The DOW and S&P 500 indices seemed reluctant to rally last week and remained essentially flat into the Thanksgiving holiday. Only the NASDAQ seemed to be in an optimistic holiday mood as it climbed almost 2% to make a new high on Friday. Directional momentum, however, remains strongly bullish in all three indices so I think my decision to unload short positions in this market early last week was a good one (especially if you were trading the NASDAQ). We may see a brief pullback this week, and if we do (especially into Friday) it may be a good opportunity to go long as it looks like this market could rally for another two to three weeks (possibly well above 18,000 in the DOW). A correction down to the 17,000 area in the DOW would be an ideal buy spot, but I don't think any downturn (if we get one at all) will get that far. Timing here is more important than price, and the end of this week would be the ideal time for a reversal (back up from a brief correction). If the broad stock market continues its rally (without a correction) past this week, we may have to wait until the second or third week of December for a good trading opportunity (not to buy, but instead to sell this market short as timing and cycle structures are suggesting the possibility of a steep correction then). On the sidelines of the broad stock market for now.
Today (November 30) the people of Switzerland voted no on the "Save Our Gold" referendum which would have forced the Swiss central bank to hold 20% of its reserves in physical gold that it could never sell. Gold investors were watching this event closely as had the referendum passed, gold prices could have taken off. The anticipation of this vote and the possibility of the referendum passing could be what has been buoying up the price of gold over the last several weeks (although polls suggesting a "no" vote have been sending the price down since last Thursday). Today's vote sent the price down another $15. This is good news for our short position in gold, but we have to keep a close eye on prices now as a bottom could be imminent and may come as early as next week. If the reaction to the Swiss vote is short-lived and gold prices remain above the $1140 - $1145 area then there is the possibility of a strong rally now, and gold could turn bullish. A break above our stop loss area of $1210 would suggest that is happening. On the other hand, if prices break below $1140 next week then we could see a more serious correction down to the $1000 area or even lower over the next 3 -6 weeks. Directional momentum is still strongly bearish in both gold and silver so I am going to hold my short position in gold until I see more bullish signals in the charts of these metals. That could come next week so stay tuned. Holding a short position in gold but out of silver at the moment.
Last Thursday crude oil broke dramatically below the baseline it had been establishing at $75. Two factors that are driving oil prices down right now are a glut in supply and possibly price manipulation by the U.S.and the EU to cripple Russia's economy in a new cold war. Directional momentum in this market is nearly 100% bearish, but the chart cycle is still suggesting an imminent sharp (but brief) rally from a bottom to be followed by a further decline to new lows. That bottom could be in now with today's price around $64 or it could go lower next week. If we see a rally in prices up to the $75 area into this Friday it could be a good spot to sell short. On the sidelines for now.