MARKETS UPDATE (3:15 pm EST)
Today gold is trading down again near $1320 but is remaining above the support at $1300. Silver, however, has broken below the "psychological" support line of $20 and is closing around $19.80. I am saying "psychological" here because there is always extra importance assigned to round numbers in trading regardless of other technical factors affecting the trade. Even though breaking $20 is significant, there is actually a strong zone of support reaching down to $19 and even lower in the current price chart for silver. Silver's price is also holding just above its 22 day moving average, which offers additional support. We are also right now in the center of a very strong reversal zone (i.e. a time period where all markets can make abrupt changes in direction) and silver is falling into it. Based on all this and the fact that medium-term momentum remains bullish, I am going to stay with my long positions in both gold and silver for now. As I suggested in Tuesday's blog, traders should not be heavily invested in precious metals at the moment. Traders who are heavily long in silver right now may want to consider unloading some of these longs until we are more certain of a bullish rally.
Momentum in the broad stock market remains bullish, but we may be seeing the start of a downturn as the DOW and S&P 500 seem to be declining from a Tuesday/Wednesday peak. Because momentum is strongly bullish, and the reversal zone mentioned above extends through the middle of next week, it is possible we could see a little more rallying to new highs before any reversal begins. With the Federal Reserve offering what now seems to be an endless supply of quantitative easing (QE), it seems we can never overestimate the potential bullishness of this market. I am still anticipating a correction here, but momentum will have to turn more bearish before I will consider selling this market short. Still on the sidelines.
Crude oil prices have been falling from a nearly $109 peak on July 19, but momentum has remained strongly bullish, which is why we haven't gone short. It is a little unclear what medium and long-term direction this market is taking right now, so I am remaining on the sidelines.
Today gold is trading down again near $1320 but is remaining above the support at $1300. Silver, however, has broken below the "psychological" support line of $20 and is closing around $19.80. I am saying "psychological" here because there is always extra importance assigned to round numbers in trading regardless of other technical factors affecting the trade. Even though breaking $20 is significant, there is actually a strong zone of support reaching down to $19 and even lower in the current price chart for silver. Silver's price is also holding just above its 22 day moving average, which offers additional support. We are also right now in the center of a very strong reversal zone (i.e. a time period where all markets can make abrupt changes in direction) and silver is falling into it. Based on all this and the fact that medium-term momentum remains bullish, I am going to stay with my long positions in both gold and silver for now. As I suggested in Tuesday's blog, traders should not be heavily invested in precious metals at the moment. Traders who are heavily long in silver right now may want to consider unloading some of these longs until we are more certain of a bullish rally.
Momentum in the broad stock market remains bullish, but we may be seeing the start of a downturn as the DOW and S&P 500 seem to be declining from a Tuesday/Wednesday peak. Because momentum is strongly bullish, and the reversal zone mentioned above extends through the middle of next week, it is possible we could see a little more rallying to new highs before any reversal begins. With the Federal Reserve offering what now seems to be an endless supply of quantitative easing (QE), it seems we can never overestimate the potential bullishness of this market. I am still anticipating a correction here, but momentum will have to turn more bearish before I will consider selling this market short. Still on the sidelines.
Crude oil prices have been falling from a nearly $109 peak on July 19, but momentum has remained strongly bullish, which is why we haven't gone short. It is a little unclear what medium and long-term direction this market is taking right now, so I am remaining on the sidelines.
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