MARKETS UPDATE (4:30 pm EDT)
The DOW, S&P 500, and NASDAQ (Composite Index) are all starting the week with new highs which rules out an intermarket bearish divergence signal for this week. But wait! The NASDAQ 100 INDEX (E-MINI) (Dec. contract) is not exceeding its high from last week so an argument could still be made for bearish divergence. These markets could start turning down now, but it would be better if the bearish divergence persisted into the second half of this week as the next strong reversal zone for this market is Oct. 25 - Nov. 2. That would be a better time for a significant reversal to start. The reversal could be sharp and significant (the DOW could go to 22,400) but probably brief (one or two weeks). If the NASDAQ 100 does not make a new high by the end of the week, I will consider shorting this market. Otherwise, we will just wait for the correction and try to buy near its bottom (as long as it doesn't go too deep). At this point in time the cycles seem to be suggesting another rally to new highs after a brief correction. If this happens, we will definitely want to sell short the top of that second high as it would likely be the final high to the current medium-term cycle and could be followed by a severe correction to the final cycle bottom. But I'm getting ahead of myself here. For now, we will remain on the sidelines and see how these markets move into the end of this week.
It is still not clear if gold and silver are getting ready to rally strongly now or if prices are going to plunge lower. Certain technical signals (including persistently bearish COT charts) are suggesting lower prices, but others are pointing to a rally. If both metals started new medium-term cycles on Oct. 6 (this is not confirmed) then gold and silver will rally. But if we are still dealing with older cycles then prices are likely heading lower to their final cycle bottoms. Good price targets for a bottom would be around $1,200 in gold and $16 in silver. The next strong reversal zone for precious metals is Oct. 27 - Nov. 6 (next week). If prices do move to those target areas into that time frame, it will be an excellent spot to buy both metals. On the sidelines of gold and silver for now.
In my Oct. 16 blog I wrote about the U.S. Dollar Index:
"There are also some chart patterns in the U.S. Dollar Index suggesting that a strong rally in the dollar could be imminent. Such a rally could really take off if the dollar can break above resistance in the 94 area. Needless to say, this would put downward pressure on the precious metals if it happens."
Well, the dollar has been rallying and is now back up to to challenging that 94 resistance. Technical signals are suggesting it could break through that resistance. We will have to wait and see if it happens. If it does, we could see gold and silver react and move down closer to those target prices mentioned above.
After nearly making a double top to the Sept 28 high of $53.11 with last Monday's high of $52.65 (Dec. contract charts) and then falling, crude oil prices are rising again. It is getting very late in the current medium-term cycle of crude and we are anticipating a correction to the final bottom of the cycle before the end of November. The next two strong reversal zones for crude are Oct. 25 - Nov. 2 and Nov.14 - 22. The final bottom will most likely be within one of these two time frames. Our target for the bottom is in the $47 area. If prices drop close to that target near the end of this week or next week, we will consider going long. Another possibility could see crude making another top in the first reversal zone and then falling to a bottom in the second one. That could give us a good shorting opportunity before we buy the final cycle bottom. We will wait and see how prices move into the end of this week. Still on the sidelines of crude oil.
The DOW, S&P 500, and NASDAQ (Composite Index) are all starting the week with new highs which rules out an intermarket bearish divergence signal for this week. But wait! The NASDAQ 100 INDEX (E-MINI) (Dec. contract) is not exceeding its high from last week so an argument could still be made for bearish divergence. These markets could start turning down now, but it would be better if the bearish divergence persisted into the second half of this week as the next strong reversal zone for this market is Oct. 25 - Nov. 2. That would be a better time for a significant reversal to start. The reversal could be sharp and significant (the DOW could go to 22,400) but probably brief (one or two weeks). If the NASDAQ 100 does not make a new high by the end of the week, I will consider shorting this market. Otherwise, we will just wait for the correction and try to buy near its bottom (as long as it doesn't go too deep). At this point in time the cycles seem to be suggesting another rally to new highs after a brief correction. If this happens, we will definitely want to sell short the top of that second high as it would likely be the final high to the current medium-term cycle and could be followed by a severe correction to the final cycle bottom. But I'm getting ahead of myself here. For now, we will remain on the sidelines and see how these markets move into the end of this week.
It is still not clear if gold and silver are getting ready to rally strongly now or if prices are going to plunge lower. Certain technical signals (including persistently bearish COT charts) are suggesting lower prices, but others are pointing to a rally. If both metals started new medium-term cycles on Oct. 6 (this is not confirmed) then gold and silver will rally. But if we are still dealing with older cycles then prices are likely heading lower to their final cycle bottoms. Good price targets for a bottom would be around $1,200 in gold and $16 in silver. The next strong reversal zone for precious metals is Oct. 27 - Nov. 6 (next week). If prices do move to those target areas into that time frame, it will be an excellent spot to buy both metals. On the sidelines of gold and silver for now.
In my Oct. 16 blog I wrote about the U.S. Dollar Index:
"There are also some chart patterns in the U.S. Dollar Index suggesting that a strong rally in the dollar could be imminent. Such a rally could really take off if the dollar can break above resistance in the 94 area. Needless to say, this would put downward pressure on the precious metals if it happens."
Well, the dollar has been rallying and is now back up to to challenging that 94 resistance. Technical signals are suggesting it could break through that resistance. We will have to wait and see if it happens. If it does, we could see gold and silver react and move down closer to those target prices mentioned above.
After nearly making a double top to the Sept 28 high of $53.11 with last Monday's high of $52.65 (Dec. contract charts) and then falling, crude oil prices are rising again. It is getting very late in the current medium-term cycle of crude and we are anticipating a correction to the final bottom of the cycle before the end of November. The next two strong reversal zones for crude are Oct. 25 - Nov. 2 and Nov.14 - 22. The final bottom will most likely be within one of these two time frames. Our target for the bottom is in the $47 area. If prices drop close to that target near the end of this week or next week, we will consider going long. Another possibility could see crude making another top in the first reversal zone and then falling to a bottom in the second one. That could give us a good shorting opportunity before we buy the final cycle bottom. We will wait and see how prices move into the end of this week. Still on the sidelines of crude oil.
RSS Feed