The Alternative Investor
  • Home
  • TRADING BLOG
  • Current Positions
  • Alternative Investor Strategy
  • ETFs
  • About Alternative Investor
  • Contact

Trading Blog          Friday,  August 22,  2014

8/22/2014

 
MARKETS  UPDATE  (8:30 pm EST)

My decision to bail out of gold positions on Tuesday based on negative COT charts and a bullish looking U.S. Dollar Index has turned out to be a good one.  Gold prices broke support at $1290 yesterday and plunged to a new monthly low at $1274 intraday.  It is significant that gold also broke below $1280 because, according to cycle studies, this now means that prices will be moving lower before the current short-term cycle is over.  The end of next week and the first week of September is a major reversal zone for gold so we won't have to wait long for some sort of bottom that could be a good buy spot.  Please note that my trading of gold and silver is going to be short-term until we have strong evidence that the final long-term cycle bottoms of gold and silver are in.  That might not be until early next year, but there should be good short-term trading opportunities before then.  I want to emphasize here that the long-term bullish picture of gold and silver remains very much intact and that once the long-term gold cycle makes its final bottom (somewhere above $1000), gold and silver will be starting multiyear rallies that should take both metals to new all-time highs.  For now, however, we will focus on the first week of September for a likely trend reversal and a possible bottom to buy.  On the sidelines of this market.


The broad stock market continues to look bullish with the S&P 500 and NASDAQ making new yearly highs and showing near 100% bullish momentum.  The DOW's directional momentum is now mixed bullish and bearish (it had been 100% bearish earlier this week), but it still refuses to break above its all-time high of 17,152.  It came close yesterday but today backed down and closed the day with a 38 point loss.  As I have stated in recent blogs, I am expecting a high towards the end of next week and the first week of September from which a significant correction of 10% or more could follow.  This correction is overdue and is seemingly being delayed by an unusually strong bullishness in the markets recently.  One reason for this could be the collapsing European economy (made worse by the recent instigation of a new Cold War with Russia) and the flight of capital out of Europe and into U.S. equities (as well as dollars, hence the dollar's recent bullishness).  Without sounding too much like a conspiracy theorist, another reason for the stock market's recent bullishness could be market manipulation.  There are definitely people in high places with lots of power who have a vested interest in keeping the stock market from crashing right now.  I'm mentioning this because the rise in the DOW since August 7 has been in a suspiciously straight line (this can be seen on any daily chart of the DOW) which can sometimes be a "fingerprint" left behind when markets are being manipulated (normal market movements are more irregular or wavy).  My concern here is that if this market is being propped up artificially, we might see a smaller "truncated" correction instead of the normal 10% or more that would be imminent in an unmanipulated market.  This speculation aside, it still looks likely that we will be getting a high over the next week or two to sell short, and so I will continue with that strategy.  If the DOW remains below its all time high of 17,152  into the end of next week, that would be a good bearish sign (i.e. intermarket divergence with the S&P 500 and NASDAQ which have already made new yearly highs) and a good signal to go short.  Still on the sidelines here.

Crude oil is nearing the end of its current short-term cycle and may be in the process of forming a bottom in the $91 - $92 area.  Any significant rally now into the end of next week may present a shorting opportunity for a fall into the final bottom, but more than likely the bottom is forming here and we should wait until that is confirmed.  Interestingly, the steep fall of oil prices since late June may be a more accurate reflection of the economy than the steeply rising August DOW.  This divergence lends support to the idea that stock markets are being artificially propped up now (see discussion above).   Out of this market for now.





Comments are closed.

    RSS Feed

    Archives

    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

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.

                                                                                                                                                            LEGAL and DISCLAIMER

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.

The Alternative Investor is an independent researcher and analyst and receives no compensation of any kind from any individuals, groups, companies or institutions discussed on this website.