This was a very difficult week for trading as the markets gave lots of mixed signals and conflicting signs. I would like to point out here to blog readers that I carefully analyze the markets every day but usually only post a new blog entry when there is a significant change in the markets that would alter trading strategies. (Rest assured that I don't take vacations from this daily analysis as I am investing my own money in these trades!) I will always, however, comment on the markets at least once a week. The purpose of this blog and website is to present in a relatively simple and straightforward manner the results of my analyses, and I try to avoid rambling financial news chitchat (which you can find on other websites and blogs).
TRADE ALERT: It is looking like the correction we were expecting in the precious metals may be delayed some more as both gold and silver appeared more bullish this week. This market is very tricky right now and is hard to call because there are strong bullish and bearish factors influencing it. There is a possibility here of significant rallying before we see that correction. We are still within a time frame or window where a reversal is likely, but we move out of that window next week. Silver is looking a little more bullish than gold this week as it broke through some resistance and stop loss points while gold did not. Based on all this, I am going to take the strategy of bailing out of the silver short positions for now and holding on to the gold short positions until next week. If the correction does not kick in next week then we will bail out of the gold shorts as well. If the precious metals do start to turn down next week, then the gains in the gold shorts will compensate for some of the silver short losses. (Note that silver is usually more volatile than gold and presents more of a risk when trading - especially short term trading).
The major correction we have been anticipating in the Swiss Franc seems to be happening now. On Tuesday this currency plunged and broke several support areas and it could continue further over the next several weeks and possibly go much lower as a significant cycle here comes to an end. As mentioned in the last blog post, a downtrend here would support the case for a correction in the precious metals because these markets usually move in the same direction. We will wait for the bottom of this correction before going long in this currency.
The broad stock market continued to be fairly stable this week. The DOW rallied some, but the S&P 500 and NASDAQ were relatively flat. There was not much change in the balance of bullish vs. bearish factors in these markets so we will continue to remain on the sidelines until the directions are more clear.
The price of crude oil abruptly shot up on Thursday following the news of an attack by Islamist militants on a natural gas plant in Algeria. This caused the appearance of several bullish technical signals on the crude oil charts. This may be a bullish development, but if the political tension eases in coming days it could turn out to be just a temporary glitch in crude oil prices. We will remain on the sidelines here and wait for a stronger directional signal for oil.