MARKETS UPDATE and IMPORTANT UPDATE and TRADE ALERT ON PRECIOUS METALS (11:30 pm EDT)
Last week we entered a short position in gold with the idea of taking advantage of an imminent correction in both gold and silver from a potential top in this week's reversal zone. There are some very bullish short-term technical signals suddenly appearing in the charts of both gold and silver right now that make holding this short position dangerous.
I am therefore going to recommend covering (unloading) this gold short position and standing aside both metals this week. On Thursday I suggested shorting silver on Friday on the condition of the spot price closing under $16.50. It closed at $16.52 so traders should be on the sidelines of silver. Gold and silver prices could still back down as we are in a reversal zone and they are both pushing against resistance areas in their charts, but there is now a more than small chance of these metals "breaking out" and suddenly exploding to new highs. (Recent COT- Commitment of Traders- charts are showing "smart money" to be unusually bullish on these metals right now). I am going to place an order to unload my gold short position at tomorrow's (Monday's) market open. At the current price that gives us a small 1% loss. We should now be on the sidelines of both gold and silver.
On Thursday evening I also suggested going short in crude oil (for Friday's market open) with a stop loss based on prices closing above $48. It looks like we may have caught the start of the correction as prices dropped steeply on Friday. Let's hold this short position and see if we can ride it down to at least the $43 area. Holding my short position in crude oil.
In Thursday's blog on the broad stock market I wrote:
"We are now approaching July 21 (tomorrow), and the S&P 500 and NASDAQ are both making new all-time highs while the DOW remains a bit below its all-time high (21,682 from last week). We are therefore seeing intermarket bearish divergence, and we are in a strong reversal zone. Could the market turn down here? It is possible, but there aren't many other technical signals pointing to a top yet, and if the DOW rallies a bit more tomorrow it could easily breach its all-time high and negate its bearish divergence with the other two indices."
Well, the DOW did not breach its high on Friday and all three indices closed in slightly negative territory so our bearish divergence signal is still valid. Is a correction starting? Maybe, but all three indices closed near the top of their Friday range, which is not very bearish, and directional momentum remains nearly 100% bullish in all three. They could push higher next week for another case of bearish divergence (if one or two, but not all three, make a new high). I am going to hold off selling short for now and see how these indices move early this week.
Last week we entered a short position in gold with the idea of taking advantage of an imminent correction in both gold and silver from a potential top in this week's reversal zone. There are some very bullish short-term technical signals suddenly appearing in the charts of both gold and silver right now that make holding this short position dangerous.
I am therefore going to recommend covering (unloading) this gold short position and standing aside both metals this week. On Thursday I suggested shorting silver on Friday on the condition of the spot price closing under $16.50. It closed at $16.52 so traders should be on the sidelines of silver. Gold and silver prices could still back down as we are in a reversal zone and they are both pushing against resistance areas in their charts, but there is now a more than small chance of these metals "breaking out" and suddenly exploding to new highs. (Recent COT- Commitment of Traders- charts are showing "smart money" to be unusually bullish on these metals right now). I am going to place an order to unload my gold short position at tomorrow's (Monday's) market open. At the current price that gives us a small 1% loss. We should now be on the sidelines of both gold and silver.
On Thursday evening I also suggested going short in crude oil (for Friday's market open) with a stop loss based on prices closing above $48. It looks like we may have caught the start of the correction as prices dropped steeply on Friday. Let's hold this short position and see if we can ride it down to at least the $43 area. Holding my short position in crude oil.
In Thursday's blog on the broad stock market I wrote:
"We are now approaching July 21 (tomorrow), and the S&P 500 and NASDAQ are both making new all-time highs while the DOW remains a bit below its all-time high (21,682 from last week). We are therefore seeing intermarket bearish divergence, and we are in a strong reversal zone. Could the market turn down here? It is possible, but there aren't many other technical signals pointing to a top yet, and if the DOW rallies a bit more tomorrow it could easily breach its all-time high and negate its bearish divergence with the other two indices."
Well, the DOW did not breach its high on Friday and all three indices closed in slightly negative territory so our bearish divergence signal is still valid. Is a correction starting? Maybe, but all three indices closed near the top of their Friday range, which is not very bearish, and directional momentum remains nearly 100% bullish in all three. They could push higher next week for another case of bearish divergence (if one or two, but not all three, make a new high). I am going to hold off selling short for now and see how these indices move early this week.
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