MARKETS UPDATE (6:00 pm EST)
Last week our broad stock market indices rallied a bit into the Christmas holiday but then they rolled over and have been falling from there. The S&P 500 and NASDAQ managed to break above their 15 and 45 day moving averages before falling, but the DOW didn't do that (it stayed below both). The S&P 500 is now back below both those averages and the NASDAQ is back below its 15-day moving average and testing its 45-day moving average. All three indices are now approaching and testing their Dec. 20 lows. If those lows hold in the DOW and S&P 500, we may see a double-bottom formation that would support the idea of new medium-term cycles starting now. Furthermore, if the NASDAQ makes a lower low, that would suggest that it too is ending an old medium-term cycle and starting a new one as this index has now fallen the minimum 2 weeks from its Dec. 16 high that we like to see at the end of a cycle. All of this would be bullish and would encourage us to buy. On the other hand, if these indices continue to move lower and start closing below their Dec. 20 lows, that would open up several bearish possibilities, and we would stay on the sidelines. For now, we are still on the sidelines of this market.
Gold and silver prices have remained relatively unchanged over the last week and a half. Gold seems to be finding support around $2600 and silver around $29. If these supports hold, both metals could be forming significant cycle bottoms and may now be ready to rally strongly. But we can't rule out further declines which could turn the cycles bearish. I am staying on the sidelines of both metals for now.
Crude oil has been rallying from its $68.42 (Feb. contract chart) low on Dec. 20 and is today testing the top of a congestion zone ($66 - $72) that has been corralling prices since mid-October. If prices can start closing above $72, we may see this market break out and turn bullish. A further break above $74 and then $76.41 would be necessary to confirm this. For now, I am still on the sidelines of crude oil.
A VERY HAPPY AND PROSPEROUS NEW YEAR TO ALL READERS!
(It may be an explosive one!)