PLEASE CHECK THE NEW UPDATES TO THE BROAD STOCK MARKET AND GOLD ON THE HOME PAGE.
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IMPORTANT UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (7:30 pm EDT)
In last Thursday's post on the broad stock market I wrote: "It looks like the DOW, S&P 500, and NASDAQ may all be falling to the final bottoms of their current medium-term cycles. Usually this involves a 2 - 5 week fall...We note that our current reversal zone ends next Monday. We could see a temporary low by then, but any bounce would probably be minor before these indices resume their descent. A serious sell-off may be starting, but if prices don't go too low and stabilize between now and mid-August, we could see another rally that may or may not make new all-time highs." All of this still applies. All three indices (DOW, S&P 500, NASDAQ) rallied from lows on July 25, but those rallies may be waning now and ready to turn back down. The S&P 500 and NASDAQ are remaining below their 45-day and 15-day moving averages as they test resistance at the 45-day moving average today. The DOW, however, is looking a bit more bullish. It is still above both its 45-day and 15-day moving averages, and it is approaching resistance around 41,000. Unlike the S&P 500 and especially the NASDAQ, the DOW is not far from its all-time high (41,376 on July 18). If it does make a new high without the other two, that would be a VERY strong bearish divergence signal. We need to keep in mind that we are expecting a final top in a longer-term 4-year cycle by the end of August which should be followed by a long and deep correction (16% - 26%) down into the end of the year. The top may already be in with the July 11th all-time high in the NASDAQ and the July 16th all-time high in the S&P 500 (and maybe even the July 18 all-time high in the DOW). Needless to say, I am on the sidelines of this market for now, but I may be considering short-selling the broad stock market soon. Gold and silver most likely started new medium-term cycles on June 7 (gold's low at $2287) and June 26 (silver's low at $28.62). These cycles are relatively young (especially silver), but they may be peaking early and starting a steep corrective fall to the bottom of a longer-term cycle (similar to what is happening in the broad stock market). I expect the end of gold's current medium-term cycle to overlap with a longer-term (1-year) cycle between late August and mid-November. This should be a fairly steep drop so we may want to sell short. The current medium-term cycle in gold made a new all-time high ($2482) on July 17. A sub-cycle correction from there found support at the 45-day moving average last week. If gold's current rally can't make a new all-time high soon, it may be a good time to sell it short. Silver is looking more bearish than gold as its price has already broken below the start of its new medium-term cycle. That turns the trend of this cycle bearish (and suggests that gold may be bearish as well). We are anticipating the end of a longer-term (4.33 year) cycle in silver by the end of this year or possibly in early 2025. That longer-term bottom will overlap with either the current medium-term cycle or possibly the next one. Either way, we should probably be looking to sell this market short soon as the current medium-term cycle has already turned bearish. I am remaining on the sidelines of both gold and silver for now. CRUDE OIL TRADE ALERT (3:30 pm EDT)
Today crude oil prices are closing below our stop loss point of $76, so I am going to bail out of my long position in crude. I am taking a 6% loss here, and there is a chance of being "whipsawed" out as today is the last day of our reversal zone, so prices could theoretically snap back up tomorrow. But there's also a good chance prices will sink lower as the sub-cycle patterns now forming appear to be bearish. Selling my long position in crude today. BRIEF UPDATE ON THE BROAD STOCK MARKET (11:30 pm EDT)
It looks like the DOW, S&P 500, and NASDAQ may all be falling to the final bottoms of their current medium-term cycles. Usually this involves a 2 - 5 week fall. So far the NASDAQ has been falling for two weeks, the S&P 500 about 1.5 weeks, but the DOW only 1 week. Clearly, there could be more downside from here. We note that our current reversal zone ends next Monday. We could see a temporary low by then, but any bounce would probably be minor before these indices resume their descent. A serious sell-off may be starting, but if prices don't go too low and stabilize between now and mid-August, we could see another rally that may or may not make new all-time highs. We are now out of the broad stock market. CRUDE OIL UPDATE (11:30 pm EDT)
Our long position in crude oil is in the red (about 5%) again as prices have fallen sharply from last Thursday's isolated high ($82.27 - September contract chart). Prices are now below both the 15-day and 45-day moving averages as we move into the center of another general reversal zone (July 18 - 29). We are in the time frame for a significant sub-cycle low in the current medium-term cycle of crude, and there is a support line just above $76 as we approach the center of this reversal zone. This market still looks bullish, so I am going to hold my long position for now with the idea that a bounce back up is imminent. A stop loss for this position can be based on a close below $76. MARKETS UPDATE (11:30 pm EDT)
Our main concern with the broad stock market right now is the likelihood of a potential peak (top) in a long-term 4-year cycle which is ideally due anytime now through the end of August. The correction down from this peak should be at least 16% - 26% from the top, and it would ideally bottom by the end of this year. If a longer-term 90-year correction is also in progress, the fall could be much more severe and last longer (i.e. into 2025-2026). For these reasons, I am now switching to a bearish trading strategy in this market. Although the market could push a bit higher into August, I am going to focus on finding a good spot to sell short and ride this correction down. Today was the last day of our strong general reversal zone, and the DOW made a new all-time high (41,376) before falling sharply and closing the day with a 533 point loss. The S&P 500 also made a new all-time high on Tuesday inside the reversal zone, and it has been falling sharply from there. The NASDAQ made a new all-time high last week on Thursday (also within the reversal zone) and it has fallen significantly from there (it is now below its 15-day moving average). These tops are significant sub-cycle crests, and they may even be the 4-year cycle crest I referred to above. We now wait for a sub-cycle corrective bottom to follow. If the correction is modest, we could still see another rally into August that may or may not make new all-time highs. But as I stated above, a 4-year cycle crest is imminent and should happen before the end of August, so we are not interested in chasing any possible rally at this point. If we do get any type of 'blow-off" top, we will be more interested in selling short near the peak. I am remaining on the sidelines of the broad stock market for now. My decision to take profits in my gold long position on Tuesday seems to have been a good one as prices peaked on Wednesday and have been falling from there. Silver prices are also falling steeply this week. While gold made a new weekly (and all-time) high this week, silver did not, and this creates a strong bearish divergence signal in the precious metal market. While it's possible for gold to make a modest sub--cycle correction (say, testing the 15-day moving average around $2400) and then rally back up to a new high, silver's bearish behavior (it is already below its 15-day AND 45-day moving averages) suggests both metals are turning bearish. I am staying on the sidelines of both gold and silver for the time being. Crude oil prices are rallying from last Tuesday's low at $80.22 (Aug. contract chart). That was near the center of our reversal zone and was likely a significant sub-cycle low. I entered a long position in crude on July 11, so today's rally puts this trade back in the black (profit). I am going to stay long here, but prices need to start closing above the recent high of $84.52 and then $85.27 to confirm that the current medium-term cycle is bullish. If it is, crude could rise to the $90 level fairly quickly. I am remaining long in my crude oil position for now. GOLD TRADE ALERT and UPDATE ON CRUDE OIL (3:00 pm EDT)
Gold prices are soaring today to a new all-time high ($2466), but silver, while rallying, is not even exceeding last week's high. This gives us a strong bearish divergence signal, and it's happening near the end of our current strong general reversal zone (July 9 - 18). We are also in the time frame for a significant sub-cycle peak. A correction down seems imminent, so I am going to take profits and sell my long position in gold today. If the correction down is modest, we may buy again, as this market could rally some more, but there's also a chance we are near the peak of a longer-term cycle that's about to take a longer-term correction. Thus, it's a good time to step aside (for now). I am still on the sidelines of silver. It looks like I bought crude oil a little too early last week as prices are edging below the isolated low from last Wednesday ($80.81 - Aug. contract chart). But we are still in our reversal zone (it ends Thursday), and a sub-cycle corrective bottom is due. Prices today are between the 15-day and 45-day moving averages, so a bottom could be forming here. I am am still holding my long position in crude. There should be strong support around $80. CRUDE OIL TRADE ALERT (3:00 pm EDT)
Crude oil made an isolated low yesterday between its 15-day and 45-day moving averages and it is closing above those averages today. This is happening near the center of our current strong general reversal zone (July 9 - 18) three trading days following last week's isolated high ($84.52 - Aug. contract chart - on July 5) which was also inside a strong reversal zone. Yesterday's low looks like a sub-cycle bottom (the first in a new and bullish medium-term cycle that began with the $72.44 low of June 4). It's possible prices could push lower tomorrow or even into next week, but if they do, they should stay between those moving averages, and a sub-cycle bottom would be imminent. I am going to enter a long position in crude today, as this market looks quite bullish, and the medium-term cycle is young. UPDATE AND COMMENTS ON THE BROAD STOCK MARKET (3:00 pm EDT) Today is a holiday in the U.S. (Independence Day, a.k.a "Fourth of July") and the stock market is closed. It will reopen tomorrow, but the trading will likely be thin as many people will be taking a long holiday week-end. Equities often rally into holidays, and all three of our market indices (DOW, S&P 500, NASDAQ) have done that. I thought today would be a good day to take an overview of this market and look at where we are in our current medium-term cycles. All three indices started new medium-term cycles with their lows in mid-April (April 17 for the DOW and April 19 for the S&P 500 and NASDAQ). All three rose from there and exceeded the highs from their previous medium-term cycles (although the DOW did this by a small margin and may have made a bearish "double-top") before dropping down into their first sub-cycle corrections - their lows on May 30 (DOW) and May 31 (S&P 500 and NASDAQ). From there, the S&P 500 and NASDAQ have soared to new all-time highs, but the DOW has been floundering and has not (yet) exceeded its May 20 all-time high of 40,077. This is creating a VERY strong bearish divergence signal in this market. A strong general reversal zone ends this week, but another one begins next Tuesday (July 9 - 18). A second sub-cycle correction is due (ideally) to bottom anytime by July 22. This means these indices should be topping out and rolling over very soon - either in this week's reversal zone or the one starting next week. Unless the DOW rockets up over the next several days, it looks like it will not exceed its all-time high of 40,077 before rolling over, and that would turn the cycle's trend bearish. If that happens, it would not bode well for the broad stock market as it could mean that a major longer-term correction is starting that could take all-three indices down to the final bottom of a 4-year cycle that is ideally due anytime between August and December with a potential 16 - 20% decline. (We also note that if a long-term 90-year cycle is in progress, the corrective decline would be even greater - possibly much greater). Based on this analysis, I am not anxious to buy into this market right now. If the DOW can rally and make a new all-time high soon, I may change my mind (as there is a possibility of a "blow-off" top before a big correction). Otherwise, I may be favoring bearish or short-selling strategies in upcoming trades. HAPPY FOURTH OF JULY TO ALL READERS !  MARKETS UPDATE (11:00 pm EDT)
Our bearish divergence signal in the broad stock market continues today as both the S&P 500 and NASDAQ leap to new all-time highs while the DOW still remains below its high from last week and also below its all-time high from May 20 (40,077). Our current strong general reversal zone ends Friday. It's not unusual for equities to rally into a holiday week-end (the Fourth of July celebration in the U.S.), but both the holiday and our reversal zone come to an end next Monday. This suggests we may be seeing a top by the end of this week followed by a significant correction down. We note, however, that another strong reversal zone starts early next week (July 9 - 18). A rally could continue pushing up into that time frame, but I think it's more likely we will see a corrective bottom inside that window. I am remaining on the sidelines of this market as we wait to see how this plays out. Until the DOW makes a new all-time high, I am very reluctant to buy into this market as a serious long-term correction in equities could be coming soon. Gold and silver are finally breaking through their 15-day and 45-day moving averages. This is a bullish sign and could indicate that a new medium-term cycle has begun in both metals (from their recent lows on June 7 for gold and June 26 for silver). Both those lows were in strong reversal zones, but if we make new highs in our current reversal zone or in the new one starting next week, it could put a damper on any rally. We have to be careful here and keep a close eye on our long position in gold. We are currently on the sidelines of silver. The U.S. Dollar Index may have made a significant high at 106.13 (inside our genera reversal zone), and if so,a corrective drop could be in progress. Any downturn in the greenback can give a boost to gold and silver prices. Crude oil has until Friday to make a top in our current reversal zone, but that could have happened with yesterday's high of $84.38 (Aug. contract chart)as prices have pulled back from there. We are still waiting for a corrective sub-cycle bottom to buy crude. That bottom could be imminent. A 2 - 8 day correction testing the 45-day and/or 15-day moving average would likely be a good buying opportunity. For now, I am on the sidelines of crude oil |
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