MARKETS UPDATE (11:30 pm EST)
Today was a holiday (President's Day) in the U.S. and equity markets were closed. They will open tomorrow and begin a short (4 day) trading week.
Last week's strong rally in the broad stock market suggests that the DOW and S&P 500 could have started new medium-term cycles from their lows on Feb. 9 (23,360 in the DOW and 2,532 in the S&P 500); however, last week the NASDAQ made a new weekly high while the DOW and S&P 500 did not (bearish divergence) so we can't rule out these indices turning down again and seeing these latter two indices make their final cycle bottoms below those Feb. 9 lows in our next reversal zone (Feb. 26 - March 6). Another possibility is to see the DOW and S&P 500 make double bottoms close to those Feb. 9 lows in this upcoming reversal zone. That would be an ideal situation as this reversal zone is much stronger than the one from Feb. 9 and is better suited to a final medium-term cycle bottom. Such a double bottom would be an ideal spot to go long. If instead equity markets continue to rise into the next reversal zone, we will expect a correction then and will also look to buy the bottom of that correction. "Bottom" line : we are still waiting to buy near the bottom of new medium-term cycles in the DOW and S&P 500. On the sidelines for now.
I'm a little concerned that last week's rally in gold and silver saw gold, but not silver, make a new weekly high. This is a (short-term) bearish divergence signal which could mean a reversal in prices is imminent. Indeed, Sunday's and today's prices were down from last week's highs (especially in silver). For these metals to remain bullish, we need to see them break above last week's highs soon, and especially for gold to break above its Jan. 25 high of $1366. Ideally, we want to see these metals rally into the next reversal zone (Feb. 27 - March 8) where we can take profits on our long positions. Let's raise our stop loss on our gold longs to a close below $1320 and on our silver longs to a close below $16.20. I should point out here that the medium and long-term picture for gold and silver still looks quite bullish so any short-term corrections in these metals will be looked at as opportunities to buy. Holding my long positions in gold and silver
The U.S. Dollar Index seems poised for another short-term rally from support just above 88. From Friday's low around 88.20, the dollar rose to 89.38 today and seems determined to have another go at that 90 - 91 resistance area. If this happens, it could push gold and silver prices a bit lower, but unless the greenback can break above 91, any dollar rally will likely turn back down and allow the precious metals to rally some more.
Crude oil seems to be on track to continue its rally into the next reversal zone for crude (Feb. 26 - March 6). Crude's double bottom on Feb. 9 and Feb. 14 near $58 (March contract chart) was very likely a significant sub-cycle low. We bought crude near this low on Feb. 13 so our long position is doing well. While it is still possible for prices to back down again and make a new low into this next reversal zone, I think it's much more likely for us to see a high at that time. We will watch for that next week. If this market is going to stay bullish, prices should soon exceed the $66.66 high of Jan, 25. Let's move our stop loss for our long position up to a close below $59. Holding my long position in crude oil.
Today was a holiday (President's Day) in the U.S. and equity markets were closed. They will open tomorrow and begin a short (4 day) trading week.
Last week's strong rally in the broad stock market suggests that the DOW and S&P 500 could have started new medium-term cycles from their lows on Feb. 9 (23,360 in the DOW and 2,532 in the S&P 500); however, last week the NASDAQ made a new weekly high while the DOW and S&P 500 did not (bearish divergence) so we can't rule out these indices turning down again and seeing these latter two indices make their final cycle bottoms below those Feb. 9 lows in our next reversal zone (Feb. 26 - March 6). Another possibility is to see the DOW and S&P 500 make double bottoms close to those Feb. 9 lows in this upcoming reversal zone. That would be an ideal situation as this reversal zone is much stronger than the one from Feb. 9 and is better suited to a final medium-term cycle bottom. Such a double bottom would be an ideal spot to go long. If instead equity markets continue to rise into the next reversal zone, we will expect a correction then and will also look to buy the bottom of that correction. "Bottom" line : we are still waiting to buy near the bottom of new medium-term cycles in the DOW and S&P 500. On the sidelines for now.
I'm a little concerned that last week's rally in gold and silver saw gold, but not silver, make a new weekly high. This is a (short-term) bearish divergence signal which could mean a reversal in prices is imminent. Indeed, Sunday's and today's prices were down from last week's highs (especially in silver). For these metals to remain bullish, we need to see them break above last week's highs soon, and especially for gold to break above its Jan. 25 high of $1366. Ideally, we want to see these metals rally into the next reversal zone (Feb. 27 - March 8) where we can take profits on our long positions. Let's raise our stop loss on our gold longs to a close below $1320 and on our silver longs to a close below $16.20. I should point out here that the medium and long-term picture for gold and silver still looks quite bullish so any short-term corrections in these metals will be looked at as opportunities to buy. Holding my long positions in gold and silver
The U.S. Dollar Index seems poised for another short-term rally from support just above 88. From Friday's low around 88.20, the dollar rose to 89.38 today and seems determined to have another go at that 90 - 91 resistance area. If this happens, it could push gold and silver prices a bit lower, but unless the greenback can break above 91, any dollar rally will likely turn back down and allow the precious metals to rally some more.
Crude oil seems to be on track to continue its rally into the next reversal zone for crude (Feb. 26 - March 6). Crude's double bottom on Feb. 9 and Feb. 14 near $58 (March contract chart) was very likely a significant sub-cycle low. We bought crude near this low on Feb. 13 so our long position is doing well. While it is still possible for prices to back down again and make a new low into this next reversal zone, I think it's much more likely for us to see a high at that time. We will watch for that next week. If this market is going to stay bullish, prices should soon exceed the $66.66 high of Jan, 25. Let's move our stop loss for our long position up to a close below $59. Holding my long position in crude oil.
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