MARKETS UPDATE (10:00 pm EDT)
We are at the center of our reversal zone (Sept. 11 -19) and today the DOW made a new all-time high. The S&P 500 and NASDAQ, however, did not (and they did not even make new monthly or weekly highs). This is a strong bearish divergence signal, so I am still holding my short DOW position in this market. The FOMC meets this week, and most investors and analysts are expecting an interest rate cut from the Fed (to be announced on Wednesday afternoon at @ 2pm). If this doesn't happen (i.e no rate cut), the market could sell-off, but even the expected cut might be a turning point down as traders often follow the adage "buy the rumor, sell the news". On the other hand, a higher than expected cut or dovish comments from the Fed could trigger a rally. We will have to wait and see what happens. The S&P 500 is not far from a new all-time high. The NASDAQ would have more distance to cover, but it too is within "walking distance" of a new all-time high. All three indices making new all-time highs would turn this market bullish.
Gold prices may be topping out near $2600 (a new all-time high) and silver may be topping near $31, both inside our current reversal zone. But silver is still below this year's high from May ($32.38) which gives us another bearish divergence signal. I am still holding my short position in silver as both metals are due to make a substantial downward correction soon. I am currently on the sidelines of gold.
Crude oil's current medium-term cycle has been a bearish one as it began with the June 4 low of $71.90 (Oct. contract chart) and prices are now well below that point. Although it would be a bit early, it's possible this cycle ended with last week's low at $65.27. If so, prices should soon break above the 15-day and 45-day moving averages. But as with the other markets, today's high is happening in the center of our reversal zone, so a reversal back down could be imminent. I am staying on the sidelines of this market until we can be more certain a new medium-term cycle has started.
We are at the center of our reversal zone (Sept. 11 -19) and today the DOW made a new all-time high. The S&P 500 and NASDAQ, however, did not (and they did not even make new monthly or weekly highs). This is a strong bearish divergence signal, so I am still holding my short DOW position in this market. The FOMC meets this week, and most investors and analysts are expecting an interest rate cut from the Fed (to be announced on Wednesday afternoon at @ 2pm). If this doesn't happen (i.e no rate cut), the market could sell-off, but even the expected cut might be a turning point down as traders often follow the adage "buy the rumor, sell the news". On the other hand, a higher than expected cut or dovish comments from the Fed could trigger a rally. We will have to wait and see what happens. The S&P 500 is not far from a new all-time high. The NASDAQ would have more distance to cover, but it too is within "walking distance" of a new all-time high. All three indices making new all-time highs would turn this market bullish.
Gold prices may be topping out near $2600 (a new all-time high) and silver may be topping near $31, both inside our current reversal zone. But silver is still below this year's high from May ($32.38) which gives us another bearish divergence signal. I am still holding my short position in silver as both metals are due to make a substantial downward correction soon. I am currently on the sidelines of gold.
Crude oil's current medium-term cycle has been a bearish one as it began with the June 4 low of $71.90 (Oct. contract chart) and prices are now well below that point. Although it would be a bit early, it's possible this cycle ended with last week's low at $65.27. If so, prices should soon break above the 15-day and 45-day moving averages. But as with the other markets, today's high is happening in the center of our reversal zone, so a reversal back down could be imminent. I am staying on the sidelines of this market until we can be more certain a new medium-term cycle has started.
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