MARKETS UPDATE (4:30 pm EDST)
Today is a holiday (the last day of the Fourth of July "long" week-end), and financial markets are closed here in the U.S. Last week, as expected, equity markets were bullish, and all three broad stock market indices (DOW, S&P 500, NASDAQ) rose sharply. Both the S&P 500 and NASDAQ made new all-time highs, but the DOW remained below its all-time high of 35,091 from May 10. Thus our intermarket bearish divergence signal persists (at least until the DOW exceeds that high, and it is close to doing that).
The cycle patterns of the DOW and S&P 500 are not clear at the moment. Both may have started new medium-term cycles in late June which would make them both very young and potentially very bullish (at least short-term). The NASDAQ, however, is more clearly an older cycle that is ready to peak and correct down to its final cycle bottom, which is due anytime over the next 4 weeks. This makes the NASDAQ the most "ripe" for a steep correction down compared to the other two indices. Still, if this market continues its bullishness this week, all three indices could push higher. Our current strong reversal zone for equities (and other markets) ends this Friday. Let's see if we get more bearish divergence this week and a good opportunity to sell short the NASDAQ. The DOW making a new all-time high with the other two indices this week would put a damper on our plans to go short.
Gold's final sub-cycle in its current medium-term cycle may be ready to peak and then fall to its final cycle bottom. That peak could be this week as we are now in the center of a long reversal zone specifically for the precious metals (June 29 - July 15). A good target for that peak would be around $1840. There is also a good chance that gold could have started a new medium-term cycle last week. If that's the case, gold could be very bullish now and could rally beyond $1840. We are currently holding a long position in gold and are in the red from the unexpected dive gold took on June 17. If gold can rally back to the $1840 area, we may have the opportunity to negate most of that loss. Let's watch for that. Should prices turn south, we will raise our stop loss back to a clear break below $1750. Holding my long position in gold for now.
Silver may also have started a new medium-term cycle last week, or it may just be starting its final sub-cycle at the end of an older cycle. Either way, we should see prices rally now. We may just see a modest rally, perhaps to $27 before prices start turning down again. But if a new cycle did start last week, prices could easily get to $28 and even higher. Let's stay on the sidelines of silver for now as we are not sure if this is a new or old cycle.
Crude oil seems to be taking its cues from equity markets and has been rallying strongly. It is making a new monthly and cycle high today at $76.39 (Aug. contract chart). This is still within our target for this rally of $73 - $77, and we are in the center of a strong reversal zone for all markets (June 29 - July 9). A top could be forming here, especially since a sub-cycle correction is due this week or next. This rally in crude has put our short position (entered on 6/23) a bit in the red, but I am reluctant to cover it now as a correction could be imminent. Let's set a stop loss for our short position on a weekly close above $77.50. Holding my short position in crude for now.
Today is a holiday (the last day of the Fourth of July "long" week-end), and financial markets are closed here in the U.S. Last week, as expected, equity markets were bullish, and all three broad stock market indices (DOW, S&P 500, NASDAQ) rose sharply. Both the S&P 500 and NASDAQ made new all-time highs, but the DOW remained below its all-time high of 35,091 from May 10. Thus our intermarket bearish divergence signal persists (at least until the DOW exceeds that high, and it is close to doing that).
The cycle patterns of the DOW and S&P 500 are not clear at the moment. Both may have started new medium-term cycles in late June which would make them both very young and potentially very bullish (at least short-term). The NASDAQ, however, is more clearly an older cycle that is ready to peak and correct down to its final cycle bottom, which is due anytime over the next 4 weeks. This makes the NASDAQ the most "ripe" for a steep correction down compared to the other two indices. Still, if this market continues its bullishness this week, all three indices could push higher. Our current strong reversal zone for equities (and other markets) ends this Friday. Let's see if we get more bearish divergence this week and a good opportunity to sell short the NASDAQ. The DOW making a new all-time high with the other two indices this week would put a damper on our plans to go short.
Gold's final sub-cycle in its current medium-term cycle may be ready to peak and then fall to its final cycle bottom. That peak could be this week as we are now in the center of a long reversal zone specifically for the precious metals (June 29 - July 15). A good target for that peak would be around $1840. There is also a good chance that gold could have started a new medium-term cycle last week. If that's the case, gold could be very bullish now and could rally beyond $1840. We are currently holding a long position in gold and are in the red from the unexpected dive gold took on June 17. If gold can rally back to the $1840 area, we may have the opportunity to negate most of that loss. Let's watch for that. Should prices turn south, we will raise our stop loss back to a clear break below $1750. Holding my long position in gold for now.
Silver may also have started a new medium-term cycle last week, or it may just be starting its final sub-cycle at the end of an older cycle. Either way, we should see prices rally now. We may just see a modest rally, perhaps to $27 before prices start turning down again. But if a new cycle did start last week, prices could easily get to $28 and even higher. Let's stay on the sidelines of silver for now as we are not sure if this is a new or old cycle.
Crude oil seems to be taking its cues from equity markets and has been rallying strongly. It is making a new monthly and cycle high today at $76.39 (Aug. contract chart). This is still within our target for this rally of $73 - $77, and we are in the center of a strong reversal zone for all markets (June 29 - July 9). A top could be forming here, especially since a sub-cycle correction is due this week or next. This rally in crude has put our short position (entered on 6/23) a bit in the red, but I am reluctant to cover it now as a correction could be imminent. Let's set a stop loss for our short position on a weekly close above $77.50. Holding my short position in crude for now.
RSS Feed