MARKETS UPDATE (11:30 pm EDST)
*CORRECTION* : In last week's blogs I stated that the DOW was making new all-time highs. That was incorrect. The DOW exceeded its April 23 high of 26,695, but stayed below its all-time high of 26,951 from Oct. 3, 2018. The S&P 500, however, did make a new all-time high (without the DOW or NASDAQ) so we still have a case of intermarket bearish divergence (until the DOW exceeds 26,951 and the NASDAQ exceeds 8,176).
We shorted the broad stock market on Friday as we had a bearish divergence signal in the center of a strong reversal zone (as well as all three indices closing in the lower half of their day's range on Friday). We are expecting a corrective dip now that will likely be brief (2 - 8 days), but steep. A good target for this correction would be around 26,100 in the DOW and 2,850 in the S&P 500. We will watch to cover our short position if we see support at those levels. There is a possibility of a longer and deeper correction if this market loses confidence (from "trade war" fears, U.S./Iran conflicts, a hawkish Fed, etc.), but right now it looks like the cycle is bullish, and any corrective dip will be brief. If those target levels are significantly breached, though, we will of course stay short. Holding my short position in the broad stock market with a stop loss based on the DOW and NASDAQ both making new all-time highs.
Gold and silver both began new medium-term cycles recently (gold in early May, silver in late May) and both are looking very bullish. Gold is due for a significant sub-cycle corrective dip now. We want to buy that dip, which may come this week. A good target would be around $1370, but any drop below $1390 followed by a breakout above last week's high ($1415.50) might also be a good signal to buy. A good buy spot for silver would be around $14.80 or any isolated low that corresponds to a corrective bottom in gold. On the sidelines of both metals but looking to buy on a corrective dip.
It looks like we missed the start of a new medium-term cycle in crude oil on June 12 at $51.25 (August contract chart). If we get a correction in the broad stock market this week, crude prices may follow suit with a corrective dip. That could give us a better buy spot in crude. We will watch for it. The price target for the top of this new medium-term cycle is around $75 so we are anxious to get long in crude as soon as possible. Any break below $50 would negate this bullish view. On the sidelines of crude but and looking to go long soon.
*CORRECTION* : In last week's blogs I stated that the DOW was making new all-time highs. That was incorrect. The DOW exceeded its April 23 high of 26,695, but stayed below its all-time high of 26,951 from Oct. 3, 2018. The S&P 500, however, did make a new all-time high (without the DOW or NASDAQ) so we still have a case of intermarket bearish divergence (until the DOW exceeds 26,951 and the NASDAQ exceeds 8,176).
We shorted the broad stock market on Friday as we had a bearish divergence signal in the center of a strong reversal zone (as well as all three indices closing in the lower half of their day's range on Friday). We are expecting a corrective dip now that will likely be brief (2 - 8 days), but steep. A good target for this correction would be around 26,100 in the DOW and 2,850 in the S&P 500. We will watch to cover our short position if we see support at those levels. There is a possibility of a longer and deeper correction if this market loses confidence (from "trade war" fears, U.S./Iran conflicts, a hawkish Fed, etc.), but right now it looks like the cycle is bullish, and any corrective dip will be brief. If those target levels are significantly breached, though, we will of course stay short. Holding my short position in the broad stock market with a stop loss based on the DOW and NASDAQ both making new all-time highs.
Gold and silver both began new medium-term cycles recently (gold in early May, silver in late May) and both are looking very bullish. Gold is due for a significant sub-cycle corrective dip now. We want to buy that dip, which may come this week. A good target would be around $1370, but any drop below $1390 followed by a breakout above last week's high ($1415.50) might also be a good signal to buy. A good buy spot for silver would be around $14.80 or any isolated low that corresponds to a corrective bottom in gold. On the sidelines of both metals but looking to buy on a corrective dip.
It looks like we missed the start of a new medium-term cycle in crude oil on June 12 at $51.25 (August contract chart). If we get a correction in the broad stock market this week, crude prices may follow suit with a corrective dip. That could give us a better buy spot in crude. We will watch for it. The price target for the top of this new medium-term cycle is around $75 so we are anxious to get long in crude as soon as possible. Any break below $50 would negate this bullish view. On the sidelines of crude but and looking to go long soon.
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