MARKETS UPDATE (10:00 pm EST)
Since last week's presidential election the broad stock market has been rallying strongly, and today the DOW reached another all-time high at 18,934. It appears that the DOW and S&P 500 started new medium-term cycles on Nov. 4 which would make these markets bullish and could mean that the DOW gets as high as 19,500 and the S&P 500 up to 2,250 before any major correction asserts itself. We should therefore be looking for a good entry point to go long. The next major reversal zone for this market starts next week and continues into the end of the month. If this rally continues into the middle or end of next week then we should expect some sort of correction to follow that could give us a good entry point to buy (assuming that correction doesn't fall below the Nov. 4th lows). We might even sell short a top next week if the setup looks right (and then reverse and buy at the bottom that follows). On the other hand, the strong rally from last week may be topping out now (the DOW's new all-time high today was not matched by the S&P 500 or NASDAQ creating a possible case of intermarket bearish divergence), and we could see a low into next week's reversal zone which could also be a good buy spot. We will stay on the sidelines for now and watch how this market moves into next week.
Gold and silver prices plunged last week and took out their October lows. This jeopardizes the idea that these metals started new medium-term cycles with those lows. In other words, they could still be completing their old cycles and making new bottoms to those cycles now. If that is the case, we could easily see those bottoms in next week's reversal zone, and it would be a good spot to buy. A more bearish possibility is that the October lows were indeed new cycle bottoms. This would mean that the trend is turning bearish and prices could go much lower. In this scenario gold needs to stay above $1,200 and silver needs to stay above $15.82 to avoid turning very bearish. As with the broad stock market, we will stay on the sidelines here and watch how prices move into next week's reversal zone.
Crude oil prices continued their fall last week, and a new monthly low was made last Friday at $43.03 (December contract chart). Next week's reversal zone is especially strong for crude, and it is late in crude's medium-term cycle so we could see a significant bottom to buy then. It is possible we could see a retest of the Aug. 3rd start of this cycle at $41.58. Still on the sidelines but now looking to buy a significant bottom in next week's reversal zone.
The U.S. Dollar Index is again testing that tough resistance line at 100 which it attempted to break through twice in 2015 as well as in early 2016. Can it break through this time? Short-term technical signals right now are suggesting that it can. An interest rate hike in December (which many analysts are expecting) would also favor a bullish dollar now. If the dollar does rally higher, it will likely push gold and silver prices lower as in the possible bearish precious metals scenario I describe above.
Since last week's presidential election the broad stock market has been rallying strongly, and today the DOW reached another all-time high at 18,934. It appears that the DOW and S&P 500 started new medium-term cycles on Nov. 4 which would make these markets bullish and could mean that the DOW gets as high as 19,500 and the S&P 500 up to 2,250 before any major correction asserts itself. We should therefore be looking for a good entry point to go long. The next major reversal zone for this market starts next week and continues into the end of the month. If this rally continues into the middle or end of next week then we should expect some sort of correction to follow that could give us a good entry point to buy (assuming that correction doesn't fall below the Nov. 4th lows). We might even sell short a top next week if the setup looks right (and then reverse and buy at the bottom that follows). On the other hand, the strong rally from last week may be topping out now (the DOW's new all-time high today was not matched by the S&P 500 or NASDAQ creating a possible case of intermarket bearish divergence), and we could see a low into next week's reversal zone which could also be a good buy spot. We will stay on the sidelines for now and watch how this market moves into next week.
Gold and silver prices plunged last week and took out their October lows. This jeopardizes the idea that these metals started new medium-term cycles with those lows. In other words, they could still be completing their old cycles and making new bottoms to those cycles now. If that is the case, we could easily see those bottoms in next week's reversal zone, and it would be a good spot to buy. A more bearish possibility is that the October lows were indeed new cycle bottoms. This would mean that the trend is turning bearish and prices could go much lower. In this scenario gold needs to stay above $1,200 and silver needs to stay above $15.82 to avoid turning very bearish. As with the broad stock market, we will stay on the sidelines here and watch how prices move into next week's reversal zone.
Crude oil prices continued their fall last week, and a new monthly low was made last Friday at $43.03 (December contract chart). Next week's reversal zone is especially strong for crude, and it is late in crude's medium-term cycle so we could see a significant bottom to buy then. It is possible we could see a retest of the Aug. 3rd start of this cycle at $41.58. Still on the sidelines but now looking to buy a significant bottom in next week's reversal zone.
The U.S. Dollar Index is again testing that tough resistance line at 100 which it attempted to break through twice in 2015 as well as in early 2016. Can it break through this time? Short-term technical signals right now are suggesting that it can. An interest rate hike in December (which many analysts are expecting) would also favor a bullish dollar now. If the dollar does rally higher, it will likely push gold and silver prices lower as in the possible bearish precious metals scenario I describe above.
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