MARKETS UPDATE ( 11:15 pm EST)
The broad stock market's disappointment with the ECB's weak stimulus package announced last Thursday (which caused the DOW to drop 252 points) did not last long. The markets quickly recovered on Friday and the DOW closed the day with a 369 point gain. It looks like we could get a significant market high in this week's reversal zone after all. The chances of a market reversal are strongest on Thursday, but the window could extend into early the following week (Dec. 14-16). This is significant because the next FOMC meeting will take place Dec. 15-16 when many believe the Fed will announce the first interest rate hike in nine years. This could be the trigger that turns the markets down. It is late in the broad stock market's current medium-term cycle so the timing is right for a top and final correction to the cycle bottom. As I've mentioned before, an ideal signal to sell the market short would be if one or two of the three major market indices (DOW, S&P 500, NASDAQ) make(s) a new monthly or all-time high, but not all three. This would be a case of intermarket bearish divergence. We will watch for it this week or early the following week when the Fed is expected to announce its interest rate policy. On the sidelines for now.
In last Thursdays's blog on the precious metals I wrote: "I'm not going to unload my long positions in gold and silver just yet as it seems a bottom and rally could be just around the corner." That was a good decision as both gold and silver rallied strongly on Friday and closed in the upper part of that day's range. That was a bullish sign and suggests that we are now starting a new medium-term cycle in both metals. New cycles always start off bullish, but next week is a also a strong reversal zone for the precious metals so, as with the broad stock market, we need to be alert for a possible top and reversal here too. A good target for gold could be anywhere from $1100 to $1140 so we may look to take profits in our long positions if prices move into that range, especially later in the week. Silver prices may get to the $15 area. Holding my long positions in both gold and silver for now.
The current medium-term crude oil cycle is not showing any typical subcycle structure, and this has made it difficult to trade short-term. Prices have been very reluctant to rally, and directional momentum in crude charts continues to be very bearish. Since it is late in this cycle (i.e. it could bottom any time now) , I may just wait for the cycle bottom to buy, and if it continues to look very bearish I will look to sell short the top of the next cycle. We may see an early bottom in this week's reversal zone, but it would be more likely to see that final bottom in mid-January of 2016. This market's short-term direction continues to be a little unclear, and because we have plenty of trading opportunities in the broad stock market and precious metals right now, it may be best to just stay on the sidelines of crude oil. Out of this market for now
The broad stock market's disappointment with the ECB's weak stimulus package announced last Thursday (which caused the DOW to drop 252 points) did not last long. The markets quickly recovered on Friday and the DOW closed the day with a 369 point gain. It looks like we could get a significant market high in this week's reversal zone after all. The chances of a market reversal are strongest on Thursday, but the window could extend into early the following week (Dec. 14-16). This is significant because the next FOMC meeting will take place Dec. 15-16 when many believe the Fed will announce the first interest rate hike in nine years. This could be the trigger that turns the markets down. It is late in the broad stock market's current medium-term cycle so the timing is right for a top and final correction to the cycle bottom. As I've mentioned before, an ideal signal to sell the market short would be if one or two of the three major market indices (DOW, S&P 500, NASDAQ) make(s) a new monthly or all-time high, but not all three. This would be a case of intermarket bearish divergence. We will watch for it this week or early the following week when the Fed is expected to announce its interest rate policy. On the sidelines for now.
In last Thursdays's blog on the precious metals I wrote: "I'm not going to unload my long positions in gold and silver just yet as it seems a bottom and rally could be just around the corner." That was a good decision as both gold and silver rallied strongly on Friday and closed in the upper part of that day's range. That was a bullish sign and suggests that we are now starting a new medium-term cycle in both metals. New cycles always start off bullish, but next week is a also a strong reversal zone for the precious metals so, as with the broad stock market, we need to be alert for a possible top and reversal here too. A good target for gold could be anywhere from $1100 to $1140 so we may look to take profits in our long positions if prices move into that range, especially later in the week. Silver prices may get to the $15 area. Holding my long positions in both gold and silver for now.
The current medium-term crude oil cycle is not showing any typical subcycle structure, and this has made it difficult to trade short-term. Prices have been very reluctant to rally, and directional momentum in crude charts continues to be very bearish. Since it is late in this cycle (i.e. it could bottom any time now) , I may just wait for the cycle bottom to buy, and if it continues to look very bearish I will look to sell short the top of the next cycle. We may see an early bottom in this week's reversal zone, but it would be more likely to see that final bottom in mid-January of 2016. This market's short-term direction continues to be a little unclear, and because we have plenty of trading opportunities in the broad stock market and precious metals right now, it may be best to just stay on the sidelines of crude oil. Out of this market for now
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