MARKETS UPDATE (11:30 pm EDST)
We are nearing the end of our current strong reversal zone for equities (and other markets) - July 30 - Aug. 10.
All three broad stock market indices made new all-time highs last week in this reversal zone, so that could be a top, and this market could be turning down now. However, there was no intermarket bearish divergence signal last week. If one or two of these indices (but not all three) makes a new high, we could see a bearish divergence signal this week, and that might be a good place to sell short. But if all three make new highs (they are all close to doing that), there will be no bearish divergence this week either. I suspect this market is bullish and will make new highs. If that happens, it could be a case of a reversal zone corresponding to a "break-out" instead of a reversal (this is not common, but it does happen). Let's wait and see if these indices can push higher past Tuesday. If they do, we may have to wait until our next reversal zone coming up Aug. 17 - 25 before we see a significant top and then a significant reversal. We will also watch for bearish divergence over the next few days and a possible opportunity to sell short (it's still possible that the NASDAQ is completing an older cycle, and it could fall sharply to that cycle's final bottom). Still on the sidelines of the broad stock market.
In last Wednesday's gold trade alert, I was worried that gold was about to take a significant correction:
"It seems like that correction could happen now, and there is a chance it could fall below $1752. Because our long position is now at a break even point, I am going to sell it today (no loss) and wait to see how far any correction will go."
Well, unloading our long position (with no loss) on Wednesday turned out to be a VERY good decision. On Friday, gold prices plummeted from $1804 to $1759, and today they dropped to $1693 intraday before closing around $1730. Wow. It looks like the $1752 low from June 29 is not holding. If that June 29 low was the start of a new medium-term cycle (as we have been thinking), it means this market's trend is turning VERY bearish. The alternative could be that gold is completing a much older cycle, which may not be so bearish (unless prices start closing below $1677). This is not good news for gold and COULD mean that the top to the long-term 23 year cycle in gold is in with the August 2020 high of $2070 and that gold has begun its long-term descent to the 23 year cycle low due around 2023 -2024. But I am getting ahead of myself. For now, we will wait and see how low prices go before we jump to any conclusions about gold's longer-term cycle.
Silver prices also plummeted Friday and today with today's intraday price getting down to $23. Silver is most likely an older medium-term cycle that is finding its final bottom now. We are still in a reversal zone for the precious metals (it ends Wednesday), so this week could see the bottom. But gold's sudden bearish turn has me worried that both metals could go lower - perhaps into the next reversal zone for gold and silver coming up Aug. 17 - 26.
Let's stay on the sidelines of both metals for now.
In last Tuesday's blog on crude oil I wrote:
"Crude may have started a new medium-term cycle with its July 20 low at $65.01 (September contract chart) or it could be completing an older cycle that is getting ready to fall sharply to its final cycle bottom (below $65.01). In either case, crude could still rally higher short-term. If this is a new cycle, it could rally much higher - possibly to the low $90's. Crude and the broad stock market will likely be moving in the same direction, and that direction is not clear in either market right now."
All of this still applies except crude prices haven't rallied and have fallen significantly since last Tuesday. Prices today at $65.15 could be making a double-bottom to that $65.01 July 20 low. That would be bullish and would confirm a new cycle. But if prices go lower from here, they may be moving down to the final bottom of an older cycle - maybe in the upcoming reversal zone for crude Aug. 17 - 26 (same as for gold and silver). We will remain on the sidelines of crude until it becomes more clear which cycle is playing out.
We are nearing the end of our current strong reversal zone for equities (and other markets) - July 30 - Aug. 10.
All three broad stock market indices made new all-time highs last week in this reversal zone, so that could be a top, and this market could be turning down now. However, there was no intermarket bearish divergence signal last week. If one or two of these indices (but not all three) makes a new high, we could see a bearish divergence signal this week, and that might be a good place to sell short. But if all three make new highs (they are all close to doing that), there will be no bearish divergence this week either. I suspect this market is bullish and will make new highs. If that happens, it could be a case of a reversal zone corresponding to a "break-out" instead of a reversal (this is not common, but it does happen). Let's wait and see if these indices can push higher past Tuesday. If they do, we may have to wait until our next reversal zone coming up Aug. 17 - 25 before we see a significant top and then a significant reversal. We will also watch for bearish divergence over the next few days and a possible opportunity to sell short (it's still possible that the NASDAQ is completing an older cycle, and it could fall sharply to that cycle's final bottom). Still on the sidelines of the broad stock market.
In last Wednesday's gold trade alert, I was worried that gold was about to take a significant correction:
"It seems like that correction could happen now, and there is a chance it could fall below $1752. Because our long position is now at a break even point, I am going to sell it today (no loss) and wait to see how far any correction will go."
Well, unloading our long position (with no loss) on Wednesday turned out to be a VERY good decision. On Friday, gold prices plummeted from $1804 to $1759, and today they dropped to $1693 intraday before closing around $1730. Wow. It looks like the $1752 low from June 29 is not holding. If that June 29 low was the start of a new medium-term cycle (as we have been thinking), it means this market's trend is turning VERY bearish. The alternative could be that gold is completing a much older cycle, which may not be so bearish (unless prices start closing below $1677). This is not good news for gold and COULD mean that the top to the long-term 23 year cycle in gold is in with the August 2020 high of $2070 and that gold has begun its long-term descent to the 23 year cycle low due around 2023 -2024. But I am getting ahead of myself. For now, we will wait and see how low prices go before we jump to any conclusions about gold's longer-term cycle.
Silver prices also plummeted Friday and today with today's intraday price getting down to $23. Silver is most likely an older medium-term cycle that is finding its final bottom now. We are still in a reversal zone for the precious metals (it ends Wednesday), so this week could see the bottom. But gold's sudden bearish turn has me worried that both metals could go lower - perhaps into the next reversal zone for gold and silver coming up Aug. 17 - 26.
Let's stay on the sidelines of both metals for now.
In last Tuesday's blog on crude oil I wrote:
"Crude may have started a new medium-term cycle with its July 20 low at $65.01 (September contract chart) or it could be completing an older cycle that is getting ready to fall sharply to its final cycle bottom (below $65.01). In either case, crude could still rally higher short-term. If this is a new cycle, it could rally much higher - possibly to the low $90's. Crude and the broad stock market will likely be moving in the same direction, and that direction is not clear in either market right now."
All of this still applies except crude prices haven't rallied and have fallen significantly since last Tuesday. Prices today at $65.15 could be making a double-bottom to that $65.01 July 20 low. That would be bullish and would confirm a new cycle. But if prices go lower from here, they may be moving down to the final bottom of an older cycle - maybe in the upcoming reversal zone for crude Aug. 17 - 26 (same as for gold and silver). We will remain on the sidelines of crude until it becomes more clear which cycle is playing out.
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