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.
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. 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. 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. 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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