MARKETS UPDATE (1:30 pm EDT)
After peaking on Sept. 2 at $66.03 (Oct. contract chart), crude oil prices have been falling. I may have been premature in thinking a new medium-term cycle started on Aug. 13. We may be seeing the final bottom to the older medium-term cycle (that began on April 9 at $54) forming now (this week or next) inside our current reversal zone for crude (Sept. 2 - 11). There is currently support around $62 and then strong support at $60. My current long position (entered on Aug. 27) is now slightly in the red, but I am going to hold it as long as prices continue to close above $60. Until that $60 line is breached, the trend in crude still looks bullish.
The broad stock market continues to defy the odds and push higher, even though it is now VERY late in the current medium-term cycle, and a final top is now overdue. Today, ALL THREE indices (DOW, S&P 500, NASDAQ) are making new all-time highs, and this negates the strong bearish divergence signals we have been seeing between these indices over the past few weeks. We are now in the center of a new reversal zone (Sept. 1 -11), so the final top could be forming now in this unusually bullish market. I am still waiting for a significant correction down to the final bottom of these medium-term cycles before considering any long position.
In my Aug. 24 blog on gold, I stated:
"There is a possibility that gold started a new medium-term cycle with its low on July 30 ($3270). If so, prices could be bullish now and poised to challenge April's all-time high at $3495."
It looks like this scenario is playing out as gold broke out to new all-time highs this week. In this case, gold is very bullish now and could get as high as $3800. I am going to watch for the first significant sub-cycle correction in this new medium-term cycle for a possible spot to buy. It could be imminent because prices are rising steeply into this week's reversal zone, suggesting a top could form this week (or next).
It looks like silver also started a new medium-term cycle on July 31, and if so, it too is due for a significant sub-cycle correction soon. We will watch for this and a potential spot to buy.
I am currently on the sidelines of both gold and silver.
After peaking on Sept. 2 at $66.03 (Oct. contract chart), crude oil prices have been falling. I may have been premature in thinking a new medium-term cycle started on Aug. 13. We may be seeing the final bottom to the older medium-term cycle (that began on April 9 at $54) forming now (this week or next) inside our current reversal zone for crude (Sept. 2 - 11). There is currently support around $62 and then strong support at $60. My current long position (entered on Aug. 27) is now slightly in the red, but I am going to hold it as long as prices continue to close above $60. Until that $60 line is breached, the trend in crude still looks bullish.
The broad stock market continues to defy the odds and push higher, even though it is now VERY late in the current medium-term cycle, and a final top is now overdue. Today, ALL THREE indices (DOW, S&P 500, NASDAQ) are making new all-time highs, and this negates the strong bearish divergence signals we have been seeing between these indices over the past few weeks. We are now in the center of a new reversal zone (Sept. 1 -11), so the final top could be forming now in this unusually bullish market. I am still waiting for a significant correction down to the final bottom of these medium-term cycles before considering any long position.
In my Aug. 24 blog on gold, I stated:
"There is a possibility that gold started a new medium-term cycle with its low on July 30 ($3270). If so, prices could be bullish now and poised to challenge April's all-time high at $3495."
It looks like this scenario is playing out as gold broke out to new all-time highs this week. In this case, gold is very bullish now and could get as high as $3800. I am going to watch for the first significant sub-cycle correction in this new medium-term cycle for a possible spot to buy. It could be imminent because prices are rising steeply into this week's reversal zone, suggesting a top could form this week (or next).
It looks like silver also started a new medium-term cycle on July 31, and if so, it too is due for a significant sub-cycle correction soon. We will watch for this and a potential spot to buy.
I am currently on the sidelines of both gold and silver.
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