UPDATE ON BROAD STOCK MARKET and PRECIOUS METALS (4:30 pm EDST)
President Trump's meeting in Japan at Saturday's G20 Summit with Chinese leader Xi Jinping resulted in an agreement to resume stalled trade negotiations. Mr. Trump even offered an olive branch of not imposing tariffs on an additional 300 billion in Chinese imports as he had planned to do. This news gave a bullish kick to the broad stock market this morning as the DOW opened with a nearly 300 point gain. That gain was short-lived, however, as equities slid down from that top and closed the day up only 120 points. The S&P 500 and NASDAQ made new weekly highs today, but the DOW did not, and all three indices are closing near the bottom of today's range. This gives us a strong intermarket bearish divergence signal. We could still be on track for a sub-cycle correction here, but if the markets rally tomorrow and the DOW makes a new high, that correction may be delayed. In that case we will have to cover our short position and wait for another top in the next reversal zone for equities (July 10 - 17). We may try and sell short again then or we may just wait for the short-term corrective dip and buy at the bottom for more rallying into the summer. Holding my short position, but ready to cover tomorrow if necessary.
Gold prices plunged sharply yesterday (Sunday) and today to rest above a support line around $1380. We have to watch carefully now as we don't want to see that level breached tomorrow. A tight stop loss should be placed at $1380 as a break below there could lead to a more serious plunge. Note that a correction even back to $1340 - $1350 would not alter our bullish view of gold. A break below $1340, however, might jeopardize that bullish view. Silver's price drop today was not as severe as gold's. We would like to see silver stay above $15, but even if it does and gold breaks lower tomorrow, we will most likely dump our long positions in both metals and stand aside. Holding my long positions in gold and silver but ready to sell quickly if necessary tomorrow.
President Trump's meeting in Japan at Saturday's G20 Summit with Chinese leader Xi Jinping resulted in an agreement to resume stalled trade negotiations. Mr. Trump even offered an olive branch of not imposing tariffs on an additional 300 billion in Chinese imports as he had planned to do. This news gave a bullish kick to the broad stock market this morning as the DOW opened with a nearly 300 point gain. That gain was short-lived, however, as equities slid down from that top and closed the day up only 120 points. The S&P 500 and NASDAQ made new weekly highs today, but the DOW did not, and all three indices are closing near the bottom of today's range. This gives us a strong intermarket bearish divergence signal. We could still be on track for a sub-cycle correction here, but if the markets rally tomorrow and the DOW makes a new high, that correction may be delayed. In that case we will have to cover our short position and wait for another top in the next reversal zone for equities (July 10 - 17). We may try and sell short again then or we may just wait for the short-term corrective dip and buy at the bottom for more rallying into the summer. Holding my short position, but ready to cover tomorrow if necessary.
Gold prices plunged sharply yesterday (Sunday) and today to rest above a support line around $1380. We have to watch carefully now as we don't want to see that level breached tomorrow. A tight stop loss should be placed at $1380 as a break below there could lead to a more serious plunge. Note that a correction even back to $1340 - $1350 would not alter our bullish view of gold. A break below $1340, however, might jeopardize that bullish view. Silver's price drop today was not as severe as gold's. We would like to see silver stay above $15, but even if it does and gold breaks lower tomorrow, we will most likely dump our long positions in both metals and stand aside. Holding my long positions in gold and silver but ready to sell quickly if necessary tomorrow.
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