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Trading Blog Thursday, April 30, 2015

4/30/2015

MARKETS UPDATE (3:15 pm EDT)

The Federal Reserve seemed to be playing its cards "close to the chest" yesterday when the minutes of this week's FOMC meeting were released without a subsequent press conference by Janet Yellen to explain some of the rhetoric of the statement. What was most apparent in the Fed's statement was the absence of any calendar references to the first rate hike. The Fed is obviously trying to discourage analysts and investors from focusing too strongly on any one date or month as this gives them more leeway in their decision making process. In typical ambiguous fashion, the Fed statement acknowledged current weakness in the economy but also noted that such weakness was likely "transitory". Some analysts are now leaning towards a September rate hike rather than a first hike in June. The next FOMC meeting should tell us if that is going to happen.

Despite the Fed's attempts to be neutral, the broad stock market did not react well (stock markets do not like uncertainty) and the DOW fell about 50 points immediately following the FOMC statement release. The fall is continuing today with the DOW down over 200 points at the time of this writing (3:15 pm EDT). As I wrote in Tuesday's blog: "Ideally, I would like to see the DOW drop a bit more into the end of the week (towards the 17,600 - 17,700 area) for an ideal spot to buy as directional momentum is now nearly 100% in all three stock market indices (DOW, S&P 500 and NASDAQ)." We may be getting this setup now so we will watch for a low in that 17,600 - 17,700 area to buy, possibly early next week. If that support area is breached and the market continues to fall past next week then we will have to abandon this bullish view. I don't think this will happen, but we have to keep in mind that we still have a case of bearish intermarket divergence in place because the S&P 500 and NASDAQ have both made new yearly highs, but the DOW still has not (yet). Nevertheless, directional momentum is now nearly 100% bullish in all three indices so we will stay with a bullish strategy until proven otherwise. On the sidelines for now.

Gold and silver also do not seem to like the Fed's statement as prices plunged steeply in both metals today. In Tuesday's blog I wrote that the FOMC meeting statement "...could either accelerate gold's rally or quash it. If gold prices cannot exceed that $1224 level soon, they could turn down again and move to a new weekly low." It looks like the "quash" scenario is unfolding. We will watch for a low into early next week, which could be a turning point for all markets. If gold prices can stay above $1140, we could get an ideal spot to go long again. Out of both gold and silver for now.

The U.S. Dollar Index has plunged down to a strong support area around 94. The dollar appears to be breaking down, but it could have a short-term bounce here which might push precious metal prices lower into next week. We will watch this carefully, especially as any continuation of the dollar's breakdown could lead to a major rally in gold
and silver.

Trading Blog Tuesday, April 28, 2015

4/28/2015

MARKETS UPDATE (3:30 pm EST)

It looks like we sold our gold long positions prematurely early Monday as prices are now rising sharply. In Sunday's blog I wrote: "While it is possible to get a short-term bounce here, the medium-term picture is starting to look bearish, and the bounce would probably not get very far before turning down again." Well, we are getting a bounce that is stronger than I expected. Does this mean gold is turning bullish? Maybe, but not necessarily. Directional momentum signals are still mostly bearish in gold charts (silver charts are mixed bullish and bearish) and early next week may see a turning point that could turn down any rally. The key now is to see if gold can exceed its April 6 high of $1224. If it does, that will indicate that the precious metals are turning bullish. The Federal Reserve and Janet Yellen are expected to update the public on their interest rate policy after their monthly meeting concludes tomorrow afternoon. As we know, these statements can have a big impact on all markets (at least for a few days) so this could either accelerate gold's rally or quash it. If gold prices cannot exceed that $1224 level soon, they could turn down again and move to a new weekly low. Even though we ditched our gold too soon, we did not take a loss and should have made a 1% - 2% profit on the trade. (Traders selling late on Monday made even more). We are now on the sidelines of both gold and silver.

This week there has been some speculation by financial analysts that the Fed will decide to further delay an interest rate hike (beyond the expected June "deadline") due to the country's latest lackluster economic data. If the Fed's statement tomorrow affirms this, it could give a boost to the broad stock market. On the other hand, the Fed sticking to the idea of a mid-year hike could push the stock indices down. Either reaction could be short-lived. Ideally, I would like to see the DOW drop a bit more into the end of the week (towards the 17,600 - 17,700 area) for an ideal spot to buy as directional momentum is now nearly 100% in all three stock market indices (DOW, S&P 500 and NASDAQ). We still need to see the DOW break its all-time high of 18,288 before we can fully confirm a bullish trend in equities. Until that happens, we still have a case of bearish intermarket divergence as the S&P 500 and NASDAQ are making new yearly highs and the DOW is not. If the Fed and Janet Yellen's statements tomorrow turn out to be dovish, it might just kick the DOW over that 18,288 hurdle. Still on the sidelines of this market.

The U.S. Dollar Index has corrected down to a support level at 96. Directional momentum in the dollar chart is now mixed bullish and bearish, so the dollar could go either way right now. If the 96 level breaks, the dollar could be starting a more serious correction. This would be bullish for the precious metals. There is also the possibility of a short-term bounce from 96, but such a bounce would not likely get beyond the 98 area before turning down again unless some event (such as a suddenly hawkish Fed policy) causes the dollar to break out and exceed 100. As with all the markets now, we will wait until the end of the week before making any trading decisions. This will allow time for some of the "dust to clear" from any disruptions in markets caused by Janet Yellen and the Fed tomorrow.

Trading Blog Sunday (late), April 26, 2015

4/25/2015

GOLD TRADE ALERT and MARKETS UPDATE (10:45 pm EDT)

On Friday gold prices broke below our stop loss at $1180 but closed just a whisker beneath that support around $1179. Because this was so close to $1180, I did not sell my long position Friday, but after analyzing the charts this weekend, I have decided that it would be wise to do so as a strong bearish signal appeared in gold's chart which makes directional momentum now 100% bearish for this metal. While it is possible to get a short-term bounce here, the medium-term picture is starting to look bearish, and the bounce would probably not get very far before turning down again. There is a chance now of gold dropping towards support at $1162 or even the $1142 area. (A clear break below $1140 would be a very bearish sign implying lower prices for at least eight more weeks.) Gold prices are still above our buy price around $1160 so we should be able to get out of our gold longs with at least a small profit on Monday (if your stop loss has not been triggered already). Based on all this I am putting in an order tonight to sell my gold long position at Monday morning's open. Fortunately, we already unloaded our silver longs early last week in anticipation of the market turning down. If gold (and silver) do bounce this week, and gold moves back up towards $1200 by the end of the week, I may consider short positions in both metals as we could see a sharp reversal back down. On the other hand, if gold and silver fall steeply into Friday and make new lows, it might end up being a good spot to go long again. The Fed meeting next week could have an effect on precious metal prices so we will watch that carefully in the middle of the week. Selling my gold long position tomorrow (Monday morning) and on the sidelines of both gold an silver for now.

The U.S. Dollar Index is now breaking below the parabolic uptrend line that it had been maintaining since last summer. Normally, bearishness in the dollar is bullish for precious metals, but Friday's drop in the dollar was accompanied by a steep fall in gold prices. This implies a weakness in the precious metals now, and it also suggests that the dollar could find some support (perhaps around 96) and possibly rally a bit (back towards that uptrend line) before breaking down again. We will have to wait and see.

The broad stock market is still giving us mixed signals, but those signals are starting to look more bullish than bearish. We now want to watch how this market moves into the end of this week (and possibly early the following week). If the DOW stays below its all-time high of 18,288, we will continue to have a case of bearish intermarket divergence (as the S&P 500 and NASDAQ have already made new highs) and the market could turn down (and possibly continue down for many more weeks). On the other hand, the DOW breaking above 18,288 (this week or over the next three weeks) would confirm a bullish trend being suggested by the current (100% bullish) directional momentum of the S&P 500 and NASDAQ (the DOW is still mixed bullish and bearish). I am currently favoring the bullish scenario, but in any case if the DOW moves down towards the 17,650 area by the end of this week or into the start of the following week, I will be looking to go long. A clear break below 17,550 would negate that bullish trading strategy and would start to look bearish. Because of the Fed meeting, we could see some erratic index movements next week so we will have to be cautious in all our trading. Still on the sidelines.

We are still watching for a good spot to buy in crude oil as a new cycle began in mid-March and the current trend is bullish. I am looking for a modest correction from a high that may have occurred on April 16 at $58.82 and should be headed down to the $52 area. So far the correction has not broken $55 so it is possible we could see another high closer to $61-$62 before the real correction begins. Either way we want to buy the bottom of this short-term correction. If prices fall this week, we may get to that $52 buy spot by Friday or the following Monday. If prices instead rise into the Friday/Monday time frame, we could get that new high near $60 at the end of the week instead of a low. In that case, we might have a good spot to sell short. Our main focus, however, will be to buy the bottom of any short-term correction whether it happens at the end of this week or into the first half of May. On the sidelines of this market for now.

Trading Blog Thursday, April 23, 2015

4/23/2015

MARKETS UPDATE (5:45 pm EDT)

It seems like the broad stock market wants to rally this week, and we could get a breakout of all three indices (DOW, S&P 500 and NASDAQ) very soon. In Tuesday's blog I wrote: "Today a strong bullish momentum signal appeared in the charts of the NASDAQ making directional momentum in this index now 100% bullish. (The DOW and S&P 500 remain mixed bullish and bearish). This is a bullish sign, but the DOW and S&P 500 will have to follow suit soon to confirm a bullish trend in equities." Well, today the S&P 500 followed suit with a strong bullish signal and directional momentum is now 100% bullish in that index as well. The DOW, however, is still mixed bullish and bearish, but that could change quickly. On the bearish side, today the NASDAQ and S&P 500 both made a new yearly high, but the DOW is still about 200 points away from its all-time high of 18,288. This could be a case of intermarket bearish divergence if the the DOW cannot exceed this high soon. We will have to wait and see. Still on the sidelines.

The U.S. Dollar Index is teetering on the brink of breaking down from its parabolic uptrend. Today it is backing down sharply from resistance at 98, and short-term technical signals in its chart do not look good at the moment. Could the dollar suddenly break upside from here? Anything is possible in the volatile (and often manipulated) market environment we have these days, but right now it looks like the dollar could be heading lower. If the dollar breaks down it would be a boost to gold and silver prices which are looking a bit weak at the moment and need to start rallying soon to avert a breakdown themselves. Holding my long position in gold but out of silver for now.

After correcting down to the $55-$56 area over the last several days, crude oil prices are rising today. The ideal correction to buy now would be towards the $52 level so I am not comfortable going long just yet in crude. The news of a potential conflict between U.S. and Iranian warships near Yemen this week is likely kicking up oil prices and creating potential volatility in this market. On the sidelines for now.

Trading Blog Tuesday, April 21, 2015

4/21/2015

MARKETS UPDATE (8:15 pm EDT)

The broad stock market is still bouncing about without a clear trend as we near the end of a significant timing window for a trend reversal. I am going to allow this timing window to extend into Friday (and possibly next Monday) which still gives the market time to make a significant bottom or reverse from a top. Today a strong bullish momentum signal appeared in the charts of the NASDAQ making directional momentum in this index now 100% bullish. (The DOW and S&P 500 remain mixed bullish and bearish). This is a bullish sign, but the DOW and S&P 500 will have to follow suit soon to confirm a bullish trend in equities. One possible bullish scenario that I favor at the moment could see the market falling into Friday and finding support for the DOW around 17,600 - 17,650 and for the S&P 500 around 2050 - 2060. If this happens, I will look to buy. An alternative scenario could see the market rallying into Friday with one or two of the three major indices (DOW, S&P 500, NASDAQ) making a new yearly high, but not all three. As I've stated many times in my blogs, this would be a case of bearish intermarket divergence and would be a good signal to sell short. (Note that the NASDAQ made a new weekly high today at 5028 but still has not exceeded its yearly high of 5042 from March 20). Recent concerns about China's government placing restrictions on investors in its stock market to avoid a speculative bubble as well as fears about Greece defaulting on its bailout loan are making Wall Street nervous. This is creating a trading environment with a potential for high volatility so all trading over the next few weeks, short or long, should be done carefully using tight stop losses. Still on the sidelines.

Gold prices are up a bit today, but gold needs to start rallying strongly this week and exceed the $1224 level to avoid the possibility of a breakdown. The behavior of the U.S. dollar is critical here. The U.S. Dollar index is now pushing against resistance at 98 and looks poised to back down again. If it does, gold should rally; however, any break above 98 would likely send gold prices down. In terms of timing, next Monday could be a significant turning point for this market. We sold our silver long positions yesterday to minimize potential losses from a possible breakdown in precious metals (silver is more volatile than gold and can manifest significant losses quickly) but kept our long position in gold. I am maintaining this gold long position with a stop loss at $1180.

In my last blog on crude oil (April 16) I wrote: "Today crude prices rallied to $57.42 and a strong bullish momentum signal appeared in crude charts making directional momentum now 100% bullish. It looks like the new cycle started in mid-March and the trend is now bullish. We will now switch to a bullish trading strategy which means we should look to buy any corrective price dips. We may not have to wait long as we are now in the center of a reversal zone for crude. Prices could start to back down a bit over the next five trading days." Crude prices have backed down from that $57.42 high and we should now be looking for a good spot (and time) to buy. This may come over the next few days. On the sidelines and waiting to buy soon.

Trading Blog Monday, April 20, 2015

4/20/2015

SILVER TRADE ALERT (2:15 pm EDT)

Today silver prices are breaking below our tight stop loss at $16 (technically there is support down to $15.95, but at the time of this writing that is breaking as well). While there is still a chance of silver finding support here and bouncing, it would be prudent to sell our longs (if they haven't been sold already) and stand aside this volatile metal for now. I am going to remain long, however, in my gold position as some technical data are still supporting the idea of more rallying. The U.S. Dollar Index may be breaking down from its parabolic uptrend, and if so we could see it move quickly to the 94-95 area. This could push gold prices higher, at least short-term. Our stop loss for gold is at $1180 (which is above our entry price around $1160) so we are well positioned and insulated from loss should this metal turn down. Selling silver long positions but holding my long positions in gold.

Trading Blog Thursday, April 16, 2015

4/16/2015

MARKETS UPDATE (4:30 pm EDT)

In my last blog I described three possible scenarios for precious metals this week:

Scenario 1 (bearish): Gold and silver rally a bit more (perhaps from a low early this week) with gold prices approaching the $1240 - $1250 area (and possibly $1280) but then turn down dramatically with gold possibly breaking below the $1140 area that began the current cycle.

Scenario 2 (bearish): Gold and silver continue to fall this week with little or no rallying leading to a break below the $1140 level.

Scenario 3 (bullish): Gold and silver rally strongly (perhaps after a brief dip towards $1180 in gold and $16 in silver) with gold eventually breaking through the $1280 area and clearing the $1300 high from made in January.

Both gold and silver have been rallying this week so we can rule out Scenario 2. It is most likely that Scenario 1 is playing out, however, the rally does not seem that strong and may not reach the levels described above. There is resistance for gold at the $1224 high achieved on April 6, so I at least want to see prices approach that high. If that happens tomorrow or early next week, I will consider taking profits in long gold and silver positions. Though less likely, we cannot completely rule out Scenario 3, which would be a very bullish breakout of gold and silver. There are some technical signals right now that support this bullish picture. For example, this week the two precious metal mining company stock indices HUI and XAU both showed strong bullish signals in their charts, with directional momentum in the HUI now 100% bullish (XAU is mixed bullish and bearish). As I've mentioned before on the site, gold and silver mining company stock prices often lead the price of the actual metals.

Another bullish influence on precious metals right now is the U.S. Dollar Index. In my last blog on the dollar (Sunday) I stated that : "...last week's strong bounce from the 96 level keeps the dollar above a clearly defined parabolic uptrend that has been in place since last summer. If this parabolic uptrend continues to support the dollar, we could see that 100 mark broken soon..." This week the U.S. Dollar Index opened at 99.5 on Monday but has been falling since then and today is closing around 97.5, which is right at the parabolic uptrend line. There are some technical signals now suggesting the dollar could break below this level. If it does, it could mean the dollar is starting a more serious correction, and that would be very bullish for gold and silver prices. It may be that the U.S. dollar is losing its appeal to global investors who are now questioning how serious the Fed is about raising interest rates. The dollar needs to bounce up now to avoid breaking that parabolic uptrend line. We will watch this carefully over the next few trading days.

I am holding my long positions in both gold and silver for now.

As we move into the end of a long potential reversal zone for the broad stock market (it ends early next week), the DOW, S&P 500, and NASDAQ are all rising, but not one has made a new yearly high (yet). I would like to see a bearish intermarket divergence signal now (one or two of these indices making a new high, but not all three) to sell short; however, if this reversal zone instead corresponds to a breakout with all three indices making new highs then we will switch to a bullish trading strategy (i.e. look for a good buy spot). This market is still ambiguous so we will remain on the sidelines for now.

My last update on Crude Oil was on April 6 when I wrote: "It is still not clear if the new crude cycle started in late January or more recently in mid-March. Any rally over the next three weeks that exceeds the $55 area would suggest a mid-March start to the cycle, and this could mean the market is turning bullish." Today crude prices rallied to $57.42 and a strong bullish momentum signal appeared in crude charts making directional momentum now 100% bullish. It looks like the new cycle started in mid-March and the trend is now bullish. We will now switch to a bullish trading strategy which means we should look to buy any corrective price dips. We may not have to wait long as we are now in the center of a reversal zone for crude. Prices could start to back down a bit over the next five trading days. Still on the sidelines but now looking to buy.

Trading Blog Sunday (night), April 12, 2015

4/11/2015

MARKETS UPDATE (11:30 pm EDT)

Precious metals are at an interesting crossroads right now and could turn bullish or bearish over the next week or two depending on the strength of the U.S. dollar. There are three probable short-term scenarios for both gold and silver at the moment, and unfortunately, the two most likely ones are bearish.

Scenario 1 (bearish): Gold and silver rally a bit more (perhaps from a low early this week) with gold prices approaching the $1240 - $1250 area (and possibly $1280) but then turn down dramatically with gold possibly breaking below the $1140 area that began the current cycle.

Scenario 2 (bearish): Gold and silver continue to fall this week with little or no rallying leading to a break below the $1140 level.

Scenario 3 (bullish): Gold and silver rally strongly (perhaps after a brief dip towards $1180 in gold and $16 in silver) with gold eventually breaking through the $1280 area and clearing the $1300 high from made in January.

At the moment it appears that 1 is the most likely scenario and 3 is the least likely. As I stated initially, the behavior of the U.S. dollar will likely determine the direction gold and silver will take. The U.S. Dollar Index is starting to look very bullish again after last week's strong rally. Prior to last week, the dollar had been correcting down from a mid-March high at 100, and a strong bearish momentum signal had appeared in its chart implying a significant correction had started. That may be changing now as last week's strong bounce from the 96 level keeps the dollar above a clearly defined parabolic uptrend that has been in place since last summer. If this parabolic uptrend continues to support the dollar, we could see that 100 mark broken soon, and this would be very bearish for precious metal prices.

I am still holding my long position in both metals with tight stop loss points at $16 in silver and $1180 in gold. Although a break below $16 would give us a small loss in our silver trade, our entry point in gold was around $1160 so even if the $1180 stop is triggered, we should end up ahead with the trade. I may sell these long positions any time next week if things start looking bearish.

Last week the broad stock market was bullish and rose steadily into Friday so we did not get any new lows for the week. But we also didn't get any new highs (or even double tops) by the DOW, S&P 500 or NASDAQ. Last week was the center of our reversal zone, but the timing for a reversal could extend into this week. Technical signals are looking somewhat bullish, but directional momentum remains mixed bullish and bearish in all three indices so it is still hard to tell what this market wants to do. Sometimes a reversal zone will correlate with a breakout (or breakdown) of a market instead of a direction change, and this might be happening now (breakout) as suggested by bullish technical signals. We still, however, want to watch for a possible case of bearish intermarket divergence over the next week or two. That's when one or two of the broad stock market indices make(s) a new yearly high, but not all three. That could give us a bearish signal to sell short. If all three indices make new highs, we would have to switch to a bullish trading strategy. Still on the sidelines of this ambiguous market.

Trading Blog Thursday, April 9, 2015

4/9/2015

GOLD and SILVER UPDATE (2:30 pm EDT)

In Monday's blog on the U.S. Dollar Index I wrote: "Short-term, however, there is support at 96, so we might see a brief bounce here which could coincide with a correction in gold and silver. If for some reason the dollar decides to really take off again, that could be very bearish for precious metals..." Well, the dollar is bouncing strongly and is pushing gold and silver prices lower. Gold is breaking below $1200 and silver below $16.50. Does this mean we should abandon our long positions in both metals? Not necessarily. There are still some short-term technical indicators that suggest a strong bounce in these metals from a bottom either today or tomorrow. We entered our long position in gold on March 18 so prices are still a considerable distance above our entry point. I am therefore going to hold this long position as long as gold stays above $1180. Silver is now breaking below our entry point from March 31 and is approaching my original suggested stop loss price of $16. I am going to maintain my long position here as well with a very tight stop loss at that price. The critical thing now is the dollar. If the dollar attempts another assault on the 100 mark and succeeds in breaking through this time, it would be bad news for the precious metals. Last week a bearish momentum signal turned the dollar chart's directional momentum from 100% bullish to mixed bullish and bearish. This would suggest more downside for the dollar, but, like the broad stock market, the dollar seems to have an unusual buoyancy these days so we don't want to underestimate its potential for a breakout. Holding my long positions in gold and silver with tight stop losses at $1180 for gold and $16 for silver.

Trading Blog Monday (night), April 6, 2015

4/6/2015

MARKETS UPDATE (9:30 pm EDT)

The U.S. jobs report last week was very disappointing, and this has many analysts again worrying about the state of the economy. Jobs created in March were the fewest in 15 months (just 126,000, breaking a streak of 12 straight 200,000-plus gains). The unemployment rate was unchanged. Many economists that had been expecting growth to bounce back with the arrival of warmer spring weather are now questioning this optimistic view and wondering if a broader economic slowdown is underway. This sudden downturn in economic data is fueling much speculation on Wall Street that the Federal Reserve might further delay an interest rate hike, perhaps until the end of summer (instead of the June target that many had been expecting), and it also makes one wonder if the jobs data are being manipulated just for this purpose. (The Fed, despite its recent hawkish rhetoric, really does not want to raise rates as it knows that a near zero rate is the main thing keeping the stock market bullish.)

I will let conspiracy theorists debate that last point. Our main concern now is that a delayed rate hike (or talk of one) could help fuel more rallying in the broad stock market. In last Wednesday's blog I wrote: "There is another strong possibility now, and that would be a correction down to somewhere between 17,200 - 17,700 (we are in that range today) over the next seven trading days followed by another strong rally." Wednesday's low could have been it if the market continues to rise this week (the DOW is up 117 points today), and we could soon see a new yearly high or double top in this market. If that happens this week or early next week I will be looking to sell short, especially if one or two stock market indices (DOW, S&P 500 or NASDAQ) make(s) a new high, but not all three (intermarket bearish divergence). There is still time, however, for this market to move lower this week and for the DOW to make a bottom in the !7,200 - 17,700 range. Should that happen, I will look to buy (as long as the DOW does not break below 17,000). Yes, we are still on the sidelines, but it looks like we could be trading, one way or the other, by the end of this week.

Our gold and silver long positions are still looking good, but we are now in the center of a reversal zone for this market and we should be looking to at least take some profits and stand aside short-term to see if this correction will be serious. Today gold made a new monthly high above $1220 and this triggered a bullish momentum signal in the charts. This makes directional momentum in gold now mixed bullish and bearish (it had been 100% bearish) so this is a good sign for the precious metals. Silver continues to be 100% bullish. If we see gold and silver rise a bit more over the next 2-3 days, I will consider taking profits in both long positions. If prices instead fall slightly over the next few days, it may be a brief correction from which more rallying will follow. We will watch price movements carefully into the end of this week (and especially over the next 2 days). There is support now for gold at $1200 and for silver at $16.50. Holding long positions in both gold and silver for now.

The U.S. Dollar Index has been taking a long overdue correction over the last several weeks as it approaches the 96 level - down from its 100.42 peak on March 15. Last week a bearish momentum signal appeared in its chart and so the dollar's directional momentum is now mixed bullish and bearish (it had been 100% bullish since July 2014). This may be telling us that the correction will go lower (which would be bullish for most commodities including gold, silver, and crude oil). Short-term, however, there is support at 96, so we might see a brief bounce here which could coincide with a correction in gold and silver. If for some reason the dollar decides to really take off again, that could be very bearish for precious metals (although there are times when both the dollar and gold can rise together).

Crude oil prices have been rising since last Wednesday and are approaching the $52 level again. The timing window for a reversal in crude is a bit wider than for the other markets, and it could extend into the third week of April.
It is still not clear if the new crude cycle started in late January or more recently in mid-March. Any rally over the next three weeks that exceeds the $55 area would suggest a mid-March start to the cycle, and this could mean the market is turning bullish. A rally that stays under $55, however, could mean that the market is going to remain bearish and will make new lows below $45 over the next 5-12 weeks. We will remain on the sidelines until this picture is less ambiguous.

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