MARKETS UPDATE (3:30 pm EST)
All three broad stock market indices (DOW, S&P 500, NASDAQ) have just turned 100% bullish in their directional momentum, and today they are all making new all-time highs. This is very bullish, but we need to note that we are now in the middle of a strong reversal zone (Dec. 6 - 18). This means it is possible for us to see a top by Wednesday and a reversal back down. However, in strongly bullish markets we sometimes get a "break-out" instead of a reversal, and this could be happening now, especially if optimism about the new U.S/China trade deal announced last week remains high. In fact, technical and cycle studies could support a "Santa Claus" rally into the end of the year. If that happens, we could see the DOW get to 28,800 or possibly even 29,700. Let's stay long in our broad stock market position for now but watch this market carefully for any signs of a top and possible reversal and be ready to sell our position if necessary.
It is starting to look like gold started a new medium-term cycle with its low of $1446 on Nov. 12, but it's still not clear if the cycle is bullish or bearish. Either way, we are in the middle of a reversal zone for precious metals (Dec. 4 - 18, same as for the broad stock market) so we could see a top this week (if it didn't happen last Thursday at $1486) and the start of a correction down. COT (Commitment of Traders) charts for both gold and silver are suggesting lower prices which also makes me think a correction is imminent. There is still the possibility of gold dropping to the $1420 area (maybe even as low as $1360). Silver has been rallying from a significant low it made last week at $16.53. It could rally some more this week, but we are in that reversal zone though Wednesday so a top could be imminent. If that top doesn't get too high, we could see silver prices going back down to $16.25 and maybe even $15.75.
Despite this short-term bearish view of gold and silver, I should say that both metals seem to be setting up for a major longer-term rally very soon. If gold and silver do correct down to those levels mentioned above then that would be a very good buy spot for what could be a very significant rally. If gold and/or silver bypass this corrective drop, and especially if gold prices break above $1490, that significant rally may already be underway. Let's wait to see if prices correct down some more. Still on the sidelines of both metals, but looking to go long soon.
Crude oil formed a sub-cycle bottom on Nov. 20 at $54.85 and has been rallying strongly from there. Our target for this rally has been the $60 - $64 range. On Friday prices got to $60.48 (Jan. contract chart), and we are in a reversal zone specifically for crude (it ends tomorrow). Prices today are not exceeding Friday's high so we may be seeing a top and reversal now. But as with the broad stock market, it's possible for crude prices to push higher into the end of this month before topping and then correcting down. Ether way, let's wait for a corrective drop to buy (as long as it doesn't go too low). Still on the sidelines of crude oil.
All three broad stock market indices (DOW, S&P 500, NASDAQ) have just turned 100% bullish in their directional momentum, and today they are all making new all-time highs. This is very bullish, but we need to note that we are now in the middle of a strong reversal zone (Dec. 6 - 18). This means it is possible for us to see a top by Wednesday and a reversal back down. However, in strongly bullish markets we sometimes get a "break-out" instead of a reversal, and this could be happening now, especially if optimism about the new U.S/China trade deal announced last week remains high. In fact, technical and cycle studies could support a "Santa Claus" rally into the end of the year. If that happens, we could see the DOW get to 28,800 or possibly even 29,700. Let's stay long in our broad stock market position for now but watch this market carefully for any signs of a top and possible reversal and be ready to sell our position if necessary.
It is starting to look like gold started a new medium-term cycle with its low of $1446 on Nov. 12, but it's still not clear if the cycle is bullish or bearish. Either way, we are in the middle of a reversal zone for precious metals (Dec. 4 - 18, same as for the broad stock market) so we could see a top this week (if it didn't happen last Thursday at $1486) and the start of a correction down. COT (Commitment of Traders) charts for both gold and silver are suggesting lower prices which also makes me think a correction is imminent. There is still the possibility of gold dropping to the $1420 area (maybe even as low as $1360). Silver has been rallying from a significant low it made last week at $16.53. It could rally some more this week, but we are in that reversal zone though Wednesday so a top could be imminent. If that top doesn't get too high, we could see silver prices going back down to $16.25 and maybe even $15.75.
Despite this short-term bearish view of gold and silver, I should say that both metals seem to be setting up for a major longer-term rally very soon. If gold and silver do correct down to those levels mentioned above then that would be a very good buy spot for what could be a very significant rally. If gold and/or silver bypass this corrective drop, and especially if gold prices break above $1490, that significant rally may already be underway. Let's wait to see if prices correct down some more. Still on the sidelines of both metals, but looking to go long soon.
Crude oil formed a sub-cycle bottom on Nov. 20 at $54.85 and has been rallying strongly from there. Our target for this rally has been the $60 - $64 range. On Friday prices got to $60.48 (Jan. contract chart), and we are in a reversal zone specifically for crude (it ends tomorrow). Prices today are not exceeding Friday's high so we may be seeing a top and reversal now. But as with the broad stock market, it's possible for crude prices to push higher into the end of this month before topping and then correcting down. Ether way, let's wait for a corrective drop to buy (as long as it doesn't go too low). Still on the sidelines of crude oil.
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