MARKETS UPDATE (6:00 pm EST)
It's starting to look like last Wednesday's drop in equity markets from a new high was just a one day corrective dip as the DOW, S&P 500, and NASDAQ continue to rally up from that low. The isolated high on Wednesday was inside a strong reversal zone and also near a strong "pivot point" for stocks, but it seems like this bullish market and the strength of our "Santa Claus" rally could override those reversal points. In bullish markets, medium-term cycles sometimes rise unchecked into the center of the cycle, and that could be happening here. If this rally continues into New Year's Day, that would be the 10th week of the current medium-term cycles in all three indices, which is near the cycle center. In that situation, a top and sharp correction down should follow.
This week we enter a weak reversal zone Dec. 26 - Jan.4, and next Monday, Tuesday, and especially Wednesday and Thursday, we have strong potential "pivot points" for this market. A top and correction down could happen any time within these windows (i.e. from today through next Thursday). We will continue to watch for a significant correction as a possible spot to buy. For now, we remain on the sidelines of the broad stock market.
Gold and silver both made significant sub-cycle lows on Dec. 13, and prices have been rising from there. It is still not clear if gold and/or silver are going to exceed their Dec. 4 highs ($2123 in gold and $25.79 in silver). Right now, prices seem reluctant to rally and could be rolling over. Today through Wednesday is a potential "pivot point" for both metals which supports the idea of a down turn now. But the trend in both metals is leaning towards bullish, and there is plenty of time for both of them to challenge or exceed those Dec. 4 highs. As I've said in past blogs, we won't chase this rally (if it happens), but will instead wait for the final bottoms to the current medium-term cycles (due around mid-January. through February) for a potential buy spot. There is a possibility of an especially sharp reversal in gold anytime now that could take prices back down to the $1900 area ($1860 - $1920). If that happens, we will be looking to buy. For now, we are on the sidelines of both metals.
The US. Dollar Index broke below support at 102, but it may find some more support at 101, and after that, a potentially strong support line at 100. These corrections may be pushing precious metal prices upwards, but if the greenback snaps back up from one of these support lines, it could push gold and silver prices lower.
We got a late "Christmas present" today with a strong rally in crude oil prices. After a two day corrective dip last week (getting down to $72.44 - Feb. contract chart on Thursday), prices shot up to $76.16 today to test the 45-day moving average. We went long in crude on Dec. 14 with the idea that the low on Dec. 13 ($67.98) was the start of a new medium-term cycle (and possibly the start of a new 4-year cycle). It's been "so far, so good" for this trade, but we still have to see prices close above the 45-day moving average to confirm the new cycle. Today was the first test. Let's see if it can break higher this week. We are holding our long position in crude oil.
It's starting to look like last Wednesday's drop in equity markets from a new high was just a one day corrective dip as the DOW, S&P 500, and NASDAQ continue to rally up from that low. The isolated high on Wednesday was inside a strong reversal zone and also near a strong "pivot point" for stocks, but it seems like this bullish market and the strength of our "Santa Claus" rally could override those reversal points. In bullish markets, medium-term cycles sometimes rise unchecked into the center of the cycle, and that could be happening here. If this rally continues into New Year's Day, that would be the 10th week of the current medium-term cycles in all three indices, which is near the cycle center. In that situation, a top and sharp correction down should follow.
This week we enter a weak reversal zone Dec. 26 - Jan.4, and next Monday, Tuesday, and especially Wednesday and Thursday, we have strong potential "pivot points" for this market. A top and correction down could happen any time within these windows (i.e. from today through next Thursday). We will continue to watch for a significant correction as a possible spot to buy. For now, we remain on the sidelines of the broad stock market.
Gold and silver both made significant sub-cycle lows on Dec. 13, and prices have been rising from there. It is still not clear if gold and/or silver are going to exceed their Dec. 4 highs ($2123 in gold and $25.79 in silver). Right now, prices seem reluctant to rally and could be rolling over. Today through Wednesday is a potential "pivot point" for both metals which supports the idea of a down turn now. But the trend in both metals is leaning towards bullish, and there is plenty of time for both of them to challenge or exceed those Dec. 4 highs. As I've said in past blogs, we won't chase this rally (if it happens), but will instead wait for the final bottoms to the current medium-term cycles (due around mid-January. through February) for a potential buy spot. There is a possibility of an especially sharp reversal in gold anytime now that could take prices back down to the $1900 area ($1860 - $1920). If that happens, we will be looking to buy. For now, we are on the sidelines of both metals.
The US. Dollar Index broke below support at 102, but it may find some more support at 101, and after that, a potentially strong support line at 100. These corrections may be pushing precious metal prices upwards, but if the greenback snaps back up from one of these support lines, it could push gold and silver prices lower.
We got a late "Christmas present" today with a strong rally in crude oil prices. After a two day corrective dip last week (getting down to $72.44 - Feb. contract chart on Thursday), prices shot up to $76.16 today to test the 45-day moving average. We went long in crude on Dec. 14 with the idea that the low on Dec. 13 ($67.98) was the start of a new medium-term cycle (and possibly the start of a new 4-year cycle). It's been "so far, so good" for this trade, but we still have to see prices close above the 45-day moving average to confirm the new cycle. Today was the first test. Let's see if it can break higher this week. We are holding our long position in crude oil.
RSS Feed