MARKETS UPDATE (3:00 pm EDST)
On Friday Gold prices slightly exceeded our stop loss point on our short position set at $1874 intraday (they got to $1874.98), but then gold closed the day below (at $1871). Some traders may have been stopped out of the short position that I had recommended on Monday. (I had set an automatic stop on my own gold ETF trade that was triggered.) The problem with setting very tight stops is that one can get "whipsawed" out of the trade. In this case, gold exceeded our stop by a tiny margin on Friday, and it now seems to be correcting down in earnest. This is classic "whipsaw" action. We may try and short gold again on any significant bounce, but for now, traders that were stopped out should stay on the sidelines. Traders who WEREN'T stopped out should hold their short positions in gold.
Fortunately, we were not stopped out of our short position in silver. Silver did not make a new high on Friday like gold, and therefore our intermarket bearish divergence remained intact. Silver prices are down steeply today, so we will continue to hold our short position and see how low they will go.
In last Thursday's blog I wrote:
"The broad stock market is trending down this week, but it seems reluctant (so far) to take a deep correction."
Well, equities gave up that reluctance Friday and today as all three of our market indices (DOW, S&P 500, NASDAQ) are taking a sharp tumble down. I also wrote in Thursday's blog:
"We've just entered a low level (weak) reversal zone (June 9-15), but we enter another major strong reversal zone next week (June 16 - 27), so if they push higher, equities could make another significant high in these time frames, or they could continue down and make a significant low instead. Right now it looks like it could go either way, but I favor them making a low. (It could also do both - make a new high and then a low, or vice-versa.)"
These indices are making new lows as we move into these reversal zones. We will watch carefully now for some sort of bottom. The likelihood of a reversal back up is strongest near the end of this week and early next week. Because this market is looking very bearish, our strategy now will be to sell short the top of any rally that may result from a bottom that could from within these reversal zones over the next two weeks. For now, we will remain on the sidelines.
Crude oil prices are now taking a dip as we move into this week's general reversal zones (June 9-15 and June 16-27). We also enter another reversal zone specifically for crude next week (June 20-28). Let's see if prices can drop some more and entice us to buy at a significant bottom that could form this week or next. Still on the sidelines of crude.
On Friday Gold prices slightly exceeded our stop loss point on our short position set at $1874 intraday (they got to $1874.98), but then gold closed the day below (at $1871). Some traders may have been stopped out of the short position that I had recommended on Monday. (I had set an automatic stop on my own gold ETF trade that was triggered.) The problem with setting very tight stops is that one can get "whipsawed" out of the trade. In this case, gold exceeded our stop by a tiny margin on Friday, and it now seems to be correcting down in earnest. This is classic "whipsaw" action. We may try and short gold again on any significant bounce, but for now, traders that were stopped out should stay on the sidelines. Traders who WEREN'T stopped out should hold their short positions in gold.
Fortunately, we were not stopped out of our short position in silver. Silver did not make a new high on Friday like gold, and therefore our intermarket bearish divergence remained intact. Silver prices are down steeply today, so we will continue to hold our short position and see how low they will go.
In last Thursday's blog I wrote:
"The broad stock market is trending down this week, but it seems reluctant (so far) to take a deep correction."
Well, equities gave up that reluctance Friday and today as all three of our market indices (DOW, S&P 500, NASDAQ) are taking a sharp tumble down. I also wrote in Thursday's blog:
"We've just entered a low level (weak) reversal zone (June 9-15), but we enter another major strong reversal zone next week (June 16 - 27), so if they push higher, equities could make another significant high in these time frames, or they could continue down and make a significant low instead. Right now it looks like it could go either way, but I favor them making a low. (It could also do both - make a new high and then a low, or vice-versa.)"
These indices are making new lows as we move into these reversal zones. We will watch carefully now for some sort of bottom. The likelihood of a reversal back up is strongest near the end of this week and early next week. Because this market is looking very bearish, our strategy now will be to sell short the top of any rally that may result from a bottom that could from within these reversal zones over the next two weeks. For now, we will remain on the sidelines.
Crude oil prices are now taking a dip as we move into this week's general reversal zones (June 9-15 and June 16-27). We also enter another reversal zone specifically for crude next week (June 20-28). Let's see if prices can drop some more and entice us to buy at a significant bottom that could form this week or next. Still on the sidelines of crude.
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