UPDATES ON CRUDE, THE U.S. DOLLAR INDEX, and the BROAD STOCK MARKET (5:00 pm EDST)
The NASDAQ made a new all-time high on Tuesday, and the S&P 500 made a new all-time high yesterday. The DOW is staying below its all-time high (35,091 on May 10) and seems to be finding resistance at the 35,000 line. The S&P 500 and especially the NASDAQ are now dropping from those highs, so this market could be rolling over. As I've discussed in previous blogs, it looks like the NASDAQ is completing and older medium-term cycle and is due to drop sharply to its final cycle bottom. That is why we have sold it short. The DOW and S&P 500 could also take corrections now, but if they are younger cycles, the corrections may be modest. Let's continue to hold our short position in the NASDAQ and see if this correction can continue lower. We would like to see the NASDAQ get at least down to the 14,000 area.
It appears that crude oil could be taking its cues from the broad stock market and correcting down. Because of our short position entered on June 23, I was worried that crude would make another high this week, but it looks like last week's high at $76.98 (Aug. contract chart) is holding as prices took a strong drop today. Let's see if they can drop below last week's low at $70.76 before we think about covering our short position. Holding my short position in crude for now.
The U.S. Dollar Index is late in its current medium-term cycle, so it looks like the "double-top" of yesterday's high at 92.82 and last week's high at 92.84 could be a significant high - especially as both happened in our reversal zone specifically for currencies (July 6 - 14). We are leaving that reversal zone now, so we don't want to see those highs exceeded. Let's see if this index falls now or makes another high. Any significant fall could trigger a rally in the precious metals.
The NASDAQ made a new all-time high on Tuesday, and the S&P 500 made a new all-time high yesterday. The DOW is staying below its all-time high (35,091 on May 10) and seems to be finding resistance at the 35,000 line. The S&P 500 and especially the NASDAQ are now dropping from those highs, so this market could be rolling over. As I've discussed in previous blogs, it looks like the NASDAQ is completing and older medium-term cycle and is due to drop sharply to its final cycle bottom. That is why we have sold it short. The DOW and S&P 500 could also take corrections now, but if they are younger cycles, the corrections may be modest. Let's continue to hold our short position in the NASDAQ and see if this correction can continue lower. We would like to see the NASDAQ get at least down to the 14,000 area.
It appears that crude oil could be taking its cues from the broad stock market and correcting down. Because of our short position entered on June 23, I was worried that crude would make another high this week, but it looks like last week's high at $76.98 (Aug. contract chart) is holding as prices took a strong drop today. Let's see if they can drop below last week's low at $70.76 before we think about covering our short position. Holding my short position in crude for now.
The U.S. Dollar Index is late in its current medium-term cycle, so it looks like the "double-top" of yesterday's high at 92.82 and last week's high at 92.84 could be a significant high - especially as both happened in our reversal zone specifically for currencies (July 6 - 14). We are leaving that reversal zone now, so we don't want to see those highs exceeded. Let's see if this index falls now or makes another high. Any significant fall could trigger a rally in the precious metals.
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