MARKETS UPDATE (3:00 pm EDST)
Today is a holiday in the U.S. (Labor Day) and markets are closed. It's a rainy day here in the small town that I live in and a good day to summarize where we are in the markets.
The broad stock market "slumped" a bit in the first half of last week but then shot up dramatically on Thursday and Friday. The DOW made a new weekly high while the S&P 500 and NASDAQ did not so we have potential intermarket bearish divergence until those latter two indices break their highs from the previous week (they are close). Right now the market looks bullish, and we may indeed see new highs this week. Still, we can't rule out another bearish turn down, especially as a U.S./China trade agreement is far from settled. This market is still ambiguous and could move either way.
Last Wednesday was technically the end of a reversal zone, but Friday's high was only two days out and could still qualify as a top. We have another (stronger) reversal zone starting this Tuesday (Sept. 3 - 13) and another (even stronger) one following that (Sept. 13 - 25). This means we could see a significant turning point (or more than one) anytime over the next four weeks in all the markets we follow (and especially in equities). If equity markets don't turn down early this week, we could easily see rallying continue into into the Sept. 3 - 13 reversal period (or even into Sept. 13 - 25) for another potential top. The bottom line here is that it is late in the medium-term cycles of all three indices (DOW, S&P 500, NASDAQ) so we are on the watch for a final cycle top to sell short for a significant correction down to the final cycle bottom. That top should happen in a reversal zone (and ideally near the center). We will look for it this week (if it didn't happen last week). Still on the sidelines of the broad stock market.
The overall medium and longer-term trends in the precious metals market right now are looking very bullish. Nevertheless, it is late in the medium-term cycles of both gold and silver. This means we are looking for a steep correction from their final tops to the final cycle bottoms in both metals. That correction should give us a good spot to buy. For gold, the final top may already be in with the $1555 high from Aug. 25. Silver's top may have happened with last Thursday's high at $18.64, but silver looks like it could push even higher. If it does that in this week's reversal zone and gold remains below $1555, we will have another bearish divergence signal (we had one last week). Unlike our strategy in the broad stock market, we are not looking to short sell this imminent correction in gold and silver. This is because this market is looking potentially very bullish now so any correction may be brief and shallow and serve best as a dipping point to go long. General targets for a correction now would be around $1450 in gold and $17 (maybe higher) in silver. On the sidelines of gold and silver but looking to go long soon.
Crude oil prices jumped to $57.13 last Friday (exceeding the Aug. 13 high of $56.84 - Oct. contract chart) but then dropped sharply and closed the day at $55.16. Was that a significant top? Maybe, but it was not in a reversal zone, which is where we prefer to see an important top. We have a new reversal zone this week, but there is also a reversal zone that is specifically relevant to crude coming up Sept. 6 - 21. Let's wait and see how crude prices move into these time frames. Crude's directional trend right now is not clear, i.e. it could go either way, but it looks a bit more bearish than bullish at the moment. The Aug. 7 low of $52.17 is an important support line now. If prices break and close below there, it will be a sign this market is turning bearish and prices could get well below $50 over the next 2 -10 weeks when the medium-term cycle is due to bottom. If prices rally into either one of the two reversal zones mentioned above, we may look for a spot to sell short, especially if the rally stays under $61. On the sidelines of crude oil for now.
The U.S. Dollar Index rallied strongly last week - right into the center of a reversal zone for currencies (Aug. 28 - Sept. 6). This suggests that a dollar correction is imminent. That could push precious metal prices higher, but if the greenback edges higher next week (it has until Friday to make a top), it could also pressure these metal prices lower and give us a spot to buy before another surge up. We will watch the dollar carefully this week. I should mention here that despite the dollar's strong surge last week, precious metal prices did not fall significantly. This is indicative of how strong the precious metals market is right now.
Today is a holiday in the U.S. (Labor Day) and markets are closed. It's a rainy day here in the small town that I live in and a good day to summarize where we are in the markets.
The broad stock market "slumped" a bit in the first half of last week but then shot up dramatically on Thursday and Friday. The DOW made a new weekly high while the S&P 500 and NASDAQ did not so we have potential intermarket bearish divergence until those latter two indices break their highs from the previous week (they are close). Right now the market looks bullish, and we may indeed see new highs this week. Still, we can't rule out another bearish turn down, especially as a U.S./China trade agreement is far from settled. This market is still ambiguous and could move either way.
Last Wednesday was technically the end of a reversal zone, but Friday's high was only two days out and could still qualify as a top. We have another (stronger) reversal zone starting this Tuesday (Sept. 3 - 13) and another (even stronger) one following that (Sept. 13 - 25). This means we could see a significant turning point (or more than one) anytime over the next four weeks in all the markets we follow (and especially in equities). If equity markets don't turn down early this week, we could easily see rallying continue into into the Sept. 3 - 13 reversal period (or even into Sept. 13 - 25) for another potential top. The bottom line here is that it is late in the medium-term cycles of all three indices (DOW, S&P 500, NASDAQ) so we are on the watch for a final cycle top to sell short for a significant correction down to the final cycle bottom. That top should happen in a reversal zone (and ideally near the center). We will look for it this week (if it didn't happen last week). Still on the sidelines of the broad stock market.
The overall medium and longer-term trends in the precious metals market right now are looking very bullish. Nevertheless, it is late in the medium-term cycles of both gold and silver. This means we are looking for a steep correction from their final tops to the final cycle bottoms in both metals. That correction should give us a good spot to buy. For gold, the final top may already be in with the $1555 high from Aug. 25. Silver's top may have happened with last Thursday's high at $18.64, but silver looks like it could push even higher. If it does that in this week's reversal zone and gold remains below $1555, we will have another bearish divergence signal (we had one last week). Unlike our strategy in the broad stock market, we are not looking to short sell this imminent correction in gold and silver. This is because this market is looking potentially very bullish now so any correction may be brief and shallow and serve best as a dipping point to go long. General targets for a correction now would be around $1450 in gold and $17 (maybe higher) in silver. On the sidelines of gold and silver but looking to go long soon.
Crude oil prices jumped to $57.13 last Friday (exceeding the Aug. 13 high of $56.84 - Oct. contract chart) but then dropped sharply and closed the day at $55.16. Was that a significant top? Maybe, but it was not in a reversal zone, which is where we prefer to see an important top. We have a new reversal zone this week, but there is also a reversal zone that is specifically relevant to crude coming up Sept. 6 - 21. Let's wait and see how crude prices move into these time frames. Crude's directional trend right now is not clear, i.e. it could go either way, but it looks a bit more bearish than bullish at the moment. The Aug. 7 low of $52.17 is an important support line now. If prices break and close below there, it will be a sign this market is turning bearish and prices could get well below $50 over the next 2 -10 weeks when the medium-term cycle is due to bottom. If prices rally into either one of the two reversal zones mentioned above, we may look for a spot to sell short, especially if the rally stays under $61. On the sidelines of crude oil for now.
The U.S. Dollar Index rallied strongly last week - right into the center of a reversal zone for currencies (Aug. 28 - Sept. 6). This suggests that a dollar correction is imminent. That could push precious metal prices higher, but if the greenback edges higher next week (it has until Friday to make a top), it could also pressure these metal prices lower and give us a spot to buy before another surge up. We will watch the dollar carefully this week. I should mention here that despite the dollar's strong surge last week, precious metal prices did not fall significantly. This is indicative of how strong the precious metals market is right now.
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