MARKETS UPDATE (11:00 pm EDT)
Last Tuesday (Oct. 15) I wrote about silver:
"A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now."
On Friday prices closed well above $33. It looks like we may have to label that October 2023 low as the bottom to the longer-term 4.3 year cycle. This would make silver quite bullish now. This is why we bailed out of our short silver position on Friday. Prices could now rally into our next reversal zones coming up next week: a general reversal zone for all markets Oct. 22 - 30 as well as one specifically for the precious metals Oct. 24 - Nov. 4. A significant top - most likely the final top to the current medium-term cycle - could form anywhere inside those time frames followed by a drop to the final medium-term cycle bottom. It's hard to say where that bottom might end up, but it will likely be a good place to go long as silver is only one year into this new 4.3 year cycle, so prices should be bullish into 2025. We will stay on the sidelines of silver for now.
Gold made a new all-time high on Friday at $2722, and since silver also made a new high, we no longer have a strong bearish divergence signal between these metals. We expect gold, like silver, to make new highs into 2025, but we are also expecting a steep correction into a longer-term 50 week cycle bottom (now overdue) before that happens. It's possible the Oct. 10 low at $2606 was that bottom, but if it was, it was way above a normal price target for a 50 week cycle. It's also unclear where we are in the current medium-term cycle for gold, so it's best to be on the sidelines of both precious metals for now. If prices continue to push up into next week's reversal zones, we could see a significant top over the next two weeks; but if prices start to fall, we could also see a significant bottom form in the same time frame. With this much uncertainty in this market, I am remaining on the sidelines of gold for now.
The broad stock market continued to edge higher last week with the DOW and S&P 500 making new all-time highs while the NASDAQ remained below its all-time high from July. If this bearish divergence continues into the new reversal zones coming up this week, we could see a significant top followed by a corrective decline. We will watch for that now.
Crude oil prices tested our stop loss point at $69.30 on Friday, but I did not sell my long position. Although Friday was one day out of our reversal zone, we enter another one on Tuesday, and there is a support line around $68 that could hold. I am going to hold my long position for now and see if a turning point can form in next week's reversal zone.
Last Tuesday (Oct. 15) I wrote about silver:
"A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now."
On Friday prices closed well above $33. It looks like we may have to label that October 2023 low as the bottom to the longer-term 4.3 year cycle. This would make silver quite bullish now. This is why we bailed out of our short silver position on Friday. Prices could now rally into our next reversal zones coming up next week: a general reversal zone for all markets Oct. 22 - 30 as well as one specifically for the precious metals Oct. 24 - Nov. 4. A significant top - most likely the final top to the current medium-term cycle - could form anywhere inside those time frames followed by a drop to the final medium-term cycle bottom. It's hard to say where that bottom might end up, but it will likely be a good place to go long as silver is only one year into this new 4.3 year cycle, so prices should be bullish into 2025. We will stay on the sidelines of silver for now.
Gold made a new all-time high on Friday at $2722, and since silver also made a new high, we no longer have a strong bearish divergence signal between these metals. We expect gold, like silver, to make new highs into 2025, but we are also expecting a steep correction into a longer-term 50 week cycle bottom (now overdue) before that happens. It's possible the Oct. 10 low at $2606 was that bottom, but if it was, it was way above a normal price target for a 50 week cycle. It's also unclear where we are in the current medium-term cycle for gold, so it's best to be on the sidelines of both precious metals for now. If prices continue to push up into next week's reversal zones, we could see a significant top over the next two weeks; but if prices start to fall, we could also see a significant bottom form in the same time frame. With this much uncertainty in this market, I am remaining on the sidelines of gold for now.
The broad stock market continued to edge higher last week with the DOW and S&P 500 making new all-time highs while the NASDAQ remained below its all-time high from July. If this bearish divergence continues into the new reversal zones coming up this week, we could see a significant top followed by a corrective decline. We will watch for that now.
Crude oil prices tested our stop loss point at $69.30 on Friday, but I did not sell my long position. Although Friday was one day out of our reversal zone, we enter another one on Tuesday, and there is a support line around $68 that could hold. I am going to hold my long position for now and see if a turning point can form in next week's reversal zone.
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