MARKETS UPDATE (5:00 pm EDST)
The broad stock market is looking very ambiguous right now so it is good that we are on the sidelines. The current strong reversal zone for this market ends early this week (on Tuesday), but this overlaps with another minor reversal signature so a strong reversal potential will extend well into Friday. Last week on Friday the S&P 500 and NASDAQ both made new all-time highs, but the DOW did not and remains below its July 16 high of 27,398. That was a strong bearish divergence signal. If the DOW cannot exceed that high this week then all three indices could be headed down into at least the first or second week of August. If that happens, we will look for a spot to buy (as long as the correction doesn't go too low). Also, if this market drops sharply this week (say, to around 26,600 in the DOW), we could be looking to buy. More rallying, however, and especially a new high in the DOW could alternatively give us a top over the next week or two and a possible opportunity to sell short. These multiple possibilities keeps us on the sidelines as we watch for a clearer pattern to develop, hopefully this week.
We are still long in crude oil based on the idea that crude made its first significant sub-cycle correction on July 19 at $55.12 (Sept. contract chart). There are two days left to the current reversal zone for crude (July 19-30) and prices are now around $56. It's possible the price could push lower this week and even break below $55.12 to establish a new sub-cycle bottom before it rallies again. But if prices get close to $52 we might have to consider the possibility of this market turning bearish. Let's hold our long position for now with a stop loss on a close below $54.
The precious metals market is also looking a little ambiguous right now and hard to call. We still have a strong intermarket bearish divergence signal from last week when silver made a new high and gold stayed well below its $1494 high from early this month. This and other short-term technical signals are suggesting that both metals could move lower. We entered a new reversal zone specifically for precious metals on Friday (July 26 - Aug. 9) and the center point of this reversal is this Friday. Let's see if we get a corrective dip into the end of the week to buy. Gold may only dip a little below $1400, but silver has the potential to drop more dramatically, perhaps as low as $15.20. Still on the sidelines of both metals.
The broad stock market is looking very ambiguous right now so it is good that we are on the sidelines. The current strong reversal zone for this market ends early this week (on Tuesday), but this overlaps with another minor reversal signature so a strong reversal potential will extend well into Friday. Last week on Friday the S&P 500 and NASDAQ both made new all-time highs, but the DOW did not and remains below its July 16 high of 27,398. That was a strong bearish divergence signal. If the DOW cannot exceed that high this week then all three indices could be headed down into at least the first or second week of August. If that happens, we will look for a spot to buy (as long as the correction doesn't go too low). Also, if this market drops sharply this week (say, to around 26,600 in the DOW), we could be looking to buy. More rallying, however, and especially a new high in the DOW could alternatively give us a top over the next week or two and a possible opportunity to sell short. These multiple possibilities keeps us on the sidelines as we watch for a clearer pattern to develop, hopefully this week.
We are still long in crude oil based on the idea that crude made its first significant sub-cycle correction on July 19 at $55.12 (Sept. contract chart). There are two days left to the current reversal zone for crude (July 19-30) and prices are now around $56. It's possible the price could push lower this week and even break below $55.12 to establish a new sub-cycle bottom before it rallies again. But if prices get close to $52 we might have to consider the possibility of this market turning bearish. Let's hold our long position for now with a stop loss on a close below $54.
The precious metals market is also looking a little ambiguous right now and hard to call. We still have a strong intermarket bearish divergence signal from last week when silver made a new high and gold stayed well below its $1494 high from early this month. This and other short-term technical signals are suggesting that both metals could move lower. We entered a new reversal zone specifically for precious metals on Friday (July 26 - Aug. 9) and the center point of this reversal is this Friday. Let's see if we get a corrective dip into the end of the week to buy. Gold may only dip a little below $1400, but silver has the potential to drop more dramatically, perhaps as low as $15.20. Still on the sidelines of both metals.
RSS Feed