MARKETS UPDATE (4:15 pm EST)
When I made an early (11:45 am) blog post last Friday, the DOW had not yet made a new all-time high, but it did so by the end of the day (reaching 18,144). This negates the bearish intermarket divergence signal that had been in place because all three broad stock market indices (DOW, S&P 500, NASDAQ) have now made new yearly highs (and in the case of the DOW and S&P 500 new all-time highs). This market is obviously very bullish, and we are also early in the new cycles of these indices. I therefore expect more rallying into the major reversal zone of next week. If the DOW backs down a bit over the next few days (say, to the 17,700 -17,800 area) I may even consider going long for a short-term trade. However, I would cover that trade on any new high into the first or second week of March and probably go short as a significant market reversal would be likely then. Because the current broad stock market cycles are so bullish, we may not see a major correction in these markets start until the first week of April (although it is still possible for that to happen from a high in early March), but any high in early March should be a turning point for at least a small correction. Our trading strategy remains basically the same but with a slight modification. We will focus on next week for a top to sell short, but if the subsequent correction is small, we will look towards the first week of April for a new high and a much more severe correction to follow. Still on the sidelines.
Gold prices tested $1191 today, but are still holding above $1200. There is still a considerable amount of bearish momentum in the precious metal markets right now so prices could easily break lower here for a bottom into the first week of March. That would create an ideal spot to buy. There is, however, a technical configuration in the charts this week that could lead to a sudden surge in prices from a bottom anytime this week. If this happens, we could get a high into next week instead of a low and we would then be looking to sell short from that high. There is strong support for gold at $1180 so that may be the level from which a rally will start (either this week or next). Ideally, we want to see a low next week, and as long as that low stays above $1132 it should be an excellent spot to buy (both gold and silver). On the sidelines of both gold and silver for now.
Crude oil prices still look like they want to fall into the reversal zone of early March (although they still have some time to rally before next week). We may not get a new low below $45, but we should still be fishing for a bottom to buy next week (perhaps in the $47 - $48 range). Any rally now from a low that holds above $45 could rise to $60 (or even $70) before falling again. If, instead of falling, crude prices start to surge into next week, we will look for a top to sell short. On the sidelines for now.
When I made an early (11:45 am) blog post last Friday, the DOW had not yet made a new all-time high, but it did so by the end of the day (reaching 18,144). This negates the bearish intermarket divergence signal that had been in place because all three broad stock market indices (DOW, S&P 500, NASDAQ) have now made new yearly highs (and in the case of the DOW and S&P 500 new all-time highs). This market is obviously very bullish, and we are also early in the new cycles of these indices. I therefore expect more rallying into the major reversal zone of next week. If the DOW backs down a bit over the next few days (say, to the 17,700 -17,800 area) I may even consider going long for a short-term trade. However, I would cover that trade on any new high into the first or second week of March and probably go short as a significant market reversal would be likely then. Because the current broad stock market cycles are so bullish, we may not see a major correction in these markets start until the first week of April (although it is still possible for that to happen from a high in early March), but any high in early March should be a turning point for at least a small correction. Our trading strategy remains basically the same but with a slight modification. We will focus on next week for a top to sell short, but if the subsequent correction is small, we will look towards the first week of April for a new high and a much more severe correction to follow. Still on the sidelines.
Gold prices tested $1191 today, but are still holding above $1200. There is still a considerable amount of bearish momentum in the precious metal markets right now so prices could easily break lower here for a bottom into the first week of March. That would create an ideal spot to buy. There is, however, a technical configuration in the charts this week that could lead to a sudden surge in prices from a bottom anytime this week. If this happens, we could get a high into next week instead of a low and we would then be looking to sell short from that high. There is strong support for gold at $1180 so that may be the level from which a rally will start (either this week or next). Ideally, we want to see a low next week, and as long as that low stays above $1132 it should be an excellent spot to buy (both gold and silver). On the sidelines of both gold and silver for now.
Crude oil prices still look like they want to fall into the reversal zone of early March (although they still have some time to rally before next week). We may not get a new low below $45, but we should still be fishing for a bottom to buy next week (perhaps in the $47 - $48 range). Any rally now from a low that holds above $45 could rise to $60 (or even $70) before falling again. If, instead of falling, crude prices start to surge into next week, we will look for a top to sell short. On the sidelines for now.
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