Friday's U.S. jobs report was very positive and showed that 321,000 new jobs were added to the economy in November. This was quite a bit more than the estimated 235,000 jobs that most economists had been expecting.
In addition, the nation's unemployment rate held steady at 5.8% (a six year low) in November which was more good news for the economy. Some analysts on Friday were even suggesting that this upbeat economic data might prompt the Federal Reserve to consider raising short-term interest rates sooner than expected (most analysts have been expecting a rate hike in mid-2015). The specter of an early interest rate hike, however, did not seem to bother Wall Street as the DOW nearly touched 18,000 and made a new all-time high on Friday.
We are now entering a four week period (now through January 1st) when we could see major turning points in all financial markets. In fact, we may see some markets turn or reverse several times. In other words, markets could be quite volatile for the rest of this month. Unfortunately, this means that most of our trading during this time will likely be short-term. December 12 -15 is a timing area to focus on that has a high probability for significant market reversals. December 19 is also a significant time to be alert for directional changes.
This week we want to observe how the broad stock market moves into Friday (Dec. 12). If the DOW turns down now and makes a correction into the end of the week, we may have a good opportunity to buy. On the other hand, more rallying into Friday could give us a good spot to sell (short). This is a tricky short-term trading environment now so I will be basing my trading decisions on daily technical data as we move through the week. Still on the sidelines of the broad stock market.
Gold and silver charts are still presenting a somewhat ambiguous picture, and here too we want to watch price movements into Friday. A strong rally by gold into Friday that does not break through the $1220 - $ 1250 area might give us a good spot to short the metals. If prices instead move lower this week, we may see a bottom to buy.
On the sidelines of both gold and silver for now.
Crude oil charts are looking very bearish at this time so we want to be alert for any short-term rally to sell short.
The cycle pattern in crude is suggesting a rally into the end of this week or early next week. If this happens and prices climb towards $78 - $79, it will be an ideal spot to sell short. Currently on the sidelines of crude oil.