We are nearing the end of the current reversal zone for gold and silver and several other markets (Feb. 2 - 12). Both metals have been falling and are now in the ideal target price range and time period for a significant sub-cycle correction. In addition to this, there are now several short-term technical indicators suggesting a bottom is near.
It looks like a good time to go long in both gold and silver, and I'm going to do that today.
We can set a close stop loss for gold on a close below $12.80.
Silver's stop loss can be set on a close below $16.
**** PLEASE NOTE: I have changed my position on CRUDE OIL over the last several minutes and am now staying on the sidelines of crude. I apologize for this quick change but new data shows that crude prices could be ready to take a serious hit - this market could be turning very bearish. ****
In Monday's blog on the U.S. Dollar Index I wrote:
"...it (the dollar) appears to be mounting another assault at the 90 - 91 line of resistance (formerly support) it broke down from in January. As I have discussed in recent blogs, the U.S. dollar may be starting a serious long-term correction down if it can't get back above 91 soon. Right now it appears the dollar could test that resistance, and in the process send the price of precious metals lower."
That is indeed happening as the greenback is now pushing hard into the center of that 90 -91 band of resistance. Because we are in a reversal zone, we could (should) see it turn back down now. We don't want to see the dollar break and close above 91 as that could be bearish for the precious metals. We will keep a close eye on this index.
After plunging dramatically early in the week, the broad stock market is now bouncing with wide swings up and down as it attempts to find some stability. The DOW's low on Tuesday at 23,778 was a bit lower than our target of 24,500 - 25,000, but this index may be stabilizing now in the 24,500 area. Although we are in a reversal zone (it ends Monday), it is not a very strong one, and we enter another stronger one in the first week of March. If this market can't stabilize here, it is possible to see it plunge further and form the final medium-term cycle bottom (which is overdue) in early March. This market is not giving us enough buy signals to go long just yet. If the DOW can close above 25,200 and the S&P 500 above 2,760 tomorrow, it might be time to buy. Still on the sidelines of the broad stock market.