MARKETS UPDATE (11:00 pm EST)
In last Saturday's blog on the broad stock market I wrote:
"After their mid-cycle "dips", all three indices are now headed towards their final medium-term cycle highs to be followed by a steep correction down to their final cycle bottoms due sometime over the next two months. There's a good chance those final tops could happen in our next strong reversal zone coming up next week (Jan. 23 - Feb. 1) or even in a weaker one in the first week of February (Feb. 2 - 13)."
We are now at the center of that strong general reversal zone (Jan. 23 - Feb.1), and this market is rising steeply into it. A top could be imminent. The NASDAQ made a new weekly isolated high on Wednesday while the DOW and S&P 500 pushed to new weekly highs today. Because all three indices made new weekly highs, we have no bearish divergence signal this week; however, the NASDAQ still has not exceeded its all-time high from Nov. 2021 (16,212), but both the DOW and S&P 500 have now exceeded their all-time highs from Jan. 2022. This is a strong bearish divergence signal (until the NASDAQ breaks through that high - it is close). Although this market could turn down now, there is still time for it to push higher through next Thursday, and even into the following week (Feb. 2 -13). We will stay on the sidelines as we continue to wait for the final correction down to the end of the current medium-term cycle, which should be a good spot to buy as this market continues to look bullish into the summer.
It is getting late in the current medium-term cycle of gold, and prices seemed reluctant to rally this week as they stayed below both the 15-day and 45-day moving averages. Gold's recent low on Jan. 17 at $2003 was not in any reversal zones, so it is unlikely that was the end of the current medium-term cycle. In other words, prices are probably headed lower to the final cycle bottom. While it's still possible for prices to surge up and test the $2100 level before falling to the final cycle bottom, that is looking less likely now. Let's stay on the sidelines of gold as we wait for the final cycle bottom, which could end up happening in our current strong general reversal zone (that ends next Thursday). Ideally we would like to see gold drop down into the $1900 - $1950 area. That would be a good spot to buy, if it happens.
Silver made a deep low at $21.96 on Monday, and it has risen steeply from there. It's possible that low was the start of a new medium-term cycle as it was in a potential "pivot point" area for the precious metals, but that would be a bit early, and there's still plenty of time for silver to go lower before completing a final medium-term cycle bottom. Today silver tested and closed just below the 15-day moving average. Let's wait and see if this week's rally gains some legs next week or if it instead turns back down. We remain on the sidelines of silver for now.
The U.S. Dollar Index made a new weekly high (103.82) on Tuesday, but that was just one day outside a reversal zone for currencies (Jan. 24 - Feb. 1). If the greenback can push higher next week, we could get another isolated high inside the reversal zone and then a significant correction down. if that scenario plays out, it could correspond to a significant bottom and reversal back up in the precious metals. We will watch closely for this next week.
Crude oil prices have finally broken upside out of their $70 - $75 (March contract chart) congestion zone. Prices are now even closing above the $76.31 high from Dec. 26. This strongly suggests that the $68.28 low on Dec. 13 was the start of a new medium-term cycle. If that's the case, a significant sub-cycle top is due shortly, and we are now in the center of a reversal zone specifically for crude Jan. 23 - Feb. 1 (it overlaps precisely with our strong general reversal zone). There is also considerable resistance between $78 - $80. We should be watching next week for a top and a correction back down which could give us a good entry point into this new cycle as the cycle's current trend looks quite bullish. We are on the sidelines of crude oil for now.
In last Saturday's blog on the broad stock market I wrote:
"After their mid-cycle "dips", all three indices are now headed towards their final medium-term cycle highs to be followed by a steep correction down to their final cycle bottoms due sometime over the next two months. There's a good chance those final tops could happen in our next strong reversal zone coming up next week (Jan. 23 - Feb. 1) or even in a weaker one in the first week of February (Feb. 2 - 13)."
We are now at the center of that strong general reversal zone (Jan. 23 - Feb.1), and this market is rising steeply into it. A top could be imminent. The NASDAQ made a new weekly isolated high on Wednesday while the DOW and S&P 500 pushed to new weekly highs today. Because all three indices made new weekly highs, we have no bearish divergence signal this week; however, the NASDAQ still has not exceeded its all-time high from Nov. 2021 (16,212), but both the DOW and S&P 500 have now exceeded their all-time highs from Jan. 2022. This is a strong bearish divergence signal (until the NASDAQ breaks through that high - it is close). Although this market could turn down now, there is still time for it to push higher through next Thursday, and even into the following week (Feb. 2 -13). We will stay on the sidelines as we continue to wait for the final correction down to the end of the current medium-term cycle, which should be a good spot to buy as this market continues to look bullish into the summer.
It is getting late in the current medium-term cycle of gold, and prices seemed reluctant to rally this week as they stayed below both the 15-day and 45-day moving averages. Gold's recent low on Jan. 17 at $2003 was not in any reversal zones, so it is unlikely that was the end of the current medium-term cycle. In other words, prices are probably headed lower to the final cycle bottom. While it's still possible for prices to surge up and test the $2100 level before falling to the final cycle bottom, that is looking less likely now. Let's stay on the sidelines of gold as we wait for the final cycle bottom, which could end up happening in our current strong general reversal zone (that ends next Thursday). Ideally we would like to see gold drop down into the $1900 - $1950 area. That would be a good spot to buy, if it happens.
Silver made a deep low at $21.96 on Monday, and it has risen steeply from there. It's possible that low was the start of a new medium-term cycle as it was in a potential "pivot point" area for the precious metals, but that would be a bit early, and there's still plenty of time for silver to go lower before completing a final medium-term cycle bottom. Today silver tested and closed just below the 15-day moving average. Let's wait and see if this week's rally gains some legs next week or if it instead turns back down. We remain on the sidelines of silver for now.
The U.S. Dollar Index made a new weekly high (103.82) on Tuesday, but that was just one day outside a reversal zone for currencies (Jan. 24 - Feb. 1). If the greenback can push higher next week, we could get another isolated high inside the reversal zone and then a significant correction down. if that scenario plays out, it could correspond to a significant bottom and reversal back up in the precious metals. We will watch closely for this next week.
Crude oil prices have finally broken upside out of their $70 - $75 (March contract chart) congestion zone. Prices are now even closing above the $76.31 high from Dec. 26. This strongly suggests that the $68.28 low on Dec. 13 was the start of a new medium-term cycle. If that's the case, a significant sub-cycle top is due shortly, and we are now in the center of a reversal zone specifically for crude Jan. 23 - Feb. 1 (it overlaps precisely with our strong general reversal zone). There is also considerable resistance between $78 - $80. We should be watching next week for a top and a correction back down which could give us a good entry point into this new cycle as the cycle's current trend looks quite bullish. We are on the sidelines of crude oil for now.
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