MARKETS UPDATE (4:30 pm EDST)
It is late in the medium-term cycles of both the DOW and S&P 500 that started with their lows back on June 3 (24,680 in the DOW; 2,728 in the S&P 500).That means we are now watching for a sharp correction down from a final high to the final cycle bottoms due within the next 5 weeks. The big question is whether or not that correction has already started from the highs of mid-September (that would be last Thursday's high of 3,022 in the S&P 500 and the Sept. 12 high of 27,307 in the DOW). Those highs did not exceed the all-time highs from July, but they were close enough to be considered a "double-top" bearish formation. So we could indeed already be heading down to the final cycle bottoms. On the other hand, we could still see the market rally now and break those those mid-September highs just before taking that sharp correction. Ideally, that would happen in the current strong reversal zone (which technically ends on Thursday) with one or two, but not all three stock market indices making new all-time highs (bearish divergence). If that happens, we will look to sell this market short. Those all-time highs are 27,399 in the DOW, 3,028 in the S&P 500, and 8,340 in the NASDAQ). If the market continues to fall, we will likely just wait for the cycle bottom to buy. On the sidelines of the broad stock market for now, but be alert for a possible sell (short) signal this week.
We have also been watching for a medium-term cycle bottom in both gold and silver to buy. Our ideal target ranges for bottoms were $1400 - $1450 in gold and $17.00 - $17.50 in silver. Silver touched the top part of its range ($17.41) on Sept. 13, but gold prices have remained significantly above $1450. This market is very tricky to call right now. We are currently in a strong reversal zone specifically for the precious metals (Sept. 13 - 27). It's possible that last Wednesday's low in gold at $1484 was the final cycle bottom. If so, a new bullish cycle is starting now and prices will rally strongly. Silver too may have started a new cycle with that $17.41 low on Sept. 13, although that was not the ideal time for a bottom. Ideally, one of these metals (not both) will make a new low this week (bullish divergence) and give us a good spot to buy. For now let's stay on the sidelines.
The U.S. Dollar Index is making a new high today in the center of a reversal zone for currencies (Sept. 17 - 26) so we may see it turn back down shortly. That would be a bullish force for the precious metals market and supports the idea that new cycles are starting or will be starting shortly in gold and silver.
Crude oil is also a tricky market to call right now, and this is because of the recent "wild card" factor of a conflict in the Middle East, i.e. the attack on a Saudi oil facility a little over a week ago. There is no "saber-rattling" rhetoric so far today from the Trump Administration, and European diplomats seem to be trying to deescalate tensions between the U.S. and Iran by questioning whether or not the attacks even came from Iran (the U.S. believes they did). It is late in the medium-term cycle of crude that started with the June 5 low of $51.54 (Nov. contract chart). Because a mid-cycle correction got so close to that price in early August, it had appeared this cycle was turning bearish. The attack on the Saudi oil facility, however, propelled crude prices to $63.89 on Sept. 15 and technically may have turned the cycle bullish. If it did, a correction to the final cycle bottom (due within 4 weeks) might only get to the $57 area (it is there now). If U.S./Iran tensions ease, however, then the cycle might resume its bearish trend and prices could go to $50 or even lower. We will stay on the sidelines of crude for now and most likely wait for the final cycle bottom to buy (wherever that may be).
It is late in the medium-term cycles of both the DOW and S&P 500 that started with their lows back on June 3 (24,680 in the DOW; 2,728 in the S&P 500).That means we are now watching for a sharp correction down from a final high to the final cycle bottoms due within the next 5 weeks. The big question is whether or not that correction has already started from the highs of mid-September (that would be last Thursday's high of 3,022 in the S&P 500 and the Sept. 12 high of 27,307 in the DOW). Those highs did not exceed the all-time highs from July, but they were close enough to be considered a "double-top" bearish formation. So we could indeed already be heading down to the final cycle bottoms. On the other hand, we could still see the market rally now and break those those mid-September highs just before taking that sharp correction. Ideally, that would happen in the current strong reversal zone (which technically ends on Thursday) with one or two, but not all three stock market indices making new all-time highs (bearish divergence). If that happens, we will look to sell this market short. Those all-time highs are 27,399 in the DOW, 3,028 in the S&P 500, and 8,340 in the NASDAQ). If the market continues to fall, we will likely just wait for the cycle bottom to buy. On the sidelines of the broad stock market for now, but be alert for a possible sell (short) signal this week.
We have also been watching for a medium-term cycle bottom in both gold and silver to buy. Our ideal target ranges for bottoms were $1400 - $1450 in gold and $17.00 - $17.50 in silver. Silver touched the top part of its range ($17.41) on Sept. 13, but gold prices have remained significantly above $1450. This market is very tricky to call right now. We are currently in a strong reversal zone specifically for the precious metals (Sept. 13 - 27). It's possible that last Wednesday's low in gold at $1484 was the final cycle bottom. If so, a new bullish cycle is starting now and prices will rally strongly. Silver too may have started a new cycle with that $17.41 low on Sept. 13, although that was not the ideal time for a bottom. Ideally, one of these metals (not both) will make a new low this week (bullish divergence) and give us a good spot to buy. For now let's stay on the sidelines.
The U.S. Dollar Index is making a new high today in the center of a reversal zone for currencies (Sept. 17 - 26) so we may see it turn back down shortly. That would be a bullish force for the precious metals market and supports the idea that new cycles are starting or will be starting shortly in gold and silver.
Crude oil is also a tricky market to call right now, and this is because of the recent "wild card" factor of a conflict in the Middle East, i.e. the attack on a Saudi oil facility a little over a week ago. There is no "saber-rattling" rhetoric so far today from the Trump Administration, and European diplomats seem to be trying to deescalate tensions between the U.S. and Iran by questioning whether or not the attacks even came from Iran (the U.S. believes they did). It is late in the medium-term cycle of crude that started with the June 5 low of $51.54 (Nov. contract chart). Because a mid-cycle correction got so close to that price in early August, it had appeared this cycle was turning bearish. The attack on the Saudi oil facility, however, propelled crude prices to $63.89 on Sept. 15 and technically may have turned the cycle bullish. If it did, a correction to the final cycle bottom (due within 4 weeks) might only get to the $57 area (it is there now). If U.S./Iran tensions ease, however, then the cycle might resume its bearish trend and prices could go to $50 or even lower. We will stay on the sidelines of crude for now and most likely wait for the final cycle bottom to buy (wherever that may be).
RSS Feed