MARKETS UPDATE (5:30 pm EST)
It is early in the medium-term cycles of all three major broad stock market indices as the DOW, S&P 500 and NASDAQ all began their new cycles with lows on Oct. 3. These indices have rallied from those lows, but we are now in a time frame for some sort of sub-cycle top and corrective dip. We like to see tops (and bottoms) happen in our reversal zones, and there is one coming up Wednesday (Nov. 20 - 28). After a shaky start this morning, equities rallied to a positive close. If this market can push higher into this new reversal zone, we will look for a top to be followed by a sharp corrective drop to buy into (if it doesn't get too low). Alternatively, if equities turn down now, we could see a corrective low in this new reversal zone and an earlier opportunity to buy. If this happens, good targets for lows could be around 27,100 - 27,500 in the DOW and 3,020 - 3,080 in the S&P 500 which we would look to buy. Otherwise, we'll wait for that later top and look to buy the corrective drop from there (we might even consider short-selling that top for a short-term trade). Still on the sidelines of the broad stock market.
Note that we are bullish on equities for now, but we are still anticipating a major correction soon. As I wrote in my Nov. 7 blog:
"Longer-term, we are still anticipating a 10-15% correction once the current medium-term cycle reaches its final peak (most likely at least several weeks or more from now). After that correction, another medium-term cycle will begin with a rally into 2020. The top of that new cycle may or may not make a new high, but once that high is in, a very severe correction (corresponding to a long-term 75 year cycle) could start that could be as severe as the 2008-2009 "crash". But I am getting ahead of myself here. We will certainly want to short sell the market if and when that opportunity comes next year, but for now we are being short-term bullish as it seems likely this market wants to rally some more."
It is interesting that the current ramping up of the impeachment process against President Trump by the Democrats does not seem to be having an adverse effect on Wall Street. Perhaps a negative impact will come as Democrat rhetoric heats up, or perhaps investors and traders just aren't taking the impeachment seriously. Time will tell. Something that investors ARE taking seriously now would be the U.S./China "trade deal" talks. Any progress in these negotiations seems to give a bullish kick to the broad stock market, but if they turn sour, watch out for a possible equity sell-off!
We are still getting a lot of mixed signals in the precious metals market, and the cycle patterns in both gold and silver are still not clear. There are some technical signals suggesting a sharp rally in both metals now, but even if that happens, there is a reversal zone specifically for gold and silver Nov. 20 - 28 (same as for equities) which would likely put a curb an any rally. Let's stay on the sidelines of these metals now until the cycle patterns become more clear.
Crude oil made a new high today at $58.09 (Dec. contract chart). We are now in between two reversal zones specifically for crude oil (Nov. 5 - 14 and Nov. 20 - Dec. 2) and the first sub-cycle top is due. This could be it, but we prefer to see tops and bottoms in reversal zones which means prices could still edge higher into the end of the week before they fall into a sub-cycle correction. We want to buy the bottom of that correction (as long as it stays above $50.89). If prices fall now, a good corrective target would be $54 -$55. If they edge higher and then fall, we will adjust that target accordingly. On the sidelines of crude for now but looking to buy a modest sub-cycle correction.
It is early in the medium-term cycles of all three major broad stock market indices as the DOW, S&P 500 and NASDAQ all began their new cycles with lows on Oct. 3. These indices have rallied from those lows, but we are now in a time frame for some sort of sub-cycle top and corrective dip. We like to see tops (and bottoms) happen in our reversal zones, and there is one coming up Wednesday (Nov. 20 - 28). After a shaky start this morning, equities rallied to a positive close. If this market can push higher into this new reversal zone, we will look for a top to be followed by a sharp corrective drop to buy into (if it doesn't get too low). Alternatively, if equities turn down now, we could see a corrective low in this new reversal zone and an earlier opportunity to buy. If this happens, good targets for lows could be around 27,100 - 27,500 in the DOW and 3,020 - 3,080 in the S&P 500 which we would look to buy. Otherwise, we'll wait for that later top and look to buy the corrective drop from there (we might even consider short-selling that top for a short-term trade). Still on the sidelines of the broad stock market.
Note that we are bullish on equities for now, but we are still anticipating a major correction soon. As I wrote in my Nov. 7 blog:
"Longer-term, we are still anticipating a 10-15% correction once the current medium-term cycle reaches its final peak (most likely at least several weeks or more from now). After that correction, another medium-term cycle will begin with a rally into 2020. The top of that new cycle may or may not make a new high, but once that high is in, a very severe correction (corresponding to a long-term 75 year cycle) could start that could be as severe as the 2008-2009 "crash". But I am getting ahead of myself here. We will certainly want to short sell the market if and when that opportunity comes next year, but for now we are being short-term bullish as it seems likely this market wants to rally some more."
It is interesting that the current ramping up of the impeachment process against President Trump by the Democrats does not seem to be having an adverse effect on Wall Street. Perhaps a negative impact will come as Democrat rhetoric heats up, or perhaps investors and traders just aren't taking the impeachment seriously. Time will tell. Something that investors ARE taking seriously now would be the U.S./China "trade deal" talks. Any progress in these negotiations seems to give a bullish kick to the broad stock market, but if they turn sour, watch out for a possible equity sell-off!
We are still getting a lot of mixed signals in the precious metals market, and the cycle patterns in both gold and silver are still not clear. There are some technical signals suggesting a sharp rally in both metals now, but even if that happens, there is a reversal zone specifically for gold and silver Nov. 20 - 28 (same as for equities) which would likely put a curb an any rally. Let's stay on the sidelines of these metals now until the cycle patterns become more clear.
Crude oil made a new high today at $58.09 (Dec. contract chart). We are now in between two reversal zones specifically for crude oil (Nov. 5 - 14 and Nov. 20 - Dec. 2) and the first sub-cycle top is due. This could be it, but we prefer to see tops and bottoms in reversal zones which means prices could still edge higher into the end of the week before they fall into a sub-cycle correction. We want to buy the bottom of that correction (as long as it stays above $50.89). If prices fall now, a good corrective target would be $54 -$55. If they edge higher and then fall, we will adjust that target accordingly. On the sidelines of crude for now but looking to buy a modest sub-cycle correction.
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