BROAD STOCK MARKET ALERT and PRECIOUS METALS UPDATE (3:30 pm EDT)
The broad stock market is giving us some odd mixed signals at the moment. We are now in the dead center of a very strong reversal zone (May 11 -19). The NASDAQ is making a new weekly and multi-month high, but the DOW is falling below its 15-day and 45-day moving averages and is making a new weekly low (bullish and bearish divergence). The S&P 500 seems undecided as it rests just above its 15-day (and 45-day) moving average, although it seems more likely to pop up to a new high than to break below those two averages and make a low in this reversal zone. Traders with long positions tied to the NASDAQ should consider taking profits now as a top seems imminent in that index. But a bottom also seems imminent in the DOW, so those with trades tied to the DOW should stay long. If the S&P 500 jumps up to a new high, one should take profits in that index, but if it instead drops to a new low (breaking the 15-day and even the 45-day moving average), I would stay long for an imminent reversal back up. Traders who are out of this market should stay out for now.
I will update this unusual and complex situation over the next several days.
Today gold prices are closing just below the 45-day moving average. That was our stop loss for our long trade, but I am going to stay long in gold today and move that stop loss down to a close below $1970 because we are near the center of two strong reversal zones (one general and one specifically for the precious metals). We also have a bullish divergence signal between gold and silver as silver is below its April low while gold is not. A sub-cycle corrective bottom is also due this week (or next) in both metals. Thus the chance of a reversal back up in both metals is very high right now. We will probably be looking to go long in silver tomorrow, especially if it drops a bit lower and gold holds above $1970. We are currently on the sidelines of silver.
The broad stock market is giving us some odd mixed signals at the moment. We are now in the dead center of a very strong reversal zone (May 11 -19). The NASDAQ is making a new weekly and multi-month high, but the DOW is falling below its 15-day and 45-day moving averages and is making a new weekly low (bullish and bearish divergence). The S&P 500 seems undecided as it rests just above its 15-day (and 45-day) moving average, although it seems more likely to pop up to a new high than to break below those two averages and make a low in this reversal zone. Traders with long positions tied to the NASDAQ should consider taking profits now as a top seems imminent in that index. But a bottom also seems imminent in the DOW, so those with trades tied to the DOW should stay long. If the S&P 500 jumps up to a new high, one should take profits in that index, but if it instead drops to a new low (breaking the 15-day and even the 45-day moving average), I would stay long for an imminent reversal back up. Traders who are out of this market should stay out for now.
I will update this unusual and complex situation over the next several days.
Today gold prices are closing just below the 45-day moving average. That was our stop loss for our long trade, but I am going to stay long in gold today and move that stop loss down to a close below $1970 because we are near the center of two strong reversal zones (one general and one specifically for the precious metals). We also have a bullish divergence signal between gold and silver as silver is below its April low while gold is not. A sub-cycle corrective bottom is also due this week (or next) in both metals. Thus the chance of a reversal back up in both metals is very high right now. We will probably be looking to go long in silver tomorrow, especially if it drops a bit lower and gold holds above $1970. We are currently on the sidelines of silver.
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