MARKETS UPDATE (10:45 pm EST)
We are now starting the first week of March which, as I've been stating in recent blogs, could be a major turning point for several financial markets, and especially equity markets. Cycle and technical data show this timing window to be especially strong, and it could even extend into the second week of March. We will therefore need to watch all markets carefully over the next two weeks for significant tops or bottoms.
The broad stock market is clearly rising into this timing window so we should be looking for a top to sell short now. Despite the vigor of the DOW, S&P 500 and NASDAQ (which surged to over 5000 today - closely approaching its all-time high of 5048 in March 2000), there are some ominous signs that a serious correction could be imminent. The London Financial Times Index (FTSE), an important equity index in the global marketplace, seems to be forming a massive long-term "triple top" with peaks in the years 2000, 2007, and now. Unless this pattern aborts (by breaking above the previous two highs), we could see a massive correction soon which could trigger a major sell-off in global equity markets, and especially in the overbought U.S. stock market. The S&P 500 is also manifesting a bearish "rising wedge" pattern that could lead to a major correction now (if it doesn't abort). Even though we are seeing these strong bearish warnings, there are still a lot of bullish technical indicators as well so it will be tricky to pick a top over the next two weeks. Because the current timing window is so wide (2-3 weeks) and markets are potentially volatile with mixed bullish and bearish signals, we may get two reversals in this market: a high followed by a low and then another high into the first week of April. The bottom line here is that a significant top in the broad stock market from which a major correction could follow could happen in either early March or early April, and we may have to engage some short-term trading until we are sure the final top is in. Stay tuned. Still on the sidelines.
Speaking of volatility, gold prices plunged dramatically today in a sudden abortion of last week's rally. In last Wednesday's blog I wrote : "This rally, however, does not seem strong (so far) and there is still time for prices to drop back down to new lows into next week. Ideally, that is what I would like to see (lows next week) as it would be an ideal setup to go long." So we may be getting our ideal setup now. Silver also plunged today and broke below last week's low. Gold, however, is still above its low of last week ($1191). If gold can stay above $1191 we will have a case of intermarket bullish divergence and a good signal to go long. On the sidelines and waiting to buy now.
It appears that we are still in the early stage of a new crude oil cycle (it may have started in late January) so we should be looking to buy for at least a short-term rally. Because we are now approaching the center of the current reversal zone, I would like to see last week's low ($47.80) taken out before considering a long position. Any rally now could possibly get to the $60 - $70 area before turning down again. Still on the sidelines.
We are now starting the first week of March which, as I've been stating in recent blogs, could be a major turning point for several financial markets, and especially equity markets. Cycle and technical data show this timing window to be especially strong, and it could even extend into the second week of March. We will therefore need to watch all markets carefully over the next two weeks for significant tops or bottoms.
The broad stock market is clearly rising into this timing window so we should be looking for a top to sell short now. Despite the vigor of the DOW, S&P 500 and NASDAQ (which surged to over 5000 today - closely approaching its all-time high of 5048 in March 2000), there are some ominous signs that a serious correction could be imminent. The London Financial Times Index (FTSE), an important equity index in the global marketplace, seems to be forming a massive long-term "triple top" with peaks in the years 2000, 2007, and now. Unless this pattern aborts (by breaking above the previous two highs), we could see a massive correction soon which could trigger a major sell-off in global equity markets, and especially in the overbought U.S. stock market. The S&P 500 is also manifesting a bearish "rising wedge" pattern that could lead to a major correction now (if it doesn't abort). Even though we are seeing these strong bearish warnings, there are still a lot of bullish technical indicators as well so it will be tricky to pick a top over the next two weeks. Because the current timing window is so wide (2-3 weeks) and markets are potentially volatile with mixed bullish and bearish signals, we may get two reversals in this market: a high followed by a low and then another high into the first week of April. The bottom line here is that a significant top in the broad stock market from which a major correction could follow could happen in either early March or early April, and we may have to engage some short-term trading until we are sure the final top is in. Stay tuned. Still on the sidelines.
Speaking of volatility, gold prices plunged dramatically today in a sudden abortion of last week's rally. In last Wednesday's blog I wrote : "This rally, however, does not seem strong (so far) and there is still time for prices to drop back down to new lows into next week. Ideally, that is what I would like to see (lows next week) as it would be an ideal setup to go long." So we may be getting our ideal setup now. Silver also plunged today and broke below last week's low. Gold, however, is still above its low of last week ($1191). If gold can stay above $1191 we will have a case of intermarket bullish divergence and a good signal to go long. On the sidelines and waiting to buy now.
It appears that we are still in the early stage of a new crude oil cycle (it may have started in late January) so we should be looking to buy for at least a short-term rally. Because we are now approaching the center of the current reversal zone, I would like to see last week's low ($47.80) taken out before considering a long position. Any rally now could possibly get to the $60 - $70 area before turning down again. Still on the sidelines.
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