a reason for this market to fall. On the other hand, if all three indices can make new all-time highs we could see a bullish "breakout" and more rallying - at least until the first week of March when we encounter another strong general reversal zone (March 3 - 18). I am remaining on the sidelines of this market for now.

Gold prices pushed higher this week and made a new all-time high ($2880) on Wednesday. This high was outside any reversal zone. A sub-cycle correction is due (even overdue) in this market anytime now, but because there are no reversal zones for the rest of this month, prices could continue to rally with only minor corrective dips. The medium-term cycle may distort under these circumstances. I am staying on the sidelines of this metal until a significant correction gives us a good opportunity to buy.

Silver also rallied this week, and prices are testing the Dec. 12 high of $32.31. This is suggesting the medium-term cycle started with the "double-bottom" lows on Dec. 19 and Dec. 31. As with gold, a sub-cycle correction is due and could happen anytime. Any moderate correction that holds above $30 may be a good spot to buy. I am still on the sidelines of silver.

My long position in crude oil (entered on Jan. 24) is being tested again this week. Last week a support line at $72 (March contract chart) held, but this week that support broke, and prices have also breached the 45-day moving average. There is another strong support area just above $70. Tomorrow is the last day of a reversal zone specifically for crude, so if prices are going to turn up they need to do that NOW to maintain the idea that this cycle is still bullish.
I am still holding my long position in crude.

Trading Blog Monday (late night), February 3, 2025

2/3/2025

MARKETS UPDATE (11:30 pm EST)

There are currently two possible ways to label the current medium-term cycles of the DOW and S&P 500:

1) They may have began with their lows on Nov. 4 (41,647 in the DOW and 5,696 in the S&P 500) or

2) They could have started with their more recent lows on January 13 (41,844 in the DOW and 5,774 in the S&P 500).

Regardless of which labeling is correct, it seems like significant tops have formed in all three of our market indices (DOW, S&P 500, and NASDAQ) all inside our recent strong general reversal zone (Jan. 22 - 31). Furthermore, all three indices have made "double-top" formations with only one index (the S&P 500) hitting a new all-time high without its two companions (bearish divergence). This is a strongly bearish picture and suggests a significant correction down is in progress. We will not enter another reversal zone until the first week of March, so this market has plenty of time to fall before hitting a significant bottom and turning back up again. Any correction now that goes below the Jan. 13 lows and especially the Nov. 4 lows mentioned above would be a VERY bearish signal that would indicate a serious correction is underway. I am staying on the sidelines of the broad stock market for now.

Gold made a new all-time high today at $2828. This high is two days out of our reversal zone for the precious metals but still within a potential "pivot point" range for gold. A downturn could (should) happen now, and if it does, we will be watching for a corrective low to test the 15-day and/or 45-day moving average that may be a good spot to buy.

It's still not clear if silver started a new medium-term cycle with the double-bottom lows of Nov.14 and Nov. 28 or the double-bottom lows of Dec. 19 and Dec. 31. In the former case, the cycle has already turned bearish because prices have gone below the start of the cycle. A break and close above $32.31 would make the second scenario more likely. Prices are staying under last Thursday's isolated high ($31.71) which was made on the last day of the reversal zone for precious metals. A downturn could be imminent. The depth of any correction will help us define the proper labeling of the cycle.

We are staying on the sidelines of both gold and silver for now.

Crude oil prices seem to be finding support around $72 near the 45-day moving average. We are at the center of a reversal zone specifically for crude (Jan. 28 - Feb. 6), so this is a good time for a reversal back up, although we could see a lower low between now and Thursday. I am still holding my long position in crude for now.