MARKETS UPDATE (6:30 pm EDST)
The broad stock market is rallying strongly today with the DOW taking the lead, the S&P 500 fairly strong, and the NASDAQ the least bullish. The DOW closed its "gap-down" space from Oct. 6 two weeks ago, the S&P 500 overcame its Oct.6 gap-down last week, but the NASDAQ has yet to overcome its Oct. 6 gap-down area. In other words, the NASDAQ is still encumbered by a "bearish island reversal" signal from early October until it closes that gap (i.e. breaks and closes above 11,052). We continue to have mixed signals in this market.
On October 14, I wrote:
"The DOW could be ending its old medium-term cycle and starting a new one with this week's double-bottom along with the new lows in the S&P 500 and NASDAQ (bullish divergence). The alternative view would be that one, two, or all three indices could be headed lower to make their final bottoms over the next several weeks. "
Its still not clear which of these scenarios is playing out. The DOW looks the most bullish right now and could be well into a new medium-term cycle (from its double-bottom lows on Sept. 30 and Oct. 13). But the S&P 500, and especially the NASDAQ, look like they could still roll over to complete the final bottoms of older medium-term cycles. We are at a pivot point (Oct. 24) in our current reversal zone and the indices are rising, so this "rollover" scenario could be imminent. If it happens, it's possible we could see the NASDAQ make a new low to complete an old cycle bottom while the DOW and S&P 500 stay above their Oct. 13 lows. That would be a good set-up to buy if it happens in our next reversal zone coming up Nov. 2 - 10. If instead the NASDAQ closes its "gap" this week and rallying continues into next week, we may have a good short-selling opportunity in that same Nov. 2 - 10 reversal zone. Let' remain on the sidelines of this market for now and wait to see if we get a rollover this week.
Longer-term, we are still bearish and waiting for a significant top to sell short as we are likely still in the downtrend of a severe correction in equities not due to bottom for at least two more years.
We are now in the dead center of a reversal zone specifically for gold and silver. Gold made a new monthly low on Friday at $1619, just a tad above its Sept. 28 low of $1616. This could be a significant double-bottom, and we could see prices rally from here. Nevertheless, this precious metal reversal zone lasts into the end of this week, so prices could still go lower for another bottom. Today's price action was a little bearish, which supports this idea. We also need to be aware that if prices close significantly below $1616, that would also be a bearish sign. We also note that silver prices have been rising into this reversal zone (from a low of $18.10 on Oct. 14), which could mean a top is imminent. All of this is making me reluctant to buy at the moment, even though a significant rally could be just around the corner. Any minor corrective dips in both metals this week could be good buy spots as long as they both hold above last week's lows. Let's remain on the sidelines of both metals for now.
In my last blog on crude oil (Oct. 16) I wrote:
"....it is VERY early in a new 18 year cycle in crude that began with that generational low - near zero $/barrel that happened in April 2020, so we should anticipate higher prices for many more years. As with all cycles, there are significant corrective drops, even in bull markets, and crude's price drop this year from June through September has been one of them. This longer-term sub-cycle correction MAY be over with that Sept. 23 low at $76.25 (Nov. contract chart), or it could push even lower into two back to back reversal zones specifically for crude in November (Nov. 8 - 30). Right now, short-term signals are looking bearish. Any break below $76.25 would definitely be bearish and point prices down to $65 or even lower. Last week prices broke below a downward trend-line that is now around $86.60 and falling. Prices need to start closing above there to look bullish, and then above $93.64 to support the idea that a new bullish cycle began on Sept. 23"
All of this still applies. Prices have not broken below $76.25, but they are still a bit below that downward trend line, so we still have no confirmation that a significant sub-cycle correction is over. We will stay on the sidelines of crude until we can be more certain that a significant bottom is in.
The broad stock market is rallying strongly today with the DOW taking the lead, the S&P 500 fairly strong, and the NASDAQ the least bullish. The DOW closed its "gap-down" space from Oct. 6 two weeks ago, the S&P 500 overcame its Oct.6 gap-down last week, but the NASDAQ has yet to overcome its Oct. 6 gap-down area. In other words, the NASDAQ is still encumbered by a "bearish island reversal" signal from early October until it closes that gap (i.e. breaks and closes above 11,052). We continue to have mixed signals in this market.
On October 14, I wrote:
"The DOW could be ending its old medium-term cycle and starting a new one with this week's double-bottom along with the new lows in the S&P 500 and NASDAQ (bullish divergence). The alternative view would be that one, two, or all three indices could be headed lower to make their final bottoms over the next several weeks. "
Its still not clear which of these scenarios is playing out. The DOW looks the most bullish right now and could be well into a new medium-term cycle (from its double-bottom lows on Sept. 30 and Oct. 13). But the S&P 500, and especially the NASDAQ, look like they could still roll over to complete the final bottoms of older medium-term cycles. We are at a pivot point (Oct. 24) in our current reversal zone and the indices are rising, so this "rollover" scenario could be imminent. If it happens, it's possible we could see the NASDAQ make a new low to complete an old cycle bottom while the DOW and S&P 500 stay above their Oct. 13 lows. That would be a good set-up to buy if it happens in our next reversal zone coming up Nov. 2 - 10. If instead the NASDAQ closes its "gap" this week and rallying continues into next week, we may have a good short-selling opportunity in that same Nov. 2 - 10 reversal zone. Let' remain on the sidelines of this market for now and wait to see if we get a rollover this week.
Longer-term, we are still bearish and waiting for a significant top to sell short as we are likely still in the downtrend of a severe correction in equities not due to bottom for at least two more years.
We are now in the dead center of a reversal zone specifically for gold and silver. Gold made a new monthly low on Friday at $1619, just a tad above its Sept. 28 low of $1616. This could be a significant double-bottom, and we could see prices rally from here. Nevertheless, this precious metal reversal zone lasts into the end of this week, so prices could still go lower for another bottom. Today's price action was a little bearish, which supports this idea. We also need to be aware that if prices close significantly below $1616, that would also be a bearish sign. We also note that silver prices have been rising into this reversal zone (from a low of $18.10 on Oct. 14), which could mean a top is imminent. All of this is making me reluctant to buy at the moment, even though a significant rally could be just around the corner. Any minor corrective dips in both metals this week could be good buy spots as long as they both hold above last week's lows. Let's remain on the sidelines of both metals for now.
In my last blog on crude oil (Oct. 16) I wrote:
"....it is VERY early in a new 18 year cycle in crude that began with that generational low - near zero $/barrel that happened in April 2020, so we should anticipate higher prices for many more years. As with all cycles, there are significant corrective drops, even in bull markets, and crude's price drop this year from June through September has been one of them. This longer-term sub-cycle correction MAY be over with that Sept. 23 low at $76.25 (Nov. contract chart), or it could push even lower into two back to back reversal zones specifically for crude in November (Nov. 8 - 30). Right now, short-term signals are looking bearish. Any break below $76.25 would definitely be bearish and point prices down to $65 or even lower. Last week prices broke below a downward trend-line that is now around $86.60 and falling. Prices need to start closing above there to look bullish, and then above $93.64 to support the idea that a new bullish cycle began on Sept. 23"
All of this still applies. Prices have not broken below $76.25, but they are still a bit below that downward trend line, so we still have no confirmation that a significant sub-cycle correction is over. We will stay on the sidelines of crude until we can be more certain that a significant bottom is in.
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