I will begin this update with the precious metals gold and silver because this is the market we need to watch most carefully next week. Our short positions in these metals did very well last week as the steep correction we were anticipating kicked in. The price of both metals is now down to levels that would satisfy reasonable estimates for a bottom (a little below $1,600 for gold and near or below $29 for silver). While both could still go lower, timing factors suggest a reversal here, so we will be looking to take profits on these short positions early next week and possibly reversing position and going long, as we are at a good entry point for the next rally. I will try to post any trade decisions I make before 3:00 pm (EST) during the week to give traders enough time to place trades before the markets close. Because we will be attempting to call the bottom in these metals and reverse our positions, I would suggest checking the blog each day next week as precise timing could be especially important in this trading situation. Both metals may have already bottomed (gold especially exhibited some bullish behavior on Friday) so we need to be ready to exit our short positions quickly if necessary. Stay tuned.
Last Monday we exited our crude oil short positions at a breakeven point because the market seemed to be losing its bearish momentum and was possibly starting a short-term rally. It did rally into Wednesday but then came right back down by the end of the week, so we may have been premature in giving up those positions. Even if the downward correction resumes, however, it is not considered worth getting short right now as the gain may be minimal at this point. Our strategy now will be to watch for the bottom and look to go long there, for crude oil is still looking bullish medium to long-term.
The broad stock market was pretty flat all week and seemed unwilling to take a definitive bullish or bearish stance. The DOW is still reluctant to break through the 14,000 mark, so there is clearly strong resistance there, yet the market has buoyancy and does not seem to want to fall either. We will continue to stand on the sidelines with this market until things are more clear. There are many political events occurring now that are likely affecting the broad stock market and making it difficult to predict. Direct market manipulation to serve politcal agendas is another possible factor that could be altering the normal cyclic flow of this market (especially the DOW).
Our last post on the Swiss Franc discussed the possibility of this currency suddenly turning bullish after making an unexpectedly shallow correction (bottoming on Jan.18) and then going on to make a new monthly high (Feb.1). The U.S. Dollar was contradicting this with its own bullishness, and the dollar may turn out to be correct as the Swiss Franc showed increasing weakness last week with a gap down in price on Thursday. So the volatility continues, and this currency may yet take that deeper correction. If it does, we will look to go long at the bottom.