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Trading Blog Monday, October 28, 2024

10/28/2024

CRUDE OIL TRADE ALERT (2:30 pm EDT)

Last week crude oil prices were bullish as they pushed thought the 45-day moving average and challenged the 15-day moving average. But that 15-day moving average held, and today prices made a gap-down back below both moving averages. This reintroduces the possibility of the current medium-term cycle, and even the longer-term 4-year cycle turning bearish. That would be confirmed if prices start closing below $64 (Dec. contract chart). I am going to sell my long position in crude today and wait to see how this plays out.

Trading Blog Thursday (night), October 24, 2024

10/24/2024

UPDATES ON THE BROAD STOCK MARKET, GOLD, and SILVER (10:00 pm EDT)

The DOW seems to be making a significant downturn this week, but the S&P 500 and NASDAQ do not seem as enthusiastic in their dips. It is fairly late in the medium-term cycles of all three indices, so we are waiting for their final corrective bottoms as a place to buy the start of a new cycle (as long as the bottoms aren't too low). Yesterday's and today's lows are happening in the center of our general reversal zone (Oct. 22 - 30), so prices could snap back up any day now. It's a bit early for the final medium-term cycle bottom, and only the DOW seems to be making a significant sub-cycle correction right now. We will remain on the sidelines of the broad stock market for now.

Gold's current longer-term cycle continues to be elusive. If we are near the end of a 50-week cycle (that began with an $1812 bottom in Oct. 2023), a steep drop in prices is imminent with a final bottom due by the end of November. But as I've mentioned in previous blogs, the Oct. 10 low of $2606 may have been the 50-week low already. The fact that gold prices continue to push higher above $2700 (they made a new all-time high yesterday at $2758) suggests a new 50-week cycle has started. But the shallow correction to $2606 on Oct. 10 was well above the normal target range for a 50-week cycle, and this suggests the older cycle may still be in place and ready to plunge any day now. We'll just have to wait a few more weeks to see if a deeper corrective drop is coming (which would be a good place to buy if it happens). If it doesn't happen by the end of November, we might have to accept that the 50-week bottom was on Oct. 10 at $2606.

Gold's medium-term cycle is also unclear at the moment. It may have started way back on June 7 at $2287. If this is the case, a normal final cycle bottom is due this week or next. But if a 50-week cycle bottom is still ahead, the medium-term cycle could expand and see a final bottom near the end of November. A third possibility is that a new medium-term cycle began with the Oct. 10 low at $2606. In this case, the cycle would be very young and bullish and could now rally above $2800. Our original trading strategy for gold was to buy the deep bottom of a 50-week cycle. We may still get to do that, but if the 50-week bottom was Oct.10, we missed it and will have to wait for the next significant sub-cycle corrective low to buy as we expect new all-time highs into 2025. For now, we remain on the sidelines of gold until we have more clarity on these cycles.

Silver's current cycles are a bit more clear than gold's cycles. A strong rally this week has taken this metal to new 10 year highs near $35. This means it is most likely a new 4.3-year longer-term cycle began one year ago in Oct. 2023. That means silver is bullish, and we are NOT going to see a final 4.3 year steep corrective drop into the end of this year as we had been anticipating. Nevertheless, it is now late in the current MEDIUM-TERM cycle in silver, and the final bottom is due 2 - 8 weeks from now. Silver made an isolated high on Tuesday inside a general reversal zone and a "pivot-point" for silver. Prices are falling from there, but there is still plenty of time for prices to edge up higher into next week's reversal zone specific to precious metals (Oct. 24 - Nov. 4) before taking any serious correction. Our trading strategy now will be to buy any significant corrective lows - ideally the final low of the current medium-term cycle. We will stay on the sidelines of silver for now.

Trading Blog Sunday (late night), October 20, 2024

10/20/2024

MARKETS UPDATE (11:00 pm EDT)

Last Tuesday (Oct. 15) I wrote about silver:

"A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now."

On Friday prices closed well above $33. It looks like we may have to label that October 2023 low as the bottom to the longer-term 4.3 year cycle. This would make silver quite bullish now. This is why we bailed out of our short silver position on Friday. Prices could now rally into our next reversal zones coming up next week: a general reversal zone for all markets Oct. 22 - 30 as well as one specifically for the precious metals Oct. 24 - Nov. 4. A significant top - most likely the final top to the current medium-term cycle - could form anywhere inside those time frames followed by a drop to the final medium-term cycle bottom. It's hard to say where that bottom might end up, but it will likely be a good place to go long as silver is only one year into this new 4.3 year cycle, so prices should be bullish into 2025. We will stay on the sidelines of silver for now.

Gold made a new all-time high on Friday at $2722, and since silver also made a new high, we no longer have a strong bearish divergence signal between these metals. We expect gold, like silver, to make new highs into 2025, but we are also expecting a steep correction into a longer-term 50 week cycle bottom (now overdue) before that happens. It's possible the Oct. 10 low at $2606 was that bottom, but if it was, it was way above a normal price target for a 50 week cycle. It's also unclear where we are in the current medium-term cycle for gold, so it's best to be on the sidelines of both precious metals for now. If prices continue to push up into next week's reversal zones, we could see a significant top over the next two weeks; but if prices start to fall, we could also see a significant bottom form in the same time frame. With this much uncertainty in this market, I am remaining on the sidelines of gold for now.

The broad stock market continued to edge higher last week with the DOW and S&P 500 making new all-time highs while the NASDAQ remained below its all-time high from July. If this bearish divergence continues into the new reversal zones coming up this week, we could see a significant top followed by a corrective decline. We will watch for that now.

Crude oil prices tested our stop loss point at $69.30 on Friday, but I did not sell my long position. Although Friday was one day out of our reversal zone, we enter another one on Tuesday, and there is a support line around $68 that could hold. I am going to hold my long position for now and see if a turning point can form in next week's reversal zone.

Trading Blog Friday, October 18, 2024

10/18/2024

SILVER TRADE ALERT (3:00 pm EDT)

Today silver prices surged up dramatically and are closing above $33. Our stop loss for our short position was a weekly close above $32, so I am going to cover (unload) my short position in silver now. Yesterday we were at a "break even" point in this trade, and today's surge gives us a loss (about 5%). I will comment more about this market and others this week-end.

Trading Blog Thursday, October 17, 2024

10/17/2024

CRUDE OIL TRADE ALERT (2:30 pm EDT)

A significant sub-cycle correction in crude oil's current medium-term cycle is now due, and crude prices have fallen sharply from the high of $78.46 (Nov. contract chart) on Oct. 8 to a support level around $70. A new weekly low was made earlier today at $69.44, but now prices are closing back near $70.50. This is the last day of our current general reversal zone for all markets and the current cycle seems bullish, so this looks like a good spot to buy for a rally that could test that $78 high. I am going to enter a long position in crude today with an initial stop loss based on a weekly close below $69.30.

Trading Blog Tuesday (late night), October 15, 2024

10/15/2024

UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:00 PM EDT)

In my last blog (Oct. 7), I wrote on the broad stock market:

"All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now."

Well, it looks like our second scenario (new highs in the reversal zone) is unfolding as the DOW, S&P 500, and NASDAQ are all making new highs this week as we approach the end of the reversal zone this Friday. We also note that both the DOW and S&P 500 are making new ALL-TIME highs while the NASDAQ is not (although it is close). This gives us a strong bearish divergence signal suggesting a significant top could be imminent. Our trading strategy remains the same here. We will look to buy any significant corrective drop that doesn't go TOO low. It looks like new all-time highs could continue into early 2025. These indices continue to look bullish, but we need to be aware that the trend could suddenly turn bearish if any corrective drops make new lows - especially below support zones. For now we remain on the sidelines of this market.

I continue to think it is late in gold's medium-term cycle and also very late in a longer-term 50-week cycle. If this is the case, prices should be ready to decline sharply to the final bottom of both cycles due in the next 2 or 3 weeks. A good price target would be between $2350 - $2450. However, gold prices have been rising since last Thursday's low at $2606 (Oct. 10). If they continue to rise, we have to consider the possibility that last week's low could be the 50-week and medium-term cycle bottom. Arguing against this idea would be the fact that $2606 is way above our projected normal target minimum of $2450. A third possibility could see the medium-term cycle expand a bit and bottom 5 to 7 weeks from now around mid-November (just after the U.S. presidential election) along with the 50-week cycle. A break significantly above the Sept. 26 high ($2709) would be bullish and suggest that the second scenario (new cycles starting last week) is playing out. Otherwise, we'll wait for this current rally to top out by Friday and look to buy a significant correction into that $2350 - $ 2450 range. We are on the sidelines of gold for now.

I am staying with the labeling of silver's medium-term cycle starting from the low of $26.52 on Aug. 8. A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now. But I still think it's more likely our original idea of an older 4.3 year cycle bottoming by the end of December is correct. In that case, prices should top out under $32.70 by Friday and start descending to an initial target around $29 and eventually even down to a range between $22 - $25 by Jan. 2025. With all this in mind, I am still holding my short position in silver entered on Oct. 1 with a stop loss now based on a clear break above $32.70.

Trading Blog Monday, October 7, 2024

10/7/2024

MARKETS UPDATE (8:00 pm EDT)

In my Sept. 24 blog I wrote:

"the broad stock market's trend now seems to be at least temporarily bullish. This is most likely the result of the Fed's generous interest rate cut given out following this month's FOMC meeting. It also appears that we are completing a 6-year cycle rather than a 4-year cycle in equity markets, and that means our three market indices (DOW, S&P 500, NASDAQ) could push higher into next year before taking a substantial longer-term correction of at least 16% - 26%. Because our current medium-term cycles in these indices are bullish, we may be looking to buy any short-term substantial sub-cycle dips."

A few days after this blog all three indices made new highs. The DOW and S&P 500 made new ALL-TIME highs, but the NASDAQ did not which sets up a bearish divergence signal in this market. All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now. We are currently on the sidelines of the broad stock market.

Last week gold prices were flat, and gold did not make a new weekly high while silver did. This give us a bearish divergence signal between these metals. Gold's all-time high ($2684) on Sept. 26 was inside a strong "pivot point" for gold, and it is very late in the current medium-term cycle. It's also late in a longer-term 50-week cycle in gold, and both cycles are due to bottom simultaneously by the end of this month. This means the Sept. 26 high could be the final top to both cycles and a sharp drop could be imminent. But we are also currently in the center of a reversal zone specifically for the precious metals (Oct. 2 - 10), so we can't rule out gold prices pushing up to a new all-time high by the end of this week before falling. If it does that without silver making a new high, we will have another strong bearish divergence signal (and good shorting opportunity). I am on the sidelines of gold for now.

Last week (Oct. 1) I entered another short position in silver thinking the Sept 26 high ($32.66) was a significant top and that gold would make a new high to give us a bearish divergence signal. Instead, gold stayed below it's Sept. 26 high and silver prices made the new high with Friday's top at $32.70. That put our silver trade a bit in the red, but we still got our bearish divergence. We note that Friday's high in silver was in the center of our current reversal zone for the metals and prices are down today. The top could be in and a sharp correction could be imminent as a significant sub-cycle correction is now due. I am holding my short position in silver for now (I did not bail out with last week's close above $32).

On Sept. 26 my blog on crude oil stated:

"We can now say with certainty that a longer-term 4-year cycle in crude oil started with the deep low of $63.57 in May 2023 (Nov. contract chart). That means we are already 1 and 1/2 years into a new 4-year cycle. Because prices have been moving down and getting very close to that $63.57 low (after rallying to $95 in Sept. 2023), this new 4-year cycle is in danger of turning bearish if it falls below $63.57. That would be a very bearish development as it would mean that prices would be moving down for at least two more years. I don't think this is likely to happen. It's more likely a "double-bottom" is forming now which would be a bullish signal for this market."

Well, prices didn't fall below $63.57, but the $64.61 low on Sept. 10 was close to being a "double-bottom". Crude has been rallying steeply from there and even broke through the 15-day and 45-day moving averages last week. The longer-term 4-year cycle did not turn bearish, and it looks like a new medium-term cycle started with that Sept. 10 bottom. This new medium-term cycle looks quite bullish, and today prices broke clearly through a strong resistance line around $76. It's the fourth week in this new cycle, so we could be seeing some sort of sub-cycle corrective drop anytime now over the next several weeks. We are entering a new general reversal zone for all markets tomorrow (Oct. 8 - 17). A sub-cycle top could form inside this time frame (this week or next). We will watch for this now as we will most likely want to buy the bottom of any significant corrective drop. For now we remain on the sidelines of crude oil.

Trading Blog Tuesday, October 1, 2024

10/1/2024

SILVER TRADE ALERT (3:30 pm EDT)

Today both silver and gold rallied a bit. Gold seems to be rising from a strong pivot point that ends today. If gold manages to make a new weekly high over the next few days (it is close) without silver doing the same (silver is not so close), we will have a strong bearish divergence signal inside our new reversal zone for the precious metals (Sept. 2 - 10). Some of silver's technical signals are looking bearish, and today prices rose early towards resistance at $32 but then fell back sharply to close at $31.35 (bearish behavior). I am entering another short position in silver today with an initial stop loss based on a close above $32. I am still on the sidelines of gold. If gold does make a new high over the next few days without silver, I will most likely sell it short as well because the tops to the current medium-term and 50 week cycle are now overdue.

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