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Trading Blog         Thursday,  October 30,  2014

10/30/2014

 
MARKETS  UPDATE  (5:15 pm EST)

Despite hopeful speculation by nervous investors that the Fed might extend its bond buying program (QE) or at least further delay the raising of short-term interest rates, the minutes of yesterday's FOMC meeting showed neither one of these dovish accommodations to placate jittery markets.  The Fed did just what it had been saying it was going to do for many months - it announced the end of its 5 year program of bond purchasing that has supported the stock market since the crash of 2008 - 2009.  The FOMC statement also reiterated its pledge to keep benchmark short-term interest rates near zero for a "considerable time" after bond buying ends.  Fed policymakers have previously suggested that the first rate hike will be around the middle of next year. 


The broad stock market had a strong two week rally leading into the day of the Fed meeting which indicated strong investor optimism (hopes for QE4?).  The market seemed a little nervous on Wednesday and dropped a bit after the FOMC statement was released, but then it recovered and is rallying strongly today.  Significantly, strong bullish momentum signals are now appearing in the charts of the DOW, S&P 500 and NASDAQ and all three indices are now mixed bullish and bearish (they had previously been 100% bearish).  Apparently the market has already factored in the idea of a QE exit and seems happy with the Fed's positive statements about the economy and continued pledge to keep interest rates low for a "considerable time".  Fortunately, I sensed this potential bullish turn earlier in the week and we were able to exit our short position on Tuesday with just a small loss.  Should we now go long in this market?  No, I don't think so, at least not yet.  All financial markets are still quite volatile.  This one could still turn down tomorrow; however, if the broad stock market rallies higher into next week then we are looking at another distorted cycle and will have to reevaluate our trading strategy.  On the sidelines for now.

The FOMC statement's slightly "hawkish" tone (no more QE and no additional delaying of the suggested mid-2015 interest rate hike) triggered a surge in the U.S. Dollar Index as it suggests the Fed is becoming fiscally responsible (is this possible?) and makes U.S. currency more appealing.  Of course, this had the opposite effect on the precious metals (which are seen as hedges against inflation and fiscal irresponsibility).  Gold and silver prices plunged yesterday and today.   A week and a half ago I wrote that, "...Technical and cycle data are suggesting a reversal soon in the precious metals that could take prices down to new lows (and possibly the long-term cycle bottoms in both gold and silver)...."   It looks like this could be happening now.  Silver is now making a new multiyear low while gold is approaching its recent multiyear low at $1183.  These prices could go lower so I am going to continue to hold my short position in gold and will consider shorting silver if we get a brief relief rally off of today's steep fall.  The next major turning point for this market could be the second or third week of November, so unless prices start to turn up now, they could continue lower into that time frame (and possibly longer).  Holding my short position in gold.

Crude oil seems to be forming a baseline in the $80 - $84 range but also seems reluctant to rally.  The cycle structure of this market still points to the start of a new cycle (low) anytime now (it is overdue) and the Oct.16th low at $79.78 may have been it.  If prices start to move below $81.5 we will watch for a bottom from Nov.5 - Nov.14. that could be a double bottom to the Oct.16th low or a new low.  We are already in the red with our long position in crude so we don't want to see this low break below $79 (our final stop loss).  If the broad stock market is indeed turning bullish now we could see crude oil rise with it as these two markets often move in tandem.  Holding my long position in crude oil for now.





Trading Blog              Tuesday,  October 28,  2014

10/28/2014

 
BROAD STOCK MARKET TRADE ALERT  (3:15 pm EST)

There is a lot of financial market chatter right now about the possibility of the Fed introducing the idea (most likely not the immediate implementation) of a fourth round of quantitative easing (QE4) at its meeting on Wednesday (see Sunday's blog).  
Many are seeing the anticipation of this possibility as the explanation for the broad stock market's vigorous rally over the last two weeks.  If that is true then a Fed statement tomorrow without a mention of QE4 could put a damper on the rally and trigger a serious downslide.  On the other hand, even a brief mention of QE4 could propel the rally higher.  Last Thursday the DOW shot up to almost 16,800 but then pulled back strongly which was suggestive of a top.  I entered a short position with a tight stop loss at 16,850.  Today the DOW is breaking that level and has even cleared 16,900 at the time of this writing.  There was extremely strong resistance from 16,850 to 16,900, and the fact that this broke so easily suggests that this market could be turning bullish again.  A further sign of market strength is the fact that a strong bullish momentum signal appeared in the NASDAQ today which makes this index now mixed bearish and bullish (the DOW and S&P remain nearly 100% bearish).  For all of these reasons I am going to pull out (cover) my short position in the broad stock market today (with a small loss of about 1%) and stand aside to see what the Fed meeting brings us tomorrow.  If the market does decide to turn down we may be able to reestablish our short position if the correction is serious, but I think the risk of this market turning bullish at the moment is strong enough to make the case for stepping aside right now.  Covering (unloading) my short position in the broad stock market today and standing aside this market for now.




Trading Blog          Sunday,  October 26,  2014

10/26/2014

 
NATURAL MARKET CYCLES  VS.  POTENTIAL MANIPULATION BY THE FEDERAL RESERVE - 
ASSESSING CURRENT TRADE RISK

Next week's Federal Reserve meetin
g is an important one as the Fed is supposed to announce the end of QE (quantitative easing), the bond buying program that has been supporting the U.S. stock market's nearly uninterrupted steady rise from its crash in 2008 -2009.  The Fed is aware of the negative impact this could have on an already nervous and jittery market and has recently (over the last several months) been trying to calm investors with promises of not raising interest rates "too soon".  This may not be enough, however, to soothe current markets as most investors are expecting interest rates to start rising by the middle of next year and possibly even sooner, and this is not so far down the road.  An increasingly unstable geopolitical environment is also contributing to recent market nervousness.

There has been a lot of speculation over the last few weeks about the possibility of the Fed starting a new round of QE (which is being called QE4 by some - referencing the three previous rounds of QE in 2010, 2011, and 2012) with some financial industry participants even urging the Fed to do this.  I think it would be unwise to underestimate the power of the Fed to keep the stock market buoyant, so I am taking this possibility seriously, especially as it could adversely affect our current trading positions.

There are presently strong cycle patterns as well as technical analysis and timing signals pointing to imminent significant corrections in both the broad stock market and the precious metals market (see recent blogs).  A lot of this analysis is predicated on the flow of natural financial cycles in a free market, that is, a market that is not manipulated.  If the Fed intervenes with QE4 (or perhaps a more covert program of intervention) it could excite Wall Street into a state of (Greenspanian) "irrational exuberance", kick equity markets into high gear and diminish or truncate any significant potential corrections (at least for now).  Gold would also likely benefit from this as many precious metal investors would realize that more QE could easily lead to runaway inflation (or hyperinflation) which diminishes the value of the dollar and makes hard assets (like gold and silver) much more valuable.  My point here is that our current short positions in gold and the broad stock market could be in jeopardy should the Fed consider a fourth round of QE at its meeting next week.  We will watch this situation carefully and maintain tight top losses on our short positions, even at the risk of being "whipsawed" out should investors have a positive knee-jerk reaction to any Fed announcement but then quickly change their minds and become bearish. 

I should note here that any blissful reaction by equity markets to the news of more QE is really quite foolish. (Of course, the stock market is known to be rather short-sighted and does not usually operate on rational thought or logic. Greed, fear, and strong emotions are its usual driving forces).  Most people realize that one should not attempt to rescue someone in debt by giving them more debt. Or perhaps a better analogy would be "helping" a drug addict by giving him or her more drugs. This usually leads to the eventual demise of the addict.  In the case of financial markets, more QE could lead to the demise or breaking of an already bloated bull market "bubble" and a long overdue market correction that could be abrupt, severe, and long-lasting.




Trading Blog          Thursday,  October 23,  2014

10/23/2014

 
GOLD and BROAD STOCK MARKET TRADE ALERT  (2:45 pm EST)

The broad stock market has been rallying strongly this week, and the DOW is now approaching the upper level of my target area (16,500 -16,800) to sell short.  We are also entering a timing window (Oct. 22 - 29) when a market reversal is likely so this looks like an ideal time to enter short positions in this market.  As I mentioned in my last blog, many analysts that I follow feel that the current rally is a "sucker rally" and will turn back down to make new lows, and the technical and cycle analysis continues to support this idea.  I am therefore going to sell short the broad stock market today with a close stop loss on a close above 16,850 in the DOW (this is only 150 points from our entry price - a good risk/reward setup).  It looks like the October Federal Reserve meeting next week is falling right into our reversal zone so that could be the catalyst that turns the market down.  Selling short the broad stock market today.

Gold prices made a top on Tuesday at $1254 (in our target zone) and are now falling.  As I stated in Monday's blog: 
 
"...Technical and cycle data are suggesting a reversal soon in the precious metals that could take prices down to new lows (and possibly the long-term cycle bottoms in both gold and silver).  We will now watch for signs of that reversal which could be sometime this week..."

A short-term sell signal appeared in today's gold
 charts so I am going to sell gold short today with a tight stop loss on a close above $1250.  I am again avoiding trading silver at the moment as silver tends to be more volatile than gold and is a higher trade risk in the currently erratic market environment.  Entering short positions in gold today.





Trading Blog           Monday,  October 20,  2014

10/20/2014

 
GOLD TRADE ALERT and MARKETS UPDATE  (2:30 pm EST)

It looks like it is a good time to cover our long position in gold and start looking for a point to sell short the precious metals market. The charts for gold and silver mining company indices HUI and XAU continue to be strongly bearish which does not bode well for these metals short-term.  Gold prices today are approaching resistance in the $1251 area, and we are in our original target zone for this rally so I am going to sell my gold long positions for a decent short-term profit and stand aside the precious metals for now. Technical and cycle data are suggesting a reversal soon in the precious metals that could take prices down to new lows (and possibly the long-term cycle bottoms in both gold and silver).  We will now watch for signs of that reversal which could be sometime this week (possibly today if the market turns here and gives a short-term sell signal).  If gold prices push higher into the week then Friday could end up being the turning point.  Selling gold long positions today and standing aside the precious metals for now.

After a wild and extremely volatile week, the broad stock market closed last Friday with a strong rally, and the DOW surged up 263 points.  Some investors were encouraged by this and are viewing Wednesday's low at 15,855 as the final bottom to this correction.  Most of the analysts I follow, however, do not agree and are viewing the bounce from Wednesday as a short-term relief rally soon to be followed by new lows. Technical and cycle data are also supporting this bearish view.  My trading strategy, therefore, continues to be bearish and we will try to sell short the top of this rally, maybe even this week.  An ideal target in the DOW would be in the 16.500 - 16,800 range (in the S&P 500 it would be 1900 - 1930) preferably later in the week, but markets are still trading in a volatile environment so we may not see that ideal setup.  In fact, the high may already be in with Friday's 16,427 DOW top.  We will have to wait and see how the market moves over the next few days.  On the sidelines but looking to sell short soon. 

Crude oil prices seem to be holding above my final line in the sand support level at $79.  As I discussed in my last blog, the current crude cycle may be distorting, but if the Oct.16 low ($79.78) turns out to be the final bottom to this correction, then we are on track with a new cycle and this would be bullish.  Holding my long position in crude oil with a tight stop loss on a close below $79.




Trading Blog            Wednesday, October 15,  2014

10/15/2014

 
 MARKETS UPDATE  (8:00 pm EST)

The broad stock market was clearly in a pessimistic mood early in today's trading as the DOW dropped nearly 400 points by early afternoon, but then it recovered a bit and closed the day with only a 173 point loss.  Many support levels have now been broken, and the cycle pattern indicates that this market should be going lower for at least three more weeks.  The DOW's correction from its Sept.19th all-time high of 17,350 is now over 8%, so it looks like we are approaching the 10% or more correction that has been overdue for some time.  As I've stated before on the site, when major cycle corrections are delayed, they often manifest later in an abrupt and sharp fashion and are hard to pinpoint and trade.  This week's dramatic plunge is an example of this as a "normal" market would have rallied a bit more before falling.  Technical factors are now suggesting that this correction could be considerably more than 10% (possibly 17% or even more) so I am still going to be looking for an opportunity to sell this market short.  Equities are extremely oversold right now and a reversal is still possible so we may get a relief rally over the next several days. 
If we do, it might give us a good spot to sell short.  Still on the sidelines.

Gold and silver continue to rally (especially gold) and gold prices nearly touched $1250 today which is the midpoint of my first target range ($1240 - $1260) for this rally.  However, I think prices could go higher and I am not ready to take profits on long positions just yet.  Gold is overbought right now and may pull back a bit, but as long as prices remain above the $1210 - $1220 area I am holding on to my long position in gold.

After nearly four months of bullish momentum and strong rallying, the U.S. Dollar Index is starting to show some signs of weakness.  The dollar dropped sharply today (intraday) to support at 84.5 as a bearish momentum signal appeared in dollar charts.  Directional momentum is now mixed bullish and bearish for this index which means the current dollar correction could turn out to be more than just a shallow dip.  We will have to wait and see.  This is good news for the precious metals as a slump in the dollar encourages higher prices in gold and silver.

My patience in waiting for a bottom in crude oil prices is starting to wear thin.  There are two reasons I have held on to my long oil position recently.  First, the current cycle in crude has reached its maximum duration length.  This length is based on statistical probability; in other words, it is highly likely the cycle bottom is happening now (this week).  If the cycle doesn't bottom now and continues for several more weeks it is distorting, which is possible but less likely. Secondly, last week and early this week has been a time period when directional reversals in many financial markets can occur, and crude has been moving down and making new lows into this timing window.  My line in the sand now is $79 - $80, and I will have to bail out of this long oil position if that price level is breached.  We nearly touched $80 today, and prices closed in the upper part of the day's trading range so we may get a bounce here, especially if the broad stock market has a relief rally now.  Still holding my long position in crude.

With tensions in the Middle East heating up, one would expect oil prices to be rising.  So what could be sending crude prices lower and causing the crude cycle to distort right now?  A recent article posted on the news site VOX (http://www.vox.com/2014/10/14/6975977/which-countries-suffer-most-when-oil-prices-plummet) may have the answer to this question.  It points out how falling oil prices could crush Russia's current economy since oil revenues account for roughly 45% of Russia's budget.  With the recent conflicts in Ukraine and Syria intensifying, many geopolitical analysts are already referring to a new "cold war" developing between Russia and the West.  The downward manipulation of crude prices to subjugate an increasingly obstinate Vladimir Putin seems to be a possibility here, especially in light of the fact that some Washington politicians were discussing the possibility of selling U.S. oil reserves earlier this year to lower oil prices and weaken the Russian economy.  The purpose of this website is not to discuss conspiracy theories, but when distortion occurs in the natural cycle of a financial market, I believe market manipulation can sometimes be a significant force behind it, and I think it is worth mentioning.   As traders, I believe we need to accept the fact that market manipulation does happen.   When it does, it can be like someone throwing a wrench into our carefully worked out technical and cycle analysis, and trading can become very difficult, though not impossible.  Interestingly, I have noted over the years that even though market manipulation often distorts cycles, it usually doesn't eliminate them.  Thus we are not totally lost when a cycle shift occurs and can usually in short time figure out how our trading strategy needs to be altered and realigned to the new pattern.




Trading Blog            Monday,  October 13,  2014

10/13/2014

 
MARKETS  UPDATE  (3:15 pm EST)

We are now at the end of a timing window for a reversal in the broad stock market and the DOW, S&P 500 and NASDAQ are all making new lows today.  If this market is going to turn up it needs to do so within the next day or two or we could start seeing a serious breakdown.  The DOW breached an important support zone at 16,600 on Friday, but there is more support all the way down to 16,333.  If this index closes below the 16,333 area, equity markets will likely continue lower for at least three more weeks and probably longer as the current cycle makes its final bottom.   That said, there is still the possibility of a reversal here and a brief but sharp rally into late October/early November. Ideally this is what I would like to see as it could present us with an excellent opportunity to sell short what could be a major correction in the broad stock market.  Unfortunately, that correction may already be in progress if the DOW continues to fall past Wednesday.  Directional momentum in the S&P 500 and NASDAQ are now 100% bearish, but the DOW remains mixed bullish and bearish which leaves some hope for a reversal and rally now.  Remaining on the sidelines for now.
(UPDATE @ 4:45 pm EST):
Nervous investors in the last hour of today's trading triggered a major sell-off and the DOW closed the day with a 223 point loss.  More importantly, the market closed below 16,333 ( i.e. the start of the current cycle) and directional momentum for the DOW has now switched to 100% bearish.  This means that the broad stock market will probably be trending down for at least  3-4 more weeks.  Nevertheless, we could still get a brief bounce here.  Our trading strategy is still bearish (i.e. looking to short sell at the top of significant rallies). 

Gold has been rallying quite strongly from its low on Oct. 5, and a new bullish momentum signal appeared on Sunday in gold metal charts.  This makes directional momentum in gold now mixed bullish and bearish.  Silver's momentum, however, remains mostly bearish, and silver's rally from Oct. 5 has been weak compared to gold's.  This divergence between gold and silver supports the idea that the current rally in precious metals is not a breakout and could turn down again soon.  Gold is now close to my first price target of $1240, but it is possible this rally could go as high as $1260 or even $1290.  Silver could rise to the $18 - $18.50 area.  (I am avoiding trading silver right now because all markets are extremely volatile this month and silver can be especially erratic under such conditions).  Ideally, this rally will peak into late October or early November and then turn down for another correction into the final cycle bottom for both gold and silver.  I am going to stay with my long position in gold for now, but if prices rise into the $1240 - $1260 area I will consider taking profits and will start to look for an opportunity to sell short.  Holding my long position in gold and on the sidelines of silver for now.

Crude oil prices are remaining above $84 and cycle studies still point to a bottom now.  A rally from this bottom should be imminent so I am still holding on to my (modest) long position.  Crude could be taking a bearish cue from the broad stock market, and a rally in equities now might help kick start a new cycle in crude.  We don't want to see crude make a new low past Wednesday of this week as this could mean the cycle pattern is distorting and the bottom could go significantly lower.  Holding my long position in crude for now.





Trading Blog               Thursday,  October 9,  2014         

10/9/2014

 
MARKETS  UPDATE  (8:00 pm EST)

In last Sunday's blog I wrote:  " ...there are several technical factors suggesting more volatility over the next several weeks.  We need to be especially careful with our trading as market movements in this environment could be erratic and unpredictable."

We are certainly seeing this in the broad stock market this week with wild, triple digit fluctuations in the DOW.  The DOW attempted to close above 17,000 on Monday but couldn't, and then it plunged 272 points on Tuesday.  On Wednesday, minutes of the September FOMC meeting were released in which the Federal Reserve reaffirmed its intent to be prudent in raising interest rates.  This not only calmed Wall Street investors but made them jubilant, and the DOW soared 274 points.  Today, however, the DOW is back down with a 334 point loss for the day.  This is obviously an extremely nervous and unstable market right now which tells us to be cautious in our trading.  We are moving into the end of this week's time period for a likely reversal in the the markets as the DOW makes new lows close to 16,600.  We might be seeing a good buy spot here, but some short-term indicators are bearish and suggest the possibility of more downside.  If prices continue to hold above 16,600 over the next few days I will consider going long for a short-term rally, especially if short-term technical indicators turn bullish.  As I've been stating in recent blogs, a significant correction of 10% or more is overdue in equity markets.  It could be in progress now if the DOW starts closing below 16,600, but I think it is more likely we will see another rally into late October-early November and either a new all-time high or a double top to the DOW's Sept 19 high followed by a major correction.           
Out of the market for now.

We are now in the red with our crude oil long position, but if prices stay above the $84 - $85 area there is a good chance crude will be turning up by early next week from the currently forming cycle bottom.  I entered my long position on Sept. 25 and at that time wrote in my blog that:   " Because crude prices can be very volatile under the current circumstances I am investing only a moderate amount of money in this trade."   The limited funds I applied to this trade is making it a bit easier to "ride out" the current price drop, but cycle and timing analysis point strongly to an imminent bottom now so we will look for this by early next week.  Holding my long position in crude.

It is "so far, so good" with our long position in gold.   We seem to be back on track for a rally in the precious metals. The analysts I follow are a bit divided in their opinions on gold at the moment.  While some anticipate a major rally and possibly a "breakout" right now, others feel the current rally will be short-lived and followed by a deeper correction.  I am leaning towards the latter scenario, that is, a short rally now followed by a another decline into the final cycle bottoms of both gold and silver sometime early next year.  My first target for this rally is the $1240 area.  If we reach or exceed that level tomorrow or Monday, I may take profits as we are still in a timing zone for a market reversal.  I would prefer, however, to see this rally continue into November and sell then.  This rally could go as high as $1290, but unless it exceeds $1300, we will be looking to reverse position (ideally in November) and sell short a correction into the final bottom of the long-term gold cycle.  Holding my long position in gold and still out of silver..

The U.S. Dollar Index is finally taking an overdue correction as it is moves down from a high of 86.75 on Oct. 3rd to a support level close to 85.  This is giving a major lift to gold and silver prices, but the overall strength of the dollar chart suggests that this correction may not last very long.  If 85 breaks there is another support level at 84-84.5.  
A resumption of the dollar rally may be the trigger that sends gold and silver prices back down to their final bottoms so we will watch the dollar index closely to help time any short selling of the precious metals.






Trading Blog           Sunday (night),  October 5,  2014

10/4/2014

 
MARKETS  UPDATE  (11:15 pm EST)

On Friday the U.S. Labor Department reported that the economy generated 248,000 jobs in September which was 33,000 more than what had been forecast by economists.  The Labor Department report also showed that September's unemployment rate dropped to 5.9%, its lowest level in six years.  This upbeat economic news had a dramatic effect on many markets including the broad stock market, crude oil, precious metals, and the U.S. Dollar. This is demonstrating just how volatile many markets are right now and, unfortunately, there are several technical factors suggesting more volatility over the next several weeks.  We need to be especially careful with our trading as market movements in this environment could be erratic and unpredictable.

One would think that the broad stock market would be a little nervous to hear that the economy is improving.  After all, an improving economy increases the likelihood of the Fed raising interest rates sooner, and the markets definitely don't want that to happen.  Nevertheless, the ever fickle stock market decided to cheer Friday's employment numbers with a big rally, and the DOW surged over 200 points and closed just over the 17,000 mark.  October 7-8 represents the center of a timing window for a major market reversal, but it is possible that reversal came early with last Thursday's DOW plunge to 16,674.  If so, we should see this market continue up this week as it works its way towards another new high (or double top to the Sept.19th high of 17,350).  If that high happens this week, I may look to sell short, but any rally now could extend into November, so we may have to wait until then for the ideal point to short sell what could be a severe market correction of 10% or more.  Alternatively, if last Friday's market jubilance turns out to be short-lived, we could get a new low in the DOW (say in the 16,500 area) this week (the ideal time for a reversal), and if that happens I will consider a long position to ride a new rally up.  Still on the sidelines of the broad stock market.

Friday's positive Labor Department report also gave a great boost to the U.S. Dollar Index and that drove both silver and gold prices lower.  Gold has broken below my stop loss level of $1200, but I am holding onto my long position because we are now entering the center of a strong reversal zone (Oct. 7-8) and there are still technical and cycle factors that point to a short-term bottom now. The key support level to watch here is the $1180 area in gold.  A clear break and close below there would be very bearish and would likely force me out of my long position.  Friday's kick to the dollar now makes this currency severely overbought on several technical levels, and a correction next week seems likely.  This makes me optimistic that gold will hold above its support and start to rally.  Holding onto my long position in gold.  Still out of silver.

As a commodity often referred to as "black gold", crude oil  also turned down on Friday in response to the dollar surge.  Although this puts our long position a bit in the red, cycle analysis still indicates that a normal bottom in this market is due this week, and we are also in the center of a reversal zone for crude.  For these reasons I am going to hold onto my long position and try to "ride out" any price dips this week with the idea of a final bottom forming now and a subsequent rally to follow.  While prices could get as low as $85, it's still possible that the Oct. 2 low of $88 was the final bottom.  We will have to wait and see if it will go lower next week.  Holding my long position in crude.





Trading Blog             Thursday,  October 2,  2014

10/2/2014

 
MARKETS  UPDATE  (4:30 pm EST)

It looks like the broad stock market is falling into the Oct. 7-8 reversal date instead of rising into it, so instead of a top we will be looking for a bottom into next week.  Early today the DOW dropped over 100 points but then it nearly completely recovered those points and closed with only a 3.5 point loss.  This is bullish behavior and may indicate that this week's sharp correction is starting to find a bottom already.  If a bottom does form by next week, the cycle pattern is suggesting another sharp but brief rally into the second half of October (or even into November) to be followed by another more severe correction to the final cycle low (which may turn out to be the 10% or greater correction we have been anticipating for some time).  If the market continues to fall past next week we may just get a complete washout into the final bottom of this current cycle into the end of the year.  The currently mixed bullish and bearish momentum signals in the DOW, S&P 500 and NASDAQ indices as well as other technical factors supports the idea of a second rally, so my strategy now is to anticipate short selling the top of that rally which could peak later this month or in November.  But first we need to see the current correction stall and find support.  We will look for this next week.  On the sidelines of this market.


Crude oil seems to taking its cues from the broad stock market as prices plummeted briefly today to just above $88 and then snapped back dramatically.  They are closing the day just above our $91 stop loss area so I am maintaining my long position in crude.  As I've stated in previous blogs, we are nearing the end of a major cycle in crude oil (which is due by next week) so this plunge to the $88 level could represent the final bottom.  If so, this market should be bullish for at least several weeks.  We need to be careful here because if the broad stock market starts to collapse it could take oil down with it.  We want to see both these markets find support over the next several trading days for at least a short-term rally.  Maintaining a long position in crude oil for now.

The U.S. Dollar Index has been dropping over the last two days and appears to be taking a breather from its steep two month rally.  Short-term bearish signals are now manifesting in the charts for this currency so a correction seems to be in progress.  Hopefully, this will help propel at least a short-term rally in the precious metals and support the long position we are holding in gold at the moment.





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The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

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All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

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