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Trading Blog Tuesday (evening), September 27, 2016

9/27/2016

MARKETS UPDATE (10:00 pm EDT)

It looks like the U.S. presidential debates are going to add more volatility to an already highly volatile equities market over the next several weeks as we move closer to election day on November 8. Politics aside, Wall Street does not like uncertainty, and in this presidential race Hillary Clinton, an establishment politician with a long history in political office, is a known quantity whereas Donald Trump, a political newcomer, is an unknown variable. This likely explains the fall in equity markets over the last several days as Trump seemed to be gaining on an apparently sick Hillary in the polls and also would explain today's strong rally after last night's debate in which Hillary gained back some points as she seemed polished, well prepared and completely recovered from any illness she may have had. (The polls today seem to be mixed as to who won the debate.) Note that I am not trying to support or discredit either candidate here but merely identify how financial markets are reacting to them.

The lows of Sept. 14 are still holding in the DOW and S&P 500 so equity markets could turn up now and start a strong rally into the election, especially if Hillary's support increases. If those lows start to break, however, we may have to change that bullish view. We still need to keep in mind that resistance in the DOW at 18,450 which needs to be broken before we can get too bullish. Still on the sidelines of this indecisive broad stock market.

Our bullish stance on gold and silver was challenged today as both metal prices dropped. Gold is still holding well above our stop loss point of $1,300, but silver dipped briefly below $19 before closing back above that line which was our second stop loss point (after $19.50). Silver has now broken below last week's low while gold hasn't (yet) so we have a case of intermarket bullish divergence (as long as gold doesn't go below $1,309). We are also entering a potentially strong reversal zone specifically for gold and silver from Wednesday through Friday and prices are falling into it. For these reasons I am going to hold on to my long position in both metals as a reversal up could be imminent. We may even tolerate silver falling below $19 as long as gold remains above $1,300 (but we don't want to see silver go below $18.40).

Crude oil prices shot up after we entered a long position early on Monday but are back down today, We are holding above our stop loss point around $44 (November contract chart). A subcycle bottom is due by the end of this week unless it already happened last week at $43.06 (very possible). If prices can stay above $43.06 through Friday then we should see crude start to rally. Holding my long position in crude.

Trading Blog Monday (early AM), September 26, 2016

9/25/2016

CRUDE OIL TRADE ALERT (12:30 am EDT)

Last Tuesday crude oil probably made a subcycle bottom (at $43.06 - November contract chart) within a reversal zone and then it rallied strongly on Wednesday and Thursday. Prices fell back on Friday and are now just above support around $44. This looks like a good point to go long for a new subcycle rally. If Tuesday's low was not the subcycle bottom, then there is the possibility of prices making a new low into the end of this week. Nevertheless, as long as prices stay above $41, that would also be a spot to buy. Right now it looks like Tuesday's low was it and a rally seems imminent. I am going to enter a long position in crude oil now for Monday's market open with a stop loss around $44 which is less than 2% from the current price. If this stop is triggered and prices move lower into Friday (but stay above $41), we will consider going long again.

Trading Blog Friday, September 23, 2016

9/23/2016

MARKETS UPDATE (3:00 pm EDT)

The strong equity rally Wednesday and Thursday triggered by the Fed's announcement of yet another delay in hiking interest rates seems to be taking a breather today and is backing off a bit from yesterday's high's. The DOW was unable to break above 18,450 (at least on its first try). In Wednesday's blog I wrote:

"We should see the broad stock market now rally into October, but first the DOW needs to break above a strong resistance at 18,400 - 18,450 (this is a "gap down" area from Sept.8-9 and is the right side of a "bearish island reversal"- see my blog on Sept. 12)."

Has the euphoria over the delayed rate hike subsided? (After all, Janet Yellen did strongly hint that one was coming before the end of the year.) We will have to wait a few more days to see if investor sentiment is turning negative. As long as the DOW and S&P 500 remain above their Sept. 14 lows, I think there is a good chance that the DOW will overcome that 18,450 level and equities will rally higher into October. Remaining on the sidelines of the broad stock market for now.

Gold and silver prices are also backing down a bit from their two day rally. I wrote in Wednesday's blog:

"If today's rally is not just a temporary knee-jerk reaction to the Fed then we should see it continue at least into mid-October with silver soon breaking above its Sept. 6 high of $20.12 ..... Volatility is still high in these markets, however, so we don't want to get too confident in our bullish position until we see this rally gain a little more momentum over the next few days. "

Silver got to $20.06 yesterday but is now back under $20 so we need to watch this carefully. Short-term technical signals for both metals still look quite bullish, however, and the next reversal zone for these metals is several weeks away. This suggests more rallying. Holding my long positions in both gold and silver.

Crude oil prices are plunging today and have lost nearly all of their strong gains from Wednesday and Thursday. It still looks like Tuesday's low at $43.06 (November contract chart) was a subcycle bottom so we should look to buy this correction as long as it stays above that low. I may enter a long position on Sunday or early next week. Stay tuned. On the sidelines of crude oil for now.

Trading Blog Wednesday (late night), Sept. 21, 2016

9/21/2016

MARKETS UPDATE (11:30 pm EDT)

As we (and most analysts) expected, the Fed announced no change in interest rates today as it released it's new policy statement following a two day FOMC meeting. Equity markets were a bit jittery in early trading leading up to the 2 pm statement release, but they rallied soon after and the DOW closed the day with a 167 point gain. Even though the Fed kept rates unchanged, Fed Chairwoman Janet Yellen hinted that one more increase this year will be "appropriate" as long as the economy remains relatively stable. Most analysts feel that could be in December as the Fed would not want to do a rate hike just before the presidential election in November.

We are now out of a strong reversal zone that has been with us for the last two weeks, and it looks like the turning point for a reversal in equities was on Sept. 14. We should see the broad stock market now rally into October, but first the DOW needs to break above a strong resistance at 18,400 - 18,450 (this is a "gap down" area from Sept.8-9 and is the right side of a "bearish island reversal"- see my blog on Sept. 12). The DOW closed at 18,293 today so we are getting close to that resistance. We should now be looking to get long again in equities, but I am going to wait a day or two to see how the markets digest today's Fed statement and Ms. Yellen's slightly hawkish comments on the next rate hike. On the sidelines of the broad stock market.

It looks like holding on to our long positions in gold and silver is paying off. The Fed's decision to delay an interest rate hike plunged the U.S. dollar today and caused an upsurge in the price of both precious metals. If today's rally is not just a temporary knee-jerk reaction to the Fed then we should see it continue at least into mid-October with silver soon breaking above its Sept. 6 high of $20.12. We are now out of last week's reversal zone for gold and silver and it appears that Sept. 16 was the turning point for this reversal. Volatility is still high in these markets, however, so we don't want to get too confident in our bullish position until we see this rally gain a little more momentum over the next few days. Holding our long positions in gold and silver.

In Monday's blog on crude oil I wrote:

"Another delayed rate hike would not only lift equities but likely crude prices as well. We are already in a good target range for a bottom in crude ($42 - $44), but I am uncomfortable right now with all the bearish technical signals. It looks like prices could fall lower into Wednesday which could be an ideal setup to buy (assuming the Fed does not hike interest rates)."

Well, prices did fall lower into early Tuesday ($43.06 - November contract chart) but then surged to $45 in late night trading. Today's "no hike" announcement kicked prices up further (to $45.80). Unless prices plunge back down tomorrow, it looks like Tuesday's low was a subcycle bottom and we should be looking to buy. There is some resistance around $46 so prices may back down a bit over the next day or two after today's strong rally and give us a better entry point to go long. Still on the sidelines of crude.

Trading Blog Monday, September 19, 2016

9/18/2016

MARKETS UPDATE and Comments on the Upcoming Fed Meeting (5:00 pm EDT)

We are approaching another FOMC meeting this week (Tuesday-Wednesday) and many financial markets are waiting with bated breath to see if the Federal Reserve will raise interest rates this time around. This meeting is especially significant because there will not be another one until Nov. 1 - 2, just a week before the U.S. presidential election. As I've been saying on this website for several weeks now, I think the current political establishment does not want a major market crash to happen before the election as that could favor the anti-establishment candidate (Trump). It remains to be seen whether or not the Fed (and others) can keep markets buoyant (or at least stable) into the end of the year, but recent history has shown that it is not wise to bet against them. Cycle and timing studies of the broad stock market currently allow for a rally into the end of the year so market manipulators may indeed be able to delay a major market correction past the election.

Next week's Fed meeting falls right at the end of a major reversal zone for all the markets we follow so the
Fed's decision on a rate hike (or not) may be the trigger for reversals in these markets. Most of these markets have been moving down into this reversal zone so it seems likely the Fed will hold back an interest rate hike to lift equity markets back up (a move that would also favor gold, silver and crude oil prices). Markets are extremely volatile at the moment, however, so if the Fed's rhetoric is too hawkish these markets might continue lower and breakdown instead of reverse up (less likely during a reversal period but still possible). The general consensus among analysts right now is that the Fed will not raise rates because of weak economic data, but there are some who are saying a surprise rate hike is possible.

Considering all of the above, it is probably best that we are now on the sidelines of the broad stock market (we took profits in our long positions last week). We will now be able to watch from a neutral position how this market moves before and after the Fed meeting and can plan our trading accordingly. It is possible that last Wednesday's low in the DOW and last Monday's low in the S&P 500 were significant bottoms and that the reversal up has now started. Dovish rhetoric from the Fed this Wednesday (i.e. no rate hike) could accelerate this incipient rally. If these indices make new lows over the next few days, however, a dovish Fed announcement on Wednesday could trigger a dramatic reversal up. If that happens, it could be a good spot to go long again with a close stop loss just below the turning points. We can't get too bullish, though, until we overcome that "gap down" resistance area in the DOW at 18,400 -18,450 (see last week's discussion of a "bearish island reversal" signal in the chart of the DOW). Of course, if the Fed decides to surprise everyone with a rate hike we could see equity markets really start to break down.
Based on the information I've presented here I think this scenario is unlikely. Still on the sidelines of the broad stock market.

Unlike our neutral position in the broad stock market, we are still holding our long positions in gold and silver. Both metals are rallying a bit from bottoms made on Friday (which was within the current reversal zone), but the rallies seem a bit weak at the moment. The cycle structures of these metals are ambiguous now and allow for a few different interpretations. If silver's August 28 low at $18.40 was the start of a new medium-term cycle (still possible), then this market should be bullish and will soon rally and break above $20. If silver didn't start a new cycle on Aug. 28 then this could be an older cycle that hasn't bottomed yet (but will soon), and prices could move below $18.40. This scenario could possibly play out if the Fed decides to raise interest rates (which would boost the dollar and depress the precious metals). Even if silver falls lower, however, it would still be close to a cycle bottom and we would be looking for a spot to buy. Earlier this month gold rallied to $1,352, but prices have been edging down since then. There is key support for gold at $1,300. If prices break and close below there, gold could move down to $1,280 or even lower. A hawkish Fed statement on Wednesday (i.e. an interest rate hike) could trigger this scenario. So the key supports to watch now would be $18.40 in silver and $1,300 in gold. If we break below both these levels then it is bearish, but if gold breaks below $1,300 and silver stays above $18.40 (or if silver breaks below $18.40 and gold stays above $1,300) then we would have a strong case of bullish intermarket divergence, and that could be very bullish and lead to a strong rally. Despite the bearish speculations I have presented here, I am favoring the bullish scenario. There are technical signals in this market that suggest a bottom is forming now, we are in a reversal zone, and it seems likely that the Fed will not raise interest rates. Let's hold on to our long positions in gold and silver for now and watch for a case of intermarket bullish divergence as described above. Stay tuned for updates as we move into Wednesday's Fed meeting.

Crude oil prices made a new monthly low on Friday at $42.74 (October contract chart) which is within a reversal zone so that could be the bottom of a subcycle correction that is due this week or next. Directional momentum in crude is now strongly bearish, however, and today prices surged briefly above $44 before losing all of the day's gains and falling back to close the day with a 1.3% loss (at $43.25). This is bearish behavior. Like the other markets, crude's direction could be determined by the Fed's decision on Wednesday. Another delayed rate hike would not only lift equities but likely crude prices as well. We are already in a good target range for a bottom in crude ($42 - $44), but I am uncomfortable right now with all the bearish technical signals. It looks like prices could fall lower into Wednesday which could be an ideal setup to buy (assuming the Fed does not hike interest rates). Let's remain on the sidelines for now and see how prices move into Wednesday.

Trading Blog Tuesday, September 13, 2016

9/13/2016

MARKETS UPDATE (5:15 pm EDT)

Fed officials have thankfully been silent today and will likely be so until the next FOMC meeting Sept. 20-21. The week or two leading up to a meeting is usually a "blackout" period for the Fed. After throwing out mixed signals about raising interest rates over the last several days (and turning equity markets into a seesaw), the Fed will likely be tight lipped for the next eight days while investors and traders are left in the dark to speculate on what they will announce at the end of their September meeting.

Markets do not like uncertainty so it is not surprising that equities are continuing their seesaw action with another strong plunge today following yesterday's surge. The DOW and S&P 500 moved back down close to Monday's lows but stopped short of making new lows. The broad stock market may find support here for a reversal, but in terms of timing we could still see new lows into the middle of next week and be within the current reversal zone. I am still anticipating a bullish reversal as long as the DOW stays above 17,800 and the S&P 500 above 2,040. We were able to sell our long positions early this morning before most of today's plunge and thus preserve some profit from that July 6th trade. We will now wait and see if the market drops further or starts to rise and overcome that "gap down" resistance at 18,400 - 18,450 in the DOW. Now on the sidelines of the broad stock market.

The U.S. Dollar Index snapped back up today after yesterday's move down (which had been triggered by dovish rhetoric from the Fed). This put more downward pressure on the precious metals. Gold prices are still staying above $1,300, but silver is breaking below our stop loss level of $19. I am going to stretch that stop loss down to $18.50 as we are now in the center of a strong reversal zone for these metals and a reversal is likely over the next day or two. We are also in the center of a reversal zone for currencies so the current dollar rally could turn down and kick off a rally in gold and silver. What we don't want to see is gold close below $1,300 as that could mean the trend is turning bearish. Holding my long positions in both gold and silver.

Crude oil prices have also been "seesawing" and are down sharply today after yesterday's price surge. I would still like to see a bottom in the $43 - $44 range by the end of this week which could be a good spot to buy. Today's low was $44.77 (October contract chart) so we are getting there. On the sidelines of crude oil for now.

Trading Blog Monday (late night), September 12, 2016

9/12/2016

BROAD STOCK MARKET TRADE ALERT and MARKETS UPDATE (11:30 pm EDT)

The broad stock market has certainly given traders a wild ride over the last two days with a nervous Wall Street jumping at comments made by Federal Reserve officials in the news. Hawkish Fed comments last week led to a dramatic Friday selloff (the DOW dropped 394 points), but today dovish Federal Reserve Gov. Lael Brainard called for "prudence" in raising interest rates. This triggered a surge in equities which negated more than half of Friday's loss (the DOW rose 239 points). Several analysts are speculating that the Fed was testing the market's reaction with their hawkish rhetoric last week and that when they saw it was not good they had Ms. Brainard calm the waters with her dovish statements today. Another theory being postulated by more conspiracy minded analysts is that the Fed deliberately tanked an overbought market last week to relieve selling pressure and set the stage for more rallying into the November presidential election. If either theory is correct, it appears to have worked - so far. We still have a week and a half of trading before the next Fed meeting tells us what the Fed will do with interest rates.

Both the DOW and S&P 500 got close to our target levels for a correction on Friday, and this is within the current reversal zone for this market. Was that the bottom of the correction? It could be, but Friday's steep plunge in the DOW was preceded by a fairly large "gap down" which now can act as resistance going back up. We can also see that there was a "gap up" on September 2 which, when combined with Friday's "gap down" forms a "bearish island reversal" signal. (The "island" would be the DOW's trading days between the gap up and gap down). This chart pattern puts downward pressure on any rally until the market can overcome the gap down area. In this case that would be 18,400 - 18,450 in the DOW. This has me concerned, especially as Friday was very early for a corrective bottom (the current reversal zone extends into the middle of next week). Because today's rally brought the DOW back up to that 18,400 gap line, we could easily see it fall again to a new low this week or into next week. Also, we should be aware of the fact that a market that falls and rises over 200 points in two days is extremely volatile and is susceptible to panic selling. This brings me to what we should do with our current long position in the broad stock market (entered on July 6). Since I think another downswing is possible, I am going to take profits now in these long positions and watch how the market moves this week into early next week. If it does make a new low that stays above 17,800 in the DOW and 2,040 in the S&P 500, we will consider going long again for a strong rally into the election. If the DOW manages to break through that "gap down" area and close above 18,450 at the end of this week, we will also consider getting back in with a close stop loss just beneath the gap down line. This strategy will allow us to capture some profits now and avoid the risk of being caught in another (possibly severe) selloff. It also gives us clear entry points for reentering if the market turns bullish. I am placing an order tonight to unload (sell) my long position in the broad stock market at tomorrow's (Tuesday's) open.

After hawkish Fed comments boosted the U.S. dollar and pushed precious metal prices down on Friday I wrote:

"Gold is remaining well above $1,300 and silver above $19 ... today's dollar rally may just be a knee-jerk reaction to the Fed's comments. I am holding my long position in both metals today as we are expecting prices to turn up and start to rally any time between now and the end of next week."

Gold and silver prices pushed a bit lower in early trading today (silver moved briefly below our $19 stop loss area), but the Fed's dovish comments in the afternoon caused them to snap right back up (as the U.S. dollar weakened). Friday's drop may indeed have been a knee-jerk reaction to the Fed, but today's rally may be another one. We therefore need to be cautious here. Today's low in gold and silver, however, is right at the dead center of a strong reversal zone for the precious metals so there is a good chance that we will see more rallying. It still looks like silver started a new medium-term cycle on Aug. 28, and that is bullish as long as prices stay above $18.40. Holding my long position in gold and silver.

Crude oil charts are looking a little ambiguous right now, and it is not clear if prices want to move lower or break higher. We are also now in the center of a reversal zone for crude. Prices made an isolated low on Sunday, but this reversal zone extends into the end of this week so there is still time for crude to make a new low (or a double bottom to the $43 low from Sept. 1) by Friday. That would be an ideal setup to buy, especially if prices can stay above $42.
Still on the sidelines of crude oil.

Trading Blog Friday, September 9, 2016

9/9/2016

COMMENT ON TODAY'S SELLOFF and BRIEF MARKETS UPDATE (3:00 pm EDT)

In a recent blog I commented that the month of September could be very volatile for many markets. That is turning out to be true. Equities (and other markets) are very much on edge and are sensitive to news stories related to global economics as well as significant geopolitical events. Wall Street was already disappointed by the lack of more stimulus from the ECB to help Europe's sagging economy earlier this week, and today a voter on the Federal Reserve's interest-rate setting board announced that the Fed could resume gradual rate increases because the risks facing our economy are now more in balance. This is triggering a strong selloff in equities. Of course, readers of this blog know that we have been anticipating a correction. In yesterday's blog I wrote:

"We are entering a strong reversal zone for the broad stock market next week so there is still time to either rally and make a top at new highs or fall below last week's lows and make a bottom."

It now looks like we will get a bottom. Ideally this would be due sometime next week. A good target for the correction would be around 18,000 in the DOW and around 2,100 in the S&P 500. If we get below those levels we may cover our long positions (entered on July 6) as there could be a more serious selloff in progress. I still feel that once this correction bottoms we will see more rallying towards new highs into the November presidential election. Holding my long position in the broad stock market for now.

Fear of an interest rate hike also boosted the U.S. dollar today and caused gold and silver prices to dip a bit lower. Gold is remaining well above $1,300 and silver above $19 and today's dollar rally may just be a knee-jerk reaction to the Fed's comments. I am holding my long position in both metals today as we are expecting prices to turn up and start to rally any time between now and the end of next week.

Today crude oil lost all of its gains from yesterday's price surge (triggered by the announcement of a surprisingly large drop in U.S. domestic crude supplies). We may still be on track for a new bottom in crude in next week's reversal zone if prices continue lower. If this happens we will be looking to buy. On the sidelines of crude oil.

Trading Blog Thursday, September 8, 2016

9/8/2016

SILVER TRADE ALERT and MARKETS UPDATE (6:00 pm EDT)

In Tuesday's blog on gold and silver I wrote:

"We got long in gold on Aug. 25 but held off buying silver as it was not clear whether or not its medium-term cycle bottom was in. We can probably confirm that bottom now (Aug. 28 at $18.40) and should be looking to buy silver as the start of a new cycle is usually very bullish. The only problem is that we are now entering a strong reversal zone specifically related to precious metals (this week and into next week) so we may see a sudden pullback in prices. That could give us a second chance to buy silver which is now pushing against resistance around $20 and could start to back down."

Silver prices have backed down from Tuesday's high of $20.12. That top was a "pivot point" at the start of a general reversal zone for gold and silver (gold fell too) which will extend into next Thursday. Prices are now dropping into the center of of this zone and could turn back up any time before then. The U.S. Dollar Index (which generally moves opposite precious metal prices) "gapped" down Tuesday from 95.75 to just below 95. The dollar could rise and start to fill that gap, but there is resistance there, and other technical signals in the U.S. Dollar Index chart are suggesting that the dollar could move lower. A falling dollar would support a rise in the precious metals. For all of these reasons I am going to enter a long position in silver tonight for the opening of tomorrow's market. Silver (and gold) prices could fall lower before next Thursday, but there is some support for silver at $19.50 and then $19.00, and we are now in the center of this reversal zone with the dollar poised to move lower. We can place our stop loss for this trade around $19.00 (or even $19.50 if gold falls below $1,300). Going long in silver and still holding our long position in gold.

Equity markets this week are staying above last week's lows but seem reluctant to rally. We are entering a strong reversal zone for the broad stock market next week so there is still time to either rally and make a top at new highs or fall below last week's lows and make a bottom. Directional momentum is currently mixed bullish and bearish in this market, but some short-term technical signals are slightly in favor of more rallying. We will have to wait and see how this plays out. Today's meeting of European Central Bank officials put a slight damper on equities as the ECB decided to keep interest rates steady but did not announce any additional measures to boost Europe's sluggish economy. We are still holding our long position in the broad stock market and will watch how equities move into next week. As I stated in my last blog post, we will probably look to take profits if these markets make new highs then.

On Tuesday I wrote on crude oil:

"Crude prices have been rising from last week's low of $43 and are now above $44 again. The cycle structure of this market is suggestive of a significant bottom into the next reversal zone near the end of this week into early next week. If we get that we will look to buy (as long as prices stay above $40)."

Well, we are not getting that. Today the U.S. government reported the largest drop in domestic crude oil supplies in 17 years. This caused the price of crude to soar above $47. While it is still possible for prices to drop to new lows next week, that seems less likely now. We may instead see new highs in this reversal zone which could give us a setup to sell short. If this market does continue to rally next week I will need to revise the cycle structure timing to accommodate this price surge. Still on the sidelines of crude.

Trading Blog Tuesday (evening), September 6, 2016

9/6/2016

MARKETS UPDATE (9:30 pm EDT)

In last Thursday's blog post I wrote:

"Tomorrow's jobs report could determine whether we see equities rise or fall next week. Fed officials have been making hawkish statements in the news recently that seem to be suggesting that they could raise interest rates soon, perhaps even twice before the year is over, if economic data supports it. A positive jobs report on Friday might scare investors into selling in anticipation of rate hikes."

Well, the jobs report on Friday turned out to be disappointing. This was a relief to investors, and the broad stock market rallied. It rallied again today. We are now out of last week's reversal zone. As long as the DOW, S&P 500 and NASDAQ can stay above last week's lows, we should see these markets rally to new highs into the next reversal zone that is coming up next week. That may turn out to be a good point to take profits on our long positions. If equities fall this week, however, we may see next week's reversal correspond to a bottom instead of a top. If that happens it could be a good opportunity to add to long positions or buy if not already long. It is too early to tell which scenario will unfold, but in both cases our overall strategy is to be bullish into the upcoming presidential election in November. If we do end up taking profits on our longs at new highs next week, we will look to buy again at the bottom of any correction that doesn't go too low. Still holding my long position in the broad stock market.

The weak jobs report (which makes an imminent rate hike less likely) not surprisingly weakened the U.S. Dollar Index which dipped down strongly on Friday and today took another steep plunge (closing the day at 94.84). This has given a strong boost to gold and silver prices. Gold recently made a bottom on Sept. 1 and silver made a bottom on Aug. 28. Both days were within our last reversal zone and we were anticipating a turn-up and rally in both metals. It looks like that is happening. We got long in gold on Aug. 25 but held off buying silver as it was not clear whether or not its medium-term cycle bottom was in. We can probably confirm that bottom now (Aug. 28 at $18.40) and should be looking to buy silver as the start of a new cycle is usually very bullish. The only problem is that we are now entering a strong reversal zone specifically related to precious metals (this week and into next week) so we may see a sudden pullback in prices. That could give us a second chance to buy silver which is now pushing against resistance around $20 and could start to back down. We could see some extremely volatile price moves in the precious metals this week so we need to be very careful with any trading. We don't want to see silver move back down below $18.40 and we don't want to see gold break below $1,300 (our stop loss for our long position). Holding my long position in gold but still waiting to buy silver.

In last Thursday's blog on crude oil I wrote:

"Crude oil prices dropped steeply this week and today broke below a strong support level at $44 (October contract chart). We are now out of a reversal zone for crude, but another one is coming up near the end of next week so we should wait to see if prices move lower into that time. If prices get too low (i.e. below $40) this market's trend may be turning bearish."

Crude prices have been rising from last week's low of $43 and are now above $44 again. The cycle structure of this market is suggestive of a significant bottom into the next reversal zone near the end of this week into early next week. If we get that we will look to buy (as long as prices stay above $40). Still on the sidelines of crude oil.

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