MARKETS UPDATE (8:00 pm EDT)
In my Sept. 24 blog I wrote:
"the broad stock market's trend now seems to be at least temporarily bullish. This is most likely the result of the Fed's generous interest rate cut given out following this month's FOMC meeting. It also appears that we are completing a 6-year cycle rather than a 4-year cycle in equity markets, and that means our three market indices (DOW, S&P 500, NASDAQ) could push higher into next year before taking a substantial longer-term correction of at least 16% - 26%. Because our current medium-term cycles in these indices are bullish, we may be looking to buy any short-term substantial sub-cycle dips."
A few days after this blog all three indices made new highs. The DOW and S&P 500 made new ALL-TIME highs, but the NASDAQ did not which sets up a bearish divergence signal in this market. All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now. We are currently on the sidelines of the broad stock market.
Last week gold prices were flat, and gold did not make a new weekly high while silver did. This give us a bearish divergence signal between these metals. Gold's all-time high ($2684) on Sept. 26 was inside a strong "pivot point" for gold, and it is very late in the current medium-term cycle. It's also late in a longer-term 50-week cycle in gold, and both cycles are due to bottom simultaneously by the end of this month. This means the Sept. 26 high could be the final top to both cycles and a sharp drop could be imminent. But we are also currently in the center of a reversal zone specifically for the precious metals (Oct. 2 - 10), so we can't rule out gold prices pushing up to a new all-time high by the end of this week before falling. If it does that without silver making a new high, we will have another strong bearish divergence signal (and good shorting opportunity). I am on the sidelines of gold for now.
Last week (Oct. 1) I entered another short position in silver thinking the Sept 26 high ($32.66) was a significant top and that gold would make a new high to give us a bearish divergence signal. Instead, gold stayed below it's Sept. 26 high and silver prices made the new high with Friday's top at $32.70. That put our silver trade a bit in the red, but we still got our bearish divergence. We note that Friday's high in silver was in the center of our current reversal zone for the metals and prices are down today. The top could be in and a sharp correction could be imminent as a significant sub-cycle correction is now due. I am holding my short position in silver for now (I did not bail out with last week's close above $32).
On Sept. 26 my blog on crude oil stated:
"We can now say with certainty that a longer-term 4-year cycle in crude oil started with the deep low of $63.57 in May 2023 (Nov. contract chart). That means we are already 1 and 1/2 years into a new 4-year cycle. Because prices have been moving down and getting very close to that $63.57 low (after rallying to $95 in Sept. 2023), this new 4-year cycle is in danger of turning bearish if it falls below $63.57. That would be a very bearish development as it would mean that prices would be moving down for at least two more years. I don't think this is likely to happen. It's more likely a "double-bottom" is forming now which would be a bullish signal for this market."
Well, prices didn't fall below $63.57, but the $64.61 low on Sept. 10 was close to being a "double-bottom". Crude has been rallying steeply from there and even broke through the 15-day and 45-day moving averages last week. The longer-term 4-year cycle did not turn bearish, and it looks like a new medium-term cycle started with that Sept. 10 bottom. This new medium-term cycle looks quite bullish, and today prices broke clearly through a strong resistance line around $76. It's the fourth week in this new cycle, so we could be seeing some sort of sub-cycle corrective drop anytime now over the next several weeks. We are entering a new general reversal zone for all markets tomorrow (Oct. 8 - 17). A sub-cycle top could form inside this time frame (this week or next). We will watch for this now as we will most likely want to buy the bottom of any significant corrective drop. For now we remain on the sidelines of crude oil.
In my Sept. 24 blog I wrote:
"the broad stock market's trend now seems to be at least temporarily bullish. This is most likely the result of the Fed's generous interest rate cut given out following this month's FOMC meeting. It also appears that we are completing a 6-year cycle rather than a 4-year cycle in equity markets, and that means our three market indices (DOW, S&P 500, NASDAQ) could push higher into next year before taking a substantial longer-term correction of at least 16% - 26%. Because our current medium-term cycles in these indices are bullish, we may be looking to buy any short-term substantial sub-cycle dips."
A few days after this blog all three indices made new highs. The DOW and S&P 500 made new ALL-TIME highs, but the NASDAQ did not which sets up a bearish divergence signal in this market. All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now. We are currently on the sidelines of the broad stock market.
Last week gold prices were flat, and gold did not make a new weekly high while silver did. This give us a bearish divergence signal between these metals. Gold's all-time high ($2684) on Sept. 26 was inside a strong "pivot point" for gold, and it is very late in the current medium-term cycle. It's also late in a longer-term 50-week cycle in gold, and both cycles are due to bottom simultaneously by the end of this month. This means the Sept. 26 high could be the final top to both cycles and a sharp drop could be imminent. But we are also currently in the center of a reversal zone specifically for the precious metals (Oct. 2 - 10), so we can't rule out gold prices pushing up to a new all-time high by the end of this week before falling. If it does that without silver making a new high, we will have another strong bearish divergence signal (and good shorting opportunity). I am on the sidelines of gold for now.
Last week (Oct. 1) I entered another short position in silver thinking the Sept 26 high ($32.66) was a significant top and that gold would make a new high to give us a bearish divergence signal. Instead, gold stayed below it's Sept. 26 high and silver prices made the new high with Friday's top at $32.70. That put our silver trade a bit in the red, but we still got our bearish divergence. We note that Friday's high in silver was in the center of our current reversal zone for the metals and prices are down today. The top could be in and a sharp correction could be imminent as a significant sub-cycle correction is now due. I am holding my short position in silver for now (I did not bail out with last week's close above $32).
On Sept. 26 my blog on crude oil stated:
"We can now say with certainty that a longer-term 4-year cycle in crude oil started with the deep low of $63.57 in May 2023 (Nov. contract chart). That means we are already 1 and 1/2 years into a new 4-year cycle. Because prices have been moving down and getting very close to that $63.57 low (after rallying to $95 in Sept. 2023), this new 4-year cycle is in danger of turning bearish if it falls below $63.57. That would be a very bearish development as it would mean that prices would be moving down for at least two more years. I don't think this is likely to happen. It's more likely a "double-bottom" is forming now which would be a bullish signal for this market."
Well, prices didn't fall below $63.57, but the $64.61 low on Sept. 10 was close to being a "double-bottom". Crude has been rallying steeply from there and even broke through the 15-day and 45-day moving averages last week. The longer-term 4-year cycle did not turn bearish, and it looks like a new medium-term cycle started with that Sept. 10 bottom. This new medium-term cycle looks quite bullish, and today prices broke clearly through a strong resistance line around $76. It's the fourth week in this new cycle, so we could be seeing some sort of sub-cycle corrective drop anytime now over the next several weeks. We are entering a new general reversal zone for all markets tomorrow (Oct. 8 - 17). A sub-cycle top could form inside this time frame (this week or next). We will watch for this now as we will most likely want to buy the bottom of any significant corrective drop. For now we remain on the sidelines of crude oil.
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