HAPPY 4TH OF JULY TO ALL READERS OF THE BLOG!
MARKETS UPDATE (5:00 pm EDT)
Tomorrow is the Fourth of July holiday here in the U.S. and the broad stock market has rallied strongly into it. Friday saw a strong surge in equities, and although the market closed early today, all three of our stock indices (DOW, S&P 500) closed with gains. Markets are closed all day tomorrow, but they will resume normal hours on Wednesday (the last day of our strong general reversal zone).
We are nearing the end of the current medium-term cycles in all three indices, so we are now watching for a final top in these cycles to be followed by a final 2-5 week steep correction to the final cycle bottoms. Because we are now making highs inside our strong reversal zone, there's a good chance the medium-term cycle tops are imminent (if they didn't happen already in the DOW and NASDAQ with their June 16 highs). We are also getting an intermarket bearish divergence signal because on Friday the S&P 500 exceeded its high from June 16 while the DOW and NASDAQ did not exceed their June 16 highs (so far). This may be a good time to sell this market short for that steep correction; however, we like to see an index close near the bottom of its daily range to confirm a bearish sell signal. None of our indices did that today. Let's wait to see how the market moves on Wednesday, technically the last day of our reversal zone. If our bearish divergence signal persists (i.e. if the DOW and/or the NASDAQ remain below their June 16 highs - 34,589 and 13,864, respectively) and markets close in the lower third of their daily range, we will look to sell short.
Although less likely, an alternative scenario could see equities break higher past Wednesday with all three indices moving above those June 16 highs. Sometimes a strong rally into a reversal zone will lead to a "break-out" instead of a reversal. This is not common, but it's possible - especially near the end of a bullish cycle. If that happens, we will refrain from any trading and wait for the final medium-term cycle tops to sell short in the next strong reversal zone coming up July 18 -26. For now, we remain on the sidelines and watch for a possible sell signal in the second half of this week.
Gold and silver prices rallied a bit today, but they both still remain below their 15-day and 45-day moving averages. We need to see prices get above those averages to confirm last week's low in gold ($1894 on Thursday) and the June 23 low in silver ($22.12) as the start of new medium-term cycles. Wednesday ends a reversal zone specifically for these metals, but there is a strong potential "pivot point" for gold on Thursday and Friday. We might see gold dip below last week's low later this week, but if silver doesn't, that will give us a bullish divergence signal and a good sign that gold's final low is in. For now we will continue to hold our long position in gold with that stop loss below $1850 or if gold makes a new weekly low and silver breaks below $22.12 after Wednesday.
The U.S. Dollar Index likely peaked on Friday at 103.54 in the center of a reversal zone for currencies, but there's still time for it to go higher through Wednesday (when the reversal zone ends). Unless the greenback is going to "break-out" here, we expect it to fall now, and that should help boost precious metal prices.
Today crude oil prices closed above the 15-day moving average and tested the 45-day moving average (but closed below it). There's still time for crude to make a new weekly low in our current reversal zone, but if it doesn't do this by Wednesday, we will have to assume that last week's low ($67.05 - Aug. contract chart) was it and that this market is likely turning bullish. A close above $75 would help confirm this. For now, let's remain on the sidelines of crude oil.
MARKETS UPDATE (5:00 pm EDT)
Tomorrow is the Fourth of July holiday here in the U.S. and the broad stock market has rallied strongly into it. Friday saw a strong surge in equities, and although the market closed early today, all three of our stock indices (DOW, S&P 500) closed with gains. Markets are closed all day tomorrow, but they will resume normal hours on Wednesday (the last day of our strong general reversal zone).
We are nearing the end of the current medium-term cycles in all three indices, so we are now watching for a final top in these cycles to be followed by a final 2-5 week steep correction to the final cycle bottoms. Because we are now making highs inside our strong reversal zone, there's a good chance the medium-term cycle tops are imminent (if they didn't happen already in the DOW and NASDAQ with their June 16 highs). We are also getting an intermarket bearish divergence signal because on Friday the S&P 500 exceeded its high from June 16 while the DOW and NASDAQ did not exceed their June 16 highs (so far). This may be a good time to sell this market short for that steep correction; however, we like to see an index close near the bottom of its daily range to confirm a bearish sell signal. None of our indices did that today. Let's wait to see how the market moves on Wednesday, technically the last day of our reversal zone. If our bearish divergence signal persists (i.e. if the DOW and/or the NASDAQ remain below their June 16 highs - 34,589 and 13,864, respectively) and markets close in the lower third of their daily range, we will look to sell short.
Although less likely, an alternative scenario could see equities break higher past Wednesday with all three indices moving above those June 16 highs. Sometimes a strong rally into a reversal zone will lead to a "break-out" instead of a reversal. This is not common, but it's possible - especially near the end of a bullish cycle. If that happens, we will refrain from any trading and wait for the final medium-term cycle tops to sell short in the next strong reversal zone coming up July 18 -26. For now, we remain on the sidelines and watch for a possible sell signal in the second half of this week.
Gold and silver prices rallied a bit today, but they both still remain below their 15-day and 45-day moving averages. We need to see prices get above those averages to confirm last week's low in gold ($1894 on Thursday) and the June 23 low in silver ($22.12) as the start of new medium-term cycles. Wednesday ends a reversal zone specifically for these metals, but there is a strong potential "pivot point" for gold on Thursday and Friday. We might see gold dip below last week's low later this week, but if silver doesn't, that will give us a bullish divergence signal and a good sign that gold's final low is in. For now we will continue to hold our long position in gold with that stop loss below $1850 or if gold makes a new weekly low and silver breaks below $22.12 after Wednesday.
The U.S. Dollar Index likely peaked on Friday at 103.54 in the center of a reversal zone for currencies, but there's still time for it to go higher through Wednesday (when the reversal zone ends). Unless the greenback is going to "break-out" here, we expect it to fall now, and that should help boost precious metal prices.
Today crude oil prices closed above the 15-day moving average and tested the 45-day moving average (but closed below it). There's still time for crude to make a new weekly low in our current reversal zone, but if it doesn't do this by Wednesday, we will have to assume that last week's low ($67.05 - Aug. contract chart) was it and that this market is likely turning bullish. A close above $75 would help confirm this. For now, let's remain on the sidelines of crude oil.
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