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Trading Blog Tuesday (night), May 28, 2024

5/28/2024

CRUDE OIL TRADE ALERT and MARKETS UPDATE (10:30 pm EDT)

Crude oil finally made a new low ($76.15 - July contract chart) last Friday in the center of our reversal zone for crude (May 22 - 31), and today prices shot up to touch $80. Friday's low was most likely the final bottom of our medium-term cycle and the start of a new one. Today's high closed well above the 15--day moving average ($78.53) which should now act as support and discourage a lower low over the next three days of the reversal zone. This looks like a good time to go long as crude still looks quite bullish through the rest of the year. Let's enter a long position in crude for tomorrow's market open. Prices may back down a bit in the morning and give us a better buy spot, but even if that doesn't happen, we want to jump on this potential rally early.

Gold and especially silver prices are rallying up from last Friday's lows. It looks like silver might make a new weekly high or at least a double-top to last Tuesday's dramatic top at $32.38. As I wrote in last Thursday's blog, it is late in the medium-term cycle of both metals, and we are waiting for a 2-5 week decline from a final cycle top. Last week's top in gold may have been the final top, but if silver breaks above $32.38, we may see its top this week. We will want to buy at the final bottoms of these medium-term cycles, as long as they don't go too low. Those bottoms could come in the first or second week of June. For now, we remain on the sidelines of both metals.

The DOW may be completing a legitimate sub-cycle correction from its May 20 high at $40,077 as it has been falling sharply from that top. It broke below its 15-day moving average last Thursday, and today it tested its 45-day moving average. The only problem is that we are not in any reversal zone until next week (June 6 - 14), and the S&P 500 and NASDAQ do not seem to be taking significant corrections (yet). The NASDAQ, in fact, made a new weekly (and all-time) high today without the other two indices, which gives us a bearish divergence signal. This makes me think the DOW's correction and the other two indices could go lower. We will remain on the sidelines of the broad stock market for now.

Trading Blog Thursday, May 23, 2024

5/23/2024

MARKETS UPDATE (11:30 pm EDT)

The Federal Reserve has recently changed its tune a bit on interest rates. Recent comments from the Fed show more worry about inflation and a possibility of a delay in interest rate cuts. This hawkish development seems to be giving a boost to the U.S. Dollar as it turns down the recent sharp rally in precious metals and equities.

Gold and especially silver have rallied strongly this month with both exceeding their previous highs from April 12 early this week. It is, however, late in their medium-term cycles, and this week's highs were likely the final tops in those cycles (especially as they happened in the center of our general reversal zone, which ends tomorrow). We now want to watch for a 2-5 week decline to the final bottom of these cycles. That bottom could easily happen in our next strong general reversal zone coming up around June 11. That will likely be a good spot to buy as both metals continue to look very bullish. For now, we are still on the sidelines of gold and silver.

Crude oil prices fell sharply this week and are now in the center of a reversal zone specifically for crude (May 22 - 31). Today crude tested last week's low of $76.36 (July contract chart). Let's see if it can make a lower low tomorrow or next week. If it does, we may be looking to buy. We are still on the sidelines of crude.

The Fed's recent hawkish rhetoric has turned the broad stock market south. The DOW has broken below its 15-day moving average, but the S&P 500 ad NASDAQ are lagging behind and have not. We expect the 15-day and possibly the 45-day moving averages to be tested in any significant sub-cycle correction. Let's wait to see if at least two or all three indices can do that. We are still on the sidelines of this market.

Trading Blog Tuesday (late night), May 21, 2024

5/21/2024

IMPORTANT UPDATE ON THE BROAD STOCK MARKET (11:30 pm EDT)

It is now clear that we have started a new medium-term cycle in the broad stock market with the lows on April 17 (37,611 in the DOW) and April 19 (4,953 in the S&P 500 and 15,223 in the NASDAQ). The big question now is whether or not this new cycle will be bullish. This one is starting out bullish, like all new cycles, but we have to keep in mind that there is a longer-term - 4 year - cycle that is due to peak by the end of August (maybe even by the end of this month) and then fall to it's final bottom sometime between Sept. 2024 - June 2025. That fall should be substantial (between 16 - 26%). If we are also near the end of an even bigger cycle - the 90 year cycle - then that correction could drag on longer and be much greater (i.e. a major crash of up to 90%).

With corrections of such potential magnitude just ahead, we clearly need to be cautious about buying into this market. Very conservative long-term traders (investors) will most likely want to stay on the sidelines for now as they wait for a final signal to sell short for at least a 16--26% profit going down. But there may be good reasons for more active (and more risk tolerant) traders to consider buying soon. All three of our indices are now in the time frame for a substantial sub-cycle correction (the first in the new medium-term cycle). Because we are making new all-time highs in the center of a strong general reversal zone (May 13 - May 25), that correction could be imminent, and we would expect it to at least test the 15-day and/or 45-day moving averages. A modest corrective drop could be the springboard for another strong rally to new all-time highs - a rally that has the potential to go parabolic as it approaches the final top of a 4-year cycle. The DOW could get to 41,000- 42,000 and the S&P 500 to 5,800-6,000 very quickly.

The alternative (more bearish) possibility could see this market encountering resistance at the current all-time highs, with the DOW and S&P 500 making bearish "double-top" formations to their highs from March. We will watch this market very carefully now as we consider a possible short-term buying opportunity. If we miss it (or decide it is too risky), we will stay on the sidelines and wait to sell short the top of a 4-year cycle between now and August. We are currently on the sidelines of the broad stock market.

Trading Blog Friday (late night), May 17, 2024

5/17/2024

MARKETS UPDATE (11:00 pm EDT)

Yesterday all three broad stock market indices (DOW, S&P 500, NASDAQ) made new all-time highs which negates any recent intermarket bearish divergence signals. This pretty much confirms that we are in a new medium-term cycle that started with the April 17 low in the DOW (37,611) and the April 19 lows in the S&P 500 and NASDAQ (4,953 and 15,223, respectively). The early phase of a new cycle is usually bullish. Nevertheless, these new highs are happening inside a strong general reversal zone (May 13 - 25), so a correction down could be imminent (unless this reversal zone coincides with a "breakout" instead of a normal reversal - less likely, but possible). Either way, now is not the time to buy, so we will remain on the sidelines of this market for now.

We took profits in our long gold and silver positions early yesterday. That turned out to be a little too early as both metal prices took off today (especially silver). We did make a good profit with our silver trade and a small one on gold, but today silver jumped from $29.6 to $31.4 causing us to regret not holding it a bit longer. We note, however, that silver's surge broke above its previous high from April 12 ($29.68), but gold's rally did not exceed its April 12 high ($2427) creating a bearish divergence signal inside our strong reversal zone. As with the broad stock market, a correction down could be imminent. If it happens, we may be looking to re-enter our long position in one or both metals. For now, we are out of both markets.

Crude oil's final medium-term cycle bottom could have happened with Wednesday's low at $76.70. Today prices closed at $80.06, just above the 15-day moving average (but still below the 45-day moving average around $81.76 and rising), and that supports the idea that a new cycle has started. But we note that this high is happening in the center of our general reversal zone. If prices turn back down before breaking above the 45-day moving average, we could see a low below $76.70 next week that could end up inside our next reversal zone specific to crude oil (May 22 - 31). That might be a better candidate for a final medium-term cycle bottom. Even if a new cycle began on Wednesday (May 15), we are rallying and making new highs inside this week's and next week's general reversal zone and potentially inside the reversal zone for crude that starts next Wednesday and continues into the end of the month. This makes me reluctant to buy until we see another significant correction. Let's stay on the sidelines of crude for now.

Trading Blog Thursday (early AM), May 16, 2024

5/16/2024

GOLD AND SILVER TRADE ALERT (4:00 am EDT)

It's time to take profits in our long gold and silver positions. We are at the center of several reversal zones, and both metals are now testing resistance near their their previous April 12 highs. Let's sell our longs now at or close to today's market open.

Trading Blog Sunday (night), May 12, 2024

5/12/2024

MARKETS UPDATE (10:30 pm EDT)

All three broad stock market indices (DOW, S&P 500, NASDAQ) rose last week and made new weekly highs on Friday, but none of them made a new all-time high (the NASDAQ came close). We are about to enter another strong general reversal zone (May 13 - 25). If these indices push higher into next week (or the following week), they will likely form a significant top and reverse back down. But will they make new all-time highs before that reversal? If all three do, that would be a bullish signal. But if only one or two make new highs, we would have a bearish reversal signal. It's still too early to label the current medium-term cycles, but the nature of any upcoming correction should make that more clear. This is not a time to buy, and it's too early to tell if we should be selling short. We remain on the sidelines of this market as we move into this new reversal zone next week.

As we expected, gold and especially silver prices rose sharply last week. We note, however, that neither one exceeded their recent April 12 high. We also note that gold's high on Friday was inside a strong potential "pivot point" for that metal, and that tomorrow and Tuesday is another strong potential "pivot point' for silver (as well as being the first two days inside our general reversal zone). If prices edge a bit higher early this week, it may be a good time to take profits in our long positions in both metals. Let's be on "trade alert" tomorrow for gold and silver.

Crude oil made an isolated low last Wednesday ($76.89 - June contract chart) and rallied to resistance around $80 on Friday before closing that day back down to $78.26). Because last Wednesday's low was not in any strong reversal zone, there's a good chance prices are going to fall lower into next week which is the first half of a very strong general reversal zone as well as a reversal zone specific to crude. There is strong support for crude from $74 - $76, so we will look for a final bottom to the current medium-term cycle (now due) in that area, which should be a good place to buy. For now, we are still on the sidelines of crude.

Trading Blog Monday, May 6, 2024

5/6/2024

MARKETS UPDATE (3:30 pm EDT)

The broad stock market is currently presenting us with a very challenging cycle pattern. We had been expecting final (overdue) bottoms to medium-term cycles in all three of our market indices (DOW, S&P 500, NASDAQ) inside our last strong reversal zone (April 22 - May 3). The S&P 500 and NASDAQ may have made slightly early bottoms on April 19 (at 4,953 and 15,223, respectively) just one trading day ahead of the the reversal zone, but the DOW's low on April 17 (37,611) was a bit too early. Nevertheless, because a final medium-term cycle bottom was (is) way overdue, those three lows could have been it as all three indices have rallied from those lows, broken above their 15-day and 45-day moving averages and are today making new weekly highs.

If those late April lows were the start of new medium-term cycles, this market should be bullish now; however, any rally is going to encounter another strong general reversal zone coming up next week (May 13 - 25). This could put a damper on the rally and quickly turn it back down. If that happens before we see a new all-time high in one, two, or even all three of our indices, it could turn the general trend of this new cycle bearish.

A second possible labeling of this market would place the end of the old medium-term cycles and the start of new ones on the lows of March 5 for the DOW and March 15 for the S&P 500 and NASDAQ. If that labeling is correct, then all three cycles have already turned bearish because they all dipped significantly below those lows in April.

Because of these bearish possibilities. we are going to refrain from any buying as we wait to see if these indices can make new all-time highs soon. If not, we may consider selling short instead of going long. We note that we've been anticipating a very big corrective drop in the second half of this year. If this market turns bearish now, it's possible that correction could come sooner. We remain on the sidelines of the broad stock market for now.

Our timing to buy gold and silver last Thursday at a significant sub-cycle low seems to be good (so far). Both metals are rallying today to challenge their 15-day moving averages. Once that resistance is cleared, we'll wait and see if these metals can exceed their April highs ($2,427 in gold and $29.68 in silver). That's possible as this market still appears to be bullish. As with the broad stock market, however, we need to be aware that any rally this week will encounter a new general reversal zone next week which is applicable to these metals. We also have a strong potential "pivot point" for gold coming up this Thursday and a strong "pivot point" for silver next week on Tuesday. If prices rally strongly into these time frames, we may consider taking early profits on our long positions in both metals. For now, we will hold our longs in gold and silver.

Crude oil prices made a low at $77.96 on Friday (June contract price) - the last day of our reversal zone. Today prices dipped a bit lower - to $77.91. We're only one day out of the reversal zone, so we could be seeing a bottom here, especially as there is strong support around $78. But final medium-term cycle bottoms can last 2-5 weeks, and this is week 4 from the cycle top of $86.97 on April 12. Prices could push lower, and next week starts another reversal zone which could be a good place for the final bottom. Below $78 there is strong support at $76. Let's stay on the sidelines until we see more evidence of a final bottom - this week or next.

Trading Blog Wednesday (late night), May 1, 2024

5/1/2024

GOLD AND SILVER TRADE ALERT and MARKETS UPDATE (11:30 pm EDT)

Gold and silver prices are currently at strong support levels and they are also in ideal target ranges for a significant sub-cycle bottom. Furthermore, a sub-cycle bottom is due in both metals by the end of this week. It looks like a good time to go long. I am placing a buy order for both metals for tomorrow's market open. We will be long in gold and silver at the opening of tomorrow's market.

Today's FOMC meeting was uneventful as the Fed kept interest rates unchanged (as expected). The DOW, however, did surge nearly 400 points around 3PM as Fed Chairman Jerome Powell stated in a press conference that an imminent interest rate HIKE was unlikely (some investors had feared a rate hike was possible as inflation remains high). But the DOW gave back all of that gain by the closing bell as the Fed also gave no suggestion of any imminent rate cuts.

We expect at least one of our broad stock market indices (DOW, S&P 500, NASDAQ) to make a new low by the end of this week to complete a final medium-term cycle bottom that will likely be a good spot to buy. We are also expecting a medium-term cycle bottom in crude oil by Friday. Today's sharp correction to $79 (June contract chart) may have been it already, but there is stronger support around $78, so prices could edge lower. For now, let's stay on the sidelines of crude and equities until we see more evidence of a bottom in both these markets.

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