MARKETS UPDATE and IMPORTANT INFORMATION ON CRUDE OIL (7:00 pm EST)
This is the 10th week in the medium-term cycles of all three of our broad stock market indices (DOW, S&P 500, NASDAQ) that started with their late October lows (Oct. 26-27). These indices rallied steadily for over two months from those lows with no significant sub-cycle corrections until this week. That is unusually bullish behavior. Even this week, the DOW seems reluctant to turn down as it tests its 15-day moving average. The S&P 500 and especially the NASDAQ seem to be leading a corrective drop as they are descending more rapidly and are now closing below their 15-day moving averages. Next week is the deadline for the bottom of any significant corrective drop. Let's wait and see if the DOW can push lower and give us a deeper sub-cycle low to buy. We remain on the sidelines of this market for now.
Gold and silver prices seem to be continuing their "rollover" pattern with silver even testing its recent sub-cycle low of $22.52 low from Dec. 13. If silver breaks below there, the current medium-term cycle trend will be officially bearish with prices likely moving lower to complete the final cycle bottom which could happen anytime now over the next eight weeks. Gold, on the other hand, is nowhere near its recent sub-cycle low and still seems like it could rally up some more to challenge or exceed its recent Dec. 4 all-time high of $2123.. Silver could rally too from a support line now around $23, but it seems less likely it would challenge its recent high of $25.79 (also on Dec. 4). As I've been stating in recent blogs, we are not chasing any rallies in these metals at this late stage in their medium-term cycles and will wait for their final bottoms before considering any long positions. Gold's final cycle bottom is not due for at least two more weeks, and prices could theoretically go quite low - even back down to the $1900 area. We remain on the sidelines of both metals for now.
The U.S. Dollar Index has been rising into a reversal zone specifically for currencies (Jan. 1 - 9), and it made an isolated high yesterday at 102.73. A turn down could be imminent, and that could kick-start a rally in the precious metals. We will watch this index carefully now.
Another thing to watch carefully now is our long position in crude oil. Today prices pushed higher towards the 45-day moving average but ended up falling back and closing just below the 15-day moving average. We went long on Dec.14 with the idea that the previous day's low ($67.98 - Feb. contract price) was a medium-term cycle bottom (and maybe even a 4-yr. cycle bottom from the $65.24 low on May 4). That could still be the case, but if it is, prices need to start rallying strongly soon and break through that 45-day moving average (now at $74.76 and falling) as well as last week's high at $76.18. A break below $67.98 would be bearish and force us to relabel the cycles.
"HEADS UP" on CRUDE OIL: I should mention here that once we determine for certain that a new 4-yr. cycle has started, we can expect crude to rally strongly with prices potentially getting back up to $130 (or even much higher) by early summer this year. We're going with the idea of a new 4-yr. cycle having already started with the $65.24 low on May 4, 2023, but if prices should start breaking below there, we could see a new (lower) 4-yr. cycle start anytime over the next eight months (i.e. by August) - anywhere between $54 - $68. But even in this more bearish scenario, the bottom of the 4-yr. cycle would still be an excellent buy spot. We would just have to wait a bit longer for that opportunity.
Needless to say, crude has great investment potential at this time and could see a possible 100% gain within six months following the establishment of a 4-yr. cycle bottom This is why we are keen to go long near the start of its new 4-yr long-term cycle.
Let's continue to hold our long position in crude with a close stop loss based on a close below $70 or $67.98, depending on your risk tolerance.
This is the 10th week in the medium-term cycles of all three of our broad stock market indices (DOW, S&P 500, NASDAQ) that started with their late October lows (Oct. 26-27). These indices rallied steadily for over two months from those lows with no significant sub-cycle corrections until this week. That is unusually bullish behavior. Even this week, the DOW seems reluctant to turn down as it tests its 15-day moving average. The S&P 500 and especially the NASDAQ seem to be leading a corrective drop as they are descending more rapidly and are now closing below their 15-day moving averages. Next week is the deadline for the bottom of any significant corrective drop. Let's wait and see if the DOW can push lower and give us a deeper sub-cycle low to buy. We remain on the sidelines of this market for now.
Gold and silver prices seem to be continuing their "rollover" pattern with silver even testing its recent sub-cycle low of $22.52 low from Dec. 13. If silver breaks below there, the current medium-term cycle trend will be officially bearish with prices likely moving lower to complete the final cycle bottom which could happen anytime now over the next eight weeks. Gold, on the other hand, is nowhere near its recent sub-cycle low and still seems like it could rally up some more to challenge or exceed its recent Dec. 4 all-time high of $2123.. Silver could rally too from a support line now around $23, but it seems less likely it would challenge its recent high of $25.79 (also on Dec. 4). As I've been stating in recent blogs, we are not chasing any rallies in these metals at this late stage in their medium-term cycles and will wait for their final bottoms before considering any long positions. Gold's final cycle bottom is not due for at least two more weeks, and prices could theoretically go quite low - even back down to the $1900 area. We remain on the sidelines of both metals for now.
The U.S. Dollar Index has been rising into a reversal zone specifically for currencies (Jan. 1 - 9), and it made an isolated high yesterday at 102.73. A turn down could be imminent, and that could kick-start a rally in the precious metals. We will watch this index carefully now.
Another thing to watch carefully now is our long position in crude oil. Today prices pushed higher towards the 45-day moving average but ended up falling back and closing just below the 15-day moving average. We went long on Dec.14 with the idea that the previous day's low ($67.98 - Feb. contract price) was a medium-term cycle bottom (and maybe even a 4-yr. cycle bottom from the $65.24 low on May 4). That could still be the case, but if it is, prices need to start rallying strongly soon and break through that 45-day moving average (now at $74.76 and falling) as well as last week's high at $76.18. A break below $67.98 would be bearish and force us to relabel the cycles.
"HEADS UP" on CRUDE OIL: I should mention here that once we determine for certain that a new 4-yr. cycle has started, we can expect crude to rally strongly with prices potentially getting back up to $130 (or even much higher) by early summer this year. We're going with the idea of a new 4-yr. cycle having already started with the $65.24 low on May 4, 2023, but if prices should start breaking below there, we could see a new (lower) 4-yr. cycle start anytime over the next eight months (i.e. by August) - anywhere between $54 - $68. But even in this more bearish scenario, the bottom of the 4-yr. cycle would still be an excellent buy spot. We would just have to wait a bit longer for that opportunity.
Needless to say, crude has great investment potential at this time and could see a possible 100% gain within six months following the establishment of a 4-yr. cycle bottom This is why we are keen to go long near the start of its new 4-yr long-term cycle.
Let's continue to hold our long position in crude with a close stop loss based on a close below $70 or $67.98, depending on your risk tolerance.
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