MARKETS UPDATE (11:30 pm EST)
As we approach the final weeks of 2024, the broad stock market is giving us a lot of mixed signals. Generally speaking, equity markets are looking quite bullish. Seemingly buoyed by the election of Trump (widely perceived as a "business friendly" president), all three market indices (DOW, S&P 500, NASDAQ) have been soaring to new all-time highs. This bodes well for the start of the upcoming new year. Nevertheless, several market analysts are pointing to the culmination of several longer-term cycles in equity markets that could peak by the first half of 2025 and be followed by a substantial market correction. (And yes, if a 90 year cycle is going to play out - and this is still a possibility - that correction could be very big.)
Even our medium-term and shorter cycles are a bit unclear and ambiguous at the moment. Today the NASDAQ broke and closed clearly above 20,000 - a record all-time high - while the DOW and S&P 500 did not make new highs, thus giving us a bearish divergence signal. But the DOW simultaneously made a new weekly low without the S&P 500 (and obviously without the NASDAQ), so we also have a bullish divergence signal.
This week the FOMC has its last meeting of the year. It will conclude on Wednesday at 2 PM, and a press conference will follow where Fed Chairman Jerome Powell will give an outlook for the economy going into 2025. It is almost certain that the Fed will announce an interest rate cut of 25 basis points, and this will most likely have a positive effect on the broad stock market. Right now, the DOW seems to be the only index that could be making a significant cycle or sub-cycle bottom. It is close to falling almost 2 weeks from its all-time high on Dec. 4, and it is well below its 15-day moving average and approaching its 45-day moving average. We like to see a 2-5 week fall that tests or breaks below these moving averages to complete the final bottom of a medium-term cycle, so this could be it. Because of our bullish outlook, we may see a buying opportunity this week or next - especially if dovish rhetoric from the Fed and Jerome Powell can kick start another rally, but for now we are still on the sidelines of this market.
Despite last week's dips, gold and silver are also looking quite bullish. There's a chance gold could be nearing the end of a longer-term cycle which could cause it to drop suddenly to the $2500 area. If that happens, it could be a good spot to buy. For now, however, I am staying on the sidelines of gold. Silver is less at risk of falling, so I am continuing to hold my long position in silver with a stop loss on a close below $30.
It is late in crude oil's current medium-term cycle (which started with the low of $63.88 - Jan. contract chart) on Sept. 10, and this cycle has been looking mostly bearish - so far. Prices seem to be stuck between $66 and $72, and until this congestion breaks - one way or the other - the trend of this cycle will remain neutral to bearish. It's possible the old medium-cycle ended and a new one started on Dec. 6, but to confirm that, prices will have to rally soon and break above $72, and then $74. In the meantime, we will wait and watch as a low below $63.88 and the final bottom to an older medium-term cycle could form in the upcoming reversal zone specifically for crude Dec. 17 - 27. If that happens, it would be a good spot to buy. I am currently on the sidelines of crude oil.
As we approach the final weeks of 2024, the broad stock market is giving us a lot of mixed signals. Generally speaking, equity markets are looking quite bullish. Seemingly buoyed by the election of Trump (widely perceived as a "business friendly" president), all three market indices (DOW, S&P 500, NASDAQ) have been soaring to new all-time highs. This bodes well for the start of the upcoming new year. Nevertheless, several market analysts are pointing to the culmination of several longer-term cycles in equity markets that could peak by the first half of 2025 and be followed by a substantial market correction. (And yes, if a 90 year cycle is going to play out - and this is still a possibility - that correction could be very big.)
Even our medium-term and shorter cycles are a bit unclear and ambiguous at the moment. Today the NASDAQ broke and closed clearly above 20,000 - a record all-time high - while the DOW and S&P 500 did not make new highs, thus giving us a bearish divergence signal. But the DOW simultaneously made a new weekly low without the S&P 500 (and obviously without the NASDAQ), so we also have a bullish divergence signal.
This week the FOMC has its last meeting of the year. It will conclude on Wednesday at 2 PM, and a press conference will follow where Fed Chairman Jerome Powell will give an outlook for the economy going into 2025. It is almost certain that the Fed will announce an interest rate cut of 25 basis points, and this will most likely have a positive effect on the broad stock market. Right now, the DOW seems to be the only index that could be making a significant cycle or sub-cycle bottom. It is close to falling almost 2 weeks from its all-time high on Dec. 4, and it is well below its 15-day moving average and approaching its 45-day moving average. We like to see a 2-5 week fall that tests or breaks below these moving averages to complete the final bottom of a medium-term cycle, so this could be it. Because of our bullish outlook, we may see a buying opportunity this week or next - especially if dovish rhetoric from the Fed and Jerome Powell can kick start another rally, but for now we are still on the sidelines of this market.
Despite last week's dips, gold and silver are also looking quite bullish. There's a chance gold could be nearing the end of a longer-term cycle which could cause it to drop suddenly to the $2500 area. If that happens, it could be a good spot to buy. For now, however, I am staying on the sidelines of gold. Silver is less at risk of falling, so I am continuing to hold my long position in silver with a stop loss on a close below $30.
It is late in crude oil's current medium-term cycle (which started with the low of $63.88 - Jan. contract chart) on Sept. 10, and this cycle has been looking mostly bearish - so far. Prices seem to be stuck between $66 and $72, and until this congestion breaks - one way or the other - the trend of this cycle will remain neutral to bearish. It's possible the old medium-cycle ended and a new one started on Dec. 6, but to confirm that, prices will have to rally soon and break above $72, and then $74. In the meantime, we will wait and watch as a low below $63.88 and the final bottom to an older medium-term cycle could form in the upcoming reversal zone specifically for crude Dec. 17 - 27. If that happens, it would be a good spot to buy. I am currently on the sidelines of crude oil.
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