MARKETS UPDATE (9:00 pm EDST)
Our labeling for the DOW and S&P 500 (older or newer cycles) is still in question, but we prefer the newer cycle labeling for now. In that case, the rally from Friday and today is the start of another sub-cycle that will peak shortly and then fall to the final medium-term cycle bottom. That bottom could be as low as 23,000 in the DOW and 3,100 in the S&P 500. Because of the strength of today's rally, however, we need to consider the possibility that last Thursday's lows were the final cycle bottoms and a new cycle has started in one or both these indices. These markets will have to turn back down soon to negate that possibility. If they do turn down (our preferred scenario), we will watch for a final cycle bottom to buy (ideally in our Oct. 7 - 15 reversal zone).
We are still labeling the NASDAQ as an older cycle ready to bottom at any time. We would like to see it get to 10,500 or even a bit lower in the NASDAQ 100 (E-mini, December contract chart) in our Oct. 7 -15 reversal zone. It got down to 10,656 two weeks ago which is close, but no cigar, and that wasn't in a reversal zone. Nevertheless, if the market keeps rallying now, we may have to accept that low and last week's low of 10,660 as a double-bottom and the start of a new medium-term cycle. As with the DOW and S&P 500, we will wait to see if this new rally has any legs. There was no intermarket bullish divergence between these three indices at last Thursday's lows (which we like to see at cycle bottoms) so that is yet another reason to suspect these indices could still go lower. We will remain on the sidelines of the broad stock market for now.
It looks like gold is nearing the end of its current medium-term cycle and is making its way down to the final cycle bottom. In this scenario, some minor rallying could happen, but the trend is down until that final bottom is hit over the next few weeks, possibly in our Oct. 7 - 19 reversal zone. We are looking for a low around $1800.
Silver has several different possibilities for its current medium-term cycle labeling, but our main concern is whether or not last week's low at $21.75 was a final bottom and start of a new medium-term cycle. If it was, we could see a strong rally from here. Otherwise, prices could still go a bit lower. As with gold, we could see a final low in our
Oct. 7 -19 reversal zone. A good target range now would be $19.50 - $20.00. A good buying set-up would be to see this target (and gold near $1800) with intermarket bearish divergence (i.e. either gold or silver - but not both - making a new weekly low). We will watch for this. On the sidelines of both metals for now.
It's starting to look like crude oil started a new medium-term cycle with its low of $36.58 on Sept. 8 (Nov. contract chart). If so, we will have to wait for a sub-cycle correction if we want to buy into the new cycle. If the current rally can't get above $44, however, it could mean the cycle is turning bearish, and in that case we would probably be looking to sell short at the sub-cycle peak instead of buying at the bottom. For now, we will remain on the sidelines.
Our labeling for the DOW and S&P 500 (older or newer cycles) is still in question, but we prefer the newer cycle labeling for now. In that case, the rally from Friday and today is the start of another sub-cycle that will peak shortly and then fall to the final medium-term cycle bottom. That bottom could be as low as 23,000 in the DOW and 3,100 in the S&P 500. Because of the strength of today's rally, however, we need to consider the possibility that last Thursday's lows were the final cycle bottoms and a new cycle has started in one or both these indices. These markets will have to turn back down soon to negate that possibility. If they do turn down (our preferred scenario), we will watch for a final cycle bottom to buy (ideally in our Oct. 7 - 15 reversal zone).
We are still labeling the NASDAQ as an older cycle ready to bottom at any time. We would like to see it get to 10,500 or even a bit lower in the NASDAQ 100 (E-mini, December contract chart) in our Oct. 7 -15 reversal zone. It got down to 10,656 two weeks ago which is close, but no cigar, and that wasn't in a reversal zone. Nevertheless, if the market keeps rallying now, we may have to accept that low and last week's low of 10,660 as a double-bottom and the start of a new medium-term cycle. As with the DOW and S&P 500, we will wait to see if this new rally has any legs. There was no intermarket bullish divergence between these three indices at last Thursday's lows (which we like to see at cycle bottoms) so that is yet another reason to suspect these indices could still go lower. We will remain on the sidelines of the broad stock market for now.
It looks like gold is nearing the end of its current medium-term cycle and is making its way down to the final cycle bottom. In this scenario, some minor rallying could happen, but the trend is down until that final bottom is hit over the next few weeks, possibly in our Oct. 7 - 19 reversal zone. We are looking for a low around $1800.
Silver has several different possibilities for its current medium-term cycle labeling, but our main concern is whether or not last week's low at $21.75 was a final bottom and start of a new medium-term cycle. If it was, we could see a strong rally from here. Otherwise, prices could still go a bit lower. As with gold, we could see a final low in our
Oct. 7 -19 reversal zone. A good target range now would be $19.50 - $20.00. A good buying set-up would be to see this target (and gold near $1800) with intermarket bearish divergence (i.e. either gold or silver - but not both - making a new weekly low). We will watch for this. On the sidelines of both metals for now.
It's starting to look like crude oil started a new medium-term cycle with its low of $36.58 on Sept. 8 (Nov. contract chart). If so, we will have to wait for a sub-cycle correction if we want to buy into the new cycle. If the current rally can't get above $44, however, it could mean the cycle is turning bearish, and in that case we would probably be looking to sell short at the sub-cycle peak instead of buying at the bottom. For now, we will remain on the sidelines.
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