MARKETS UPDATE (5:30 pm EST)
We are now starting another week that will lead into a major holiday weekend (New Year's Day on Sunday). Currently we are also in the center of a significant reversal zone that is relevant to all the markets we follow (equities, precious metals, crude oil and the U.S. dollar), but is especially relevant to equities. This reversal zone will extend into the first half of next week. Because of the extended holiday period (which is usually lightly traded), I don't think we will see any dramatic market moves until next week, but we can't rule this out entirely as we are in the center of a strong reversal zone.
If the broad stock market does fall this week, we will now look for support around 19,200 in the DOW and 2,170 in the S&P 500. These could be good spots to go long. I suspect, however, that equities will push higher this week and perhaps into early next week. If they do (and especially if we get intermarket bearish divergence where one of these indices makes a new weekly high, but not the other) we will consider selling short for a short-term (but possibly sharp) correction down. The current medium-term cycles of the DOW, S&P 500 and NASDAQ are still young, and our longer-term strategy now is bullish; that is, we are looking to buy the bottom of any short-term moderate correction. Still on the sidelines of this market.
The cycle pattern of gold and silver is still a little unclear, but both metals are likely making a significant bottom in this reversal zone. Last week silver made a new weekly low while gold did not for a case of intermarket bullish divergence. An ideal set-up now would be for gold to make a new low while silver does not. That could be a strong buy signal if it happens this week or early next week. We will watch for this. Currently on the sidelines of both gold and silver.
Crude oil's cycle is also a bit unclear at the moment. If crude is going to make a significant top in this reversal zone, it needs to exceed its Dec.11th high of $55.44 (February contract chart) before the end of next week. If that happens, we could have a good spot to sell short. But if crude prices are reluctant to rally this week, they may instead fall to make a cycle or subcycle bottom in the current reversal zone, which could be a good place to buy. If crude started a new medium-term cycle on Nov. 14 and its trend remains bullish then any corrections now should not go below $44. On the sidelines of crude for now.
We are now starting another week that will lead into a major holiday weekend (New Year's Day on Sunday). Currently we are also in the center of a significant reversal zone that is relevant to all the markets we follow (equities, precious metals, crude oil and the U.S. dollar), but is especially relevant to equities. This reversal zone will extend into the first half of next week. Because of the extended holiday period (which is usually lightly traded), I don't think we will see any dramatic market moves until next week, but we can't rule this out entirely as we are in the center of a strong reversal zone.
If the broad stock market does fall this week, we will now look for support around 19,200 in the DOW and 2,170 in the S&P 500. These could be good spots to go long. I suspect, however, that equities will push higher this week and perhaps into early next week. If they do (and especially if we get intermarket bearish divergence where one of these indices makes a new weekly high, but not the other) we will consider selling short for a short-term (but possibly sharp) correction down. The current medium-term cycles of the DOW, S&P 500 and NASDAQ are still young, and our longer-term strategy now is bullish; that is, we are looking to buy the bottom of any short-term moderate correction. Still on the sidelines of this market.
The cycle pattern of gold and silver is still a little unclear, but both metals are likely making a significant bottom in this reversal zone. Last week silver made a new weekly low while gold did not for a case of intermarket bullish divergence. An ideal set-up now would be for gold to make a new low while silver does not. That could be a strong buy signal if it happens this week or early next week. We will watch for this. Currently on the sidelines of both gold and silver.
Crude oil's cycle is also a bit unclear at the moment. If crude is going to make a significant top in this reversal zone, it needs to exceed its Dec.11th high of $55.44 (February contract chart) before the end of next week. If that happens, we could have a good spot to sell short. But if crude prices are reluctant to rally this week, they may instead fall to make a cycle or subcycle bottom in the current reversal zone, which could be a good place to buy. If crude started a new medium-term cycle on Nov. 14 and its trend remains bullish then any corrections now should not go below $44. On the sidelines of crude for now.
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