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Trading Blog Thursday (night), March 28, 2024

3/28/2024

MARKETS UPDATE (10:30 pm EDST)

The broad stock market continues to be stubbornly bullish and seemingly reluctant to take any significant corrective drop, despite the fact that our medium-term cycle labeling for all three indices (DOW, S&P 500, NASDAQ) indicates that they are all overdue for a final top and a subsequent sharp and significant correction down. We noted in a previous blog that the DOW may have already completed its medium-term cycle bottom with its March 5 low at 38,457. If that's true, then the DOW has started a new medium-term cycle and would be very bullish. But the S&P 500 and NASDAQ charts do not show a similar alternate labeling, so the prospect of a strong corrective drop is still looming over this market - at least for these latter two indices.

Today the S&P 500 made yet another new weekly (and all-time) high, and the DOW came very close to doing the same thing. The NASDAQ, however, remained significantly below last week's high, so we have yet another bearish divergence signal between these indices. We are also inside a potential "pivot point" for this market (March 27 - 29), so yes, we could get a strong turn-down now. The next strong general reversal zone is coming up April 22 - May 3. That would be the ideal spot for a final corrective bottom, but because it is so late in the cycle, we could even see a sharp correction start now and bottom inside a weak reversal zone coming up next week (April 1 - 10). Either way, we are still watching for a medium-term cycle bottom to buy as this market could continue to rally strongly into the summer (although beyond that we are expecting a very significant longer-term correction down).. We are currently on the sidelines of the broad stock market.

Gold and silver prices rallied strongly today. Gold is looking very bullish as it has now broken clearly above the "triple top" formation at $2060 - $2070 on Aug. 2020, March 2022, and May 2023 and is making new all-time highs (today reaching $2231). Gold has also been rallying strongly from the start of a new medium-term cycle on Feb. 14 (at $1986). This new cycle's first sub-cycle dip may have happened with last Monday's low at $2146, or a deeper sub-cycle correction may be imminent. Either way, we are going to continue holding our long position in gold and try to ride out any corrections, as this cycle is still relatively young and gold seems poised to rally higher. An estimated target for the top of the current medium-term cycle could be around $2300 - $2380.

Silver also started a new medium-term cycle on Feb. 14, and it may have made its first sub-cycle dip with yesterday's low at $24.34, but it could still go lower. Friday through next Monday is a potentially strong "pivot point" for both gold and silver, so a new low in that time window would not be unexpected. As with gold, however, we are going to try and ride out any corrections in silver right now as this new medium-term cycle's trend looks bullish. To confirm that we will have to see prices start closing above last week's high at $25.74. We went long in silver on March 1 around $23, so we already have a profit buffer on our trade and can afford to ride out any further dips that stay above $23. A clear break above $25.74 could get us on track to a target range of $27 - $35 by the end of this year.
We continue to hold our long position in silver.

Crude oil prices rallied strongly today and exceeded last week's high of $83.12 (May contract chart). Prices also closed above an upward sloping trend channel that has been in place since December last year, which is a bullish sign (as long as prices can hold above that channel - now around $82.40 and rising).

As I mentioned in Monday's blog on crude, the sub-cycle labeling of the current medium-term cycle is a little unclear. But we know the cycle is old and near completion, so a final top is imminent and will be followed by a final sharp correction down to the cycle bottom. That bottom is due anytime now by mid-May. Because the final corrective drop should take 2 - 5 weeks, the final top cannot be far away. We may even see it this week as today and Friday defines a potentially strong "pivot point" for this market (and others). Also, next week we enter another (somewhat weak) general reversal zone (April 1 - 10). After that, we don't have any reversal zones until the last week of April (April 22 - May 3, a very strong reversal). Based on all this, a likely scenario could see a final top in crude this week or next followed by a sharp correction down into a final bottom in late April/early May. Crude still looks very bullish into the end of this year, so we will be looking to buy this current medium-term cycle bottom, wherever it ends up landing. We remain on the sidelines of crude for now.

Trading Blog Monday, March 25. 2024

3/25/2024

UPDATE ON CRUDE OIL (3:00 pm EDST)

The current medium-term cycle in crude oil (which started with the $68.85 low on Dec. 13, 2023 - May contract chart) is getting old. This means we should be anticipating the cycle's final peak soon, followed by a sharp correction down to the final cycle bottom (which is due anytime by mid-May). The current labeling of sub-cycles in this market is ambiguous, but it looks like the low of $76.43 on March 11 could have been a significant sub-cycle bottom. The steep rally from there broke bullishly above the resistance of an upward sloping channel line and made an isolated high ($83.12) on March 19 before dipping back below the line. That isolated high was inside last week's general reversal zone, so if it holds, it could be the final top of the current medium-term cycle. If so, prices should now fall sharply to the final cycle bottom. But if instead crude rallies above $83.12, we will have to wait a little longer for the final top and a subsequent correction that should last at least two weeks and test the 15-day moving average (now at $79.80 and rising).

The bottom line here is that we are waiting for the final corrective bottom to the current medium-term cycle in crude for an opportunity to buy. This market looks very bullish into the end of this year, but we are being very cautious in our trading at the moment because we are still not certain if a long-term 4-year cycle in crude ended way back on May 4, 2023 around $65. If it did, crude should rally strongly now. But if that 4-year trough is still ahead, prices could take another steep drop back to the $60 - $65 area anytime before July before any serious rally can get underway. If crude can rally and close convincingly above $83.12 soon, we will assume that 4-year trough is behind us and a new bullish 4-year cycle has started. For now, we remain on the sidelines of this market.

Trading Blog Thursday (late night), March 21, 2024

3/21/2024

UPDATES ON THE BROAD STOCK MARKET, GOLD, and SILVER (11:30 pm EDST)

Yesterday's FOMC meeting concluded with the Fed leaving rates unchanged (as expected). The Fed also reaffirmed that there would be three rate cuts in 2024; however, Fed Chairman Jerome Powell expressed caution in going too fast with rate cutting as he pointed out that lowering inflation was still a "bumpy road to 2%". This somewhat hawkish tone was reflected in the fact that Fed officials cut their proposed number of rate cuts for next year from four to three. Nevertheless, Wall street shrugged off any inflation concerns and charged full speed ahead with confidence in their anticipation of this year's cuts.

The DOW gained 400 points yesterday, and another 269 points today, closing at a new all-time high. The S&P 500 and NASDAQ are also making new all-time highs this week, so all of our bearish divergence signals are now negated. Our current reversal zone continues through tomorrow, so we could still see a final medium-term cycle top either today or tomorrow in these indices, although the lack of a bearish divergence signal is now putting a slight damper on that scenario. As I mentioned in my last blog on the broad stock market, there's a chance that the DOW started a new medium-term cycle with its March 5 low at 38,458. If this market continues to rally strongly into next week, we will have to consider that possibility. We remain on the sidelines of the broad stock market for now.

While Wall Street seemed to ignore Mr. Powell's slightly hawkish rhetoric, the U.S. Dollar Index seemed to appreciate it as it surged back up to 104 and closed back above its 15-day and 45-day moving averages. This, in turn, put a damper on the closing prices of gold and silver. Although gold rallied to a new weekly (and all-time) high above $2200 in early morning trading, prices quickly fell back down and closed around $2181. Silver also made a new weekly high ($25.74) early, but then fell sharply to close at $24.76. These highs were made in the center of a potential "pivot point" for both metals. This could be a significant sub-cycle high for silver because this metal only dropped slightly from last Friday's high for three days and stayed well above its 15-day moving average. In after hour trading, silver is now approaching that 15-day moving average, so we could see it fall further over the next several trading days. We will continue to hold our long position in silver as long as the drop remains modest. Let's set a stop loss on a close below $24 for now.

Gold may have finished its sub-cycle correction from its high on March 8 ($2193) with its March 18 low ($2146) six trading days later. If so, it is starting a new sub-cycle and should be bullish. But if today's high was the top of the first sub-cycle (instead of March 8), then a corrective drop could be starting to again test the 15-day moving average. We went long in gold yesterday, so as with silver, we will try to ride out any corrective dips that fall below $2146, as long as they don't go TOO low. If gold gets below the 15-day moving average, the next line of support would be around $2100. We can use that as our initial stop loss point as we hold our long position in gold.

Trading Blog Wednesday, March 20, 2024

3/20/2024

GOLD TRADE ALERT (2:30 pm)

It looks like it's time to buy gold as prices have fallen into our reversal zones and near the 15-day moving average.
Buying gold today. (We already bought silver on March 1, so we are no long in both metals.)

Trading Blog Monday, March 18, 2024

3/18/2024

MARKETS UPDATE (10:00 pm EDST)

The broad stock market continues to be amazingly buoyant and seems reluctant to take any serious corrections even though a significant corrective drop is now due (overdue) in all three market indices (DOW, S&P 500, NASDAQ). The current medium-term cycles for these three indices are very old and due for a 2-5 week corrective drop down to their final cycle bottoms. The DOW's last high was on Feb. 23 (39,282), and it fell from there to make an isolated low almost two weeks later on March 5 (38,457). There's a slight possibility of that low being the end of the old medium-term cycle and the start of a new one, but if so, this index should be very bullish now, which doesn't seem to be the case. Furthermore, both the S&P 500's and NASDAQ's last highs were on March 8 - only one week ago - and we expect at least two weeks for a final correction to a medium-term cycle bottom.

For now, let's stick with the idea that the final highs are in and a corrective fall is in progress. If instead these indices push to new highs this week, we will expect those highs to be the final cycle tops with a reversal to follow because our current strong reversal zone (March 14 - 22) ends on Friday (and we won't see another until the last week of April). We are still on the sidelines of the broad stock market.

Both gold and silver started new medium-term cycles on Feb. 14 (Valentine's Day - easy to remember) and both metals have been rallying strongly from there. But both are now due for their first sub-cycle corrections. A typical sub-cycle correction would see a 3 -8 day pullback, and we would like to see it test the 15-day moving average. Gold has now fallen 6 days from an isolated high ($2193) on March 8, and it is approaching its 15-day moving average. Tomorrow is the dead center of our current general reversal zone, and Tuesday through Thursday could be a potential "pivot point" for both gold and silver. Let's look for a spot to buy gold over the next few days. We remain on the sidelines of gold today.

Silver's last isolated high ($25.41) was just last Friday, and today prices are down a bit from there. We may see more pullback over the next several days to test the 15-day moving average (now around $24 and rising steeply), but then we expect prices to resume their rally back up. We are currently long in silver with a good profit (we bought silver on March 1). Let's hold our long position for now and ride out any corrective dips this week. If prices do test the 15-day moving average this week, it could be another opportunity to buy if not already long.

Crude oil may have made a significant sub-cycle low last Monday at $76.79 (April contract chart), which was inside a reversal zone for crude (Feb. 21 - March 13). But crude is now making a new weekly high inside our current general reversal zone (March 14 - 22) as it tests strong resistance between $82 - $84. A reversal and another sub-cycle low could be imminent. We missed buying last week's correction, so we'll have to wait for the next one.

One concern with crude that we've had over the last month or two has been identifying the bottom of a longer-term
4 year cycle in crude. The end of that cycle could have been the low of $68.57 on Dec. 13, 2023, but we haven't been sure of that. If the end of that cycle is still coming, we could see crude prices dropping back towards $60 sometime over the next 7 weeks. A clear break and close above $82 would imply that Dec. 13 was the 4 year low. That may be happening now. If this is the case, crude oil's trend now would be very bullish. We will stay on the sidelines for now as we wait to buy at the bottom of the next significant sub-cycle correction. This could at the end of an older 4 year cycle near $60 sometime over the next 7 weeks, or somewhere considerably higher than $60 if the 4 year cycle bottomed last December. Either way, we're still expecting a strong rally by crude into the end of this year.

Trading Blog Thursday, March 14, 2024

3/14/2024

UPDATE ON THE BROAD STOCK MARKET (11:00 pm EDST)

The S&P 500 and NASDAQ made new all-time highs last Friday, while the DOW's last all-time high was on Feb. 23. This bearish divergence signal is still in effect, even though the DOW has been rising a bit this week. We are entering another fairly strong general reversal zone today (March 14 - 22), and the final bottom to the current medium-term cycles in all three indices is due anytime now. Any one of these indices (or all three) could push up to make a new all-time high and final top inside this new reversal zone, or the tops could already be in. If the latter, we expect this market to now fall sharply to a final medium-term cycle bottom due anytime over the next few weeks (ideally next week). A good target for a bottom is still around 37,000 (36,500 - 37,500) in the DOW and between 4,800 and 5,000 in the S&P 500. We remain on the sidelines of the broad stock market as we watch for a correction into these ranges.

Trading Blog Thursday, March 7, 2024

3/7/2024

MARKETS UPDATE (2:30 pm EST)

The broad stock market continues to demonstrate an amazing buoyancy and a reluctance to take any significant correction (so far). According to our normal cycle analysis, the final bottoms to the current medium-term cycles in all three market indices (DOW, S&P 500, NASDAQ) would be due by the end of next week, but that would require a very steep fall, especially for the S&P 500 which is making yet another new all-time high today. Still, it could happen, but these cycles could also expand a bit and bottom in late March, or even early April. Usually a final corrective drop lasts 2-5 weeks. There is a new, fairly strong general reversal zone coming up March 14 - 22. The last half of that reversal zone is two weeks from now, so a final bottom could happen then.

Today the S&P 500 is making a new weekly (all-time) high while the DOW and NASDAQ are not, so we have yet another bearish divergence signal. The DOW's last high was on Feb. 23, so it is already 2 weeks into a corrective dip. The NASDAQ's most recent high was last Friday, so it has been down just one week (and it has been rising back up sharply and could exceed Friday's high any day now). We are presently inside a weak reversal zone, and today and tomorrow are potentially very strong "pivot points" for equities. What all of this means is that a steep downturn in this market could (should) be imminent, with a final bottom to the correction likely by March 22. A good target for the bottom could still be around 37,000 in the DOW. We'll remain on the sidelines as we wait for the final bottoms in these current medium-term cycles.

The rally in precious metal prices continues today as gold makes a new all-time high and silver breaks above a resistance line at $24. This rally has been very steep, and both metals may take a "breather" dip soon. We are already long in silver, and we may use any significant dips in gold as an opportunity to buy. It is early in these new medium-term cycles, and the current trend is bullish. For now, we remain long in silver and on the sidelines of gold.

Crude oil prices have been down from the high of $80.85 (April contract chart) on March 1, but they seem to be finding support at the 15-day moving average (now at $78.22 and rising slowly). If $80.85 was a sub-cycle high, prices should move lower to a sub-cycle bottom, and that could be a good entry point to buy. A reversal zone specifically for crude ends next Wednesday, so there is still time for a higher high before a significant correction. Alternatively, a deeper correction into Wednesday might give us a good buying opportunity. We remain on the sidelines for now.

Trading Blog Tuesday, March 5, 2024

3/5/2024

MARKETS UPDATE (4:00 pm EST)

Last Friday the NASDAQ finally broke above it's Nov. 2021 all-time high (16,212) to make a new all-time high at 16,302. This means that the strong bearish divergence signal between the NASDAQ, DOW and S&P 500 is now negated. Although this weakens the case for an imminent catastrophic "crash" in equities, it does not eliminate that possibility. There are still several technical signals and cycle patterns that point to the end of a long-term 90 year cycle now that could lead to a severe correction (as much as 90%). Even if the 90 year cycle "crash" does not play out (the last one was in 1929), we are approaching the end of several other cycles that could also give us a significant correction that will likely start before the end of this year.

Shorter term, the current medium-term cycles in the DOW, S&P 500, and NASDAQ are very "long in the tooth" and overdue for their final corrective bottoms. Last Friday's highs in the NASDAQ and S&P 500 were new weekly highs, but the DOW's last high was in the previous week, so we have another short-term bearish divergence signal. Also, the S&P 500 made a new weekly high yesterday without the other two indices, and all three are heavily down today (more bearish divergence). Last Friday was barely inside our strong reversal zone, but we are now inside another (weaker) reversal zone (March 1 - 11), so the final tops could be in place here. Let's see if this market can take a decent correction now and give us a potential spot to buy near the final medium-term cycle bottoms. We expect more strong rallying from those bottoms into the summer. We are still on the sidelines of this market.

Gold and silver prices have been exploding upwards since last Friday. This confirms the idea that both metals started new medium-term cycles from their lows on Feb. 14 ($1986 in gold and $21.94 in silver). Today gold is breaking above it's previous all-time high from last December ($2123) which confirms that a bullish trend is in place. Although gold could take a corrective breather now as it tests this high, it is still early in the new cycle, so we may look to go long on any dips. For now, we remain on the sidelines of gold.

We were able to buy silver last Friday before its massive surge up yesterday, but this rally may be hampered by a strong resistance line around $24. As with gold, it is early in this new medium-term cycle and the trend looks bullish, so we won't worry about any short-term dips unless they start to break back below the 15-day and 45-day moving averages. Let's stay with our long position in silver for now.

The U.S. Dollar Index made an isolated high last Friday (104.29), and it's been down from there. That high was near the center of a reversal zone specifically for currencies Feb. 28 - March 7, so more downside is possible. If the greenback falls lower, it will help boost precious metal prices.

It looks like crude oil is well into a medium-term cycle that began with the low of $68.57 (April contract chart) on Dec. 13, 2023. A significant sub-cycle correction occurred on Feb. 5 ($71.49), and another one is now due. This market looks very bullish, and we are looking for an opportunity to go long on any significant corrections down. We are now in the middle of an unusually long reversal zone for crude (Feb. 21 - March 13), so a top could form anytime with a sharp correction down to follow. There is resistance around $80, so last Friday's isolated high at $80.85 may be significant. Let's see if prices can move lower before we consider any buying. We are still on the sidelines of crude oil.

Trading Blog Friday, March 1, 2024

3/1/2024

SILVER TRADE ALERT (2:00 pm EST)

Today gold and silver prices are rallying sharply with both metals closing above their 15-day and 45-day moving averages. This most likely confirms that both started new medium-term cycles with their lows on Feb. 14 and are bullish. Let's buy silver today with a stop loss at Wednesday's low of $22.28. Gold's surge up was very strong, so I am going to wait for it to back down a bit before buying - perhaps early next week.

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