It looks like another bull/bear standoff is developing in the silver and gold markets as the price of the metals continues to push against our stop loss areas but doesn't quite clear them. We will continue to hold our short positions until we get a clear and decisive break above these resistance zones. There are many mixed and confusing signals in the precious metal markets right now. The stock charts of many gold and silver mining companies are looking quite bearish at the moment, and the behavior of these stocks is often a predictor of the direction the metals themselves will take. On the other hand, the chart for the U.S. dollar index is looking dire and a drop in the dollar usually indicates a rise in the precious metals. Hopefully, directions will be a little more clear next week in these markets.
The broad stock market continued its bullish charge this week and is finishing with the DOW clearing the 14,000 mark today. Even the NASDAQ, which had been lagging behind the DOW and S&P 500 in rally strength, surged strongly today and gave a strong signal of bullish momentum. Of course, it is not very wise to buy into the top of a rally (assuming we know the top!) and there are still cycle and timing factors that would indicate some sort of correction about to commence. Even if the correction is small, it should give us a better entry point into the market. We will therefore continue to stand on the sidelines here.
The chart for crude oil is looking similar to that of the broad stock market in that a correction looks imminent. As stated in earlier blogs, we may attempt to sell this market short if a strong sell signal appears. Crude oil is not looking quite as bullish as the broad stock market right now, and this may be an indication that both markets are ready to take a breather from their rallies.