MARKETS UPDATE (11:30 pm EDT)
Despite violent protests in the streets of Athens last week from anti-austerity supporters who wanted Greece's parliament to reject the harsh austerity reforms demanded by EU officials in return for a third bailout, Greek officials capitulated to the eurozone with their vote on late Wednesday to approve the tough new austerity measures for their country. Greece's banks will reopen on Monday after a three-week shutdown as talks on the new bailout begins.
The broad stock market was up on Thursday, the first trading day following the Greek Parliament's vote, but the rally was modest. This suggests that the market's strong rally on Monday and Tuesday had anticipated and already factored in Greece's approval of the new bailout plan. The DOW was down a bit on Friday but remained above 18,000, a resistance level it broke on Tuesday (which should now act as support). We are now entering the last two weeks of July when there is a strong likelihood of a major reversal in equity (and other) markets. The DOW, S&P 500 and NASDAQ are all rising sharply from their July 7 lows so we should be looking for a top in these markets to sell short any time now. Longer term cycle patterns are also suggesting that any correction now could be very significant (10-15% or more). The big question is, how high can these indices go before reversing? If all three break to new
all-time highs (the NASDAQ made a new all-time high on Friday) then we could see the DOW up to 18,800 or higher and the S&P 500 to 2200. But there are a lot of technical, cycle and timing factors right now that suggest the markets will not get that high before turning down and making a major correction. Momentum signals are now mixed with the DOW mostly bearish, the NASDAQ bullish and the S&P 500 mixed bullish and bearish. We will watch carefully for signs of a top in these markets, ideally before the end of July. On the sidelines of the broad stock market for now.
In last Tuesday's blog on precious metals I wrote: "Gold and silver prices may have made significant bottoms last week (gold at $1147 and silver at $14.75), but the strong bearish directional momentum in the charts of both metals now is suggestive of still lower prices.... but the bottom of the current cycle should be in by the end of the month."
Well, gold and silver prices are going lower. As I write this (Sunday, July 19, 11 pm) gold prices have fallen to $1108 and silver to $14.60. We should be looking for a reversal in this market any time now, ideally this week or next. We will watch for signs of a medium-term cycle bottom to buy in both gold and silver in this time period. On the sidelines of gold and silver but looking to buy soon.
I am anticipating a medium-term cycle bottom in crude oil as well over the next several weeks, and this week's reversal zone is especially strong for crude. Prices seem to be stabilizing at $50, but directional momentum is still 100% bearish in this market so prices could still go lower. I would like to see a stronger bullish momentum signal in crude charts before considering a long position. We may get that this week. Out of this market for now.
Despite violent protests in the streets of Athens last week from anti-austerity supporters who wanted Greece's parliament to reject the harsh austerity reforms demanded by EU officials in return for a third bailout, Greek officials capitulated to the eurozone with their vote on late Wednesday to approve the tough new austerity measures for their country. Greece's banks will reopen on Monday after a three-week shutdown as talks on the new bailout begins.
The broad stock market was up on Thursday, the first trading day following the Greek Parliament's vote, but the rally was modest. This suggests that the market's strong rally on Monday and Tuesday had anticipated and already factored in Greece's approval of the new bailout plan. The DOW was down a bit on Friday but remained above 18,000, a resistance level it broke on Tuesday (which should now act as support). We are now entering the last two weeks of July when there is a strong likelihood of a major reversal in equity (and other) markets. The DOW, S&P 500 and NASDAQ are all rising sharply from their July 7 lows so we should be looking for a top in these markets to sell short any time now. Longer term cycle patterns are also suggesting that any correction now could be very significant (10-15% or more). The big question is, how high can these indices go before reversing? If all three break to new
all-time highs (the NASDAQ made a new all-time high on Friday) then we could see the DOW up to 18,800 or higher and the S&P 500 to 2200. But there are a lot of technical, cycle and timing factors right now that suggest the markets will not get that high before turning down and making a major correction. Momentum signals are now mixed with the DOW mostly bearish, the NASDAQ bullish and the S&P 500 mixed bullish and bearish. We will watch carefully for signs of a top in these markets, ideally before the end of July. On the sidelines of the broad stock market for now.
In last Tuesday's blog on precious metals I wrote: "Gold and silver prices may have made significant bottoms last week (gold at $1147 and silver at $14.75), but the strong bearish directional momentum in the charts of both metals now is suggestive of still lower prices.... but the bottom of the current cycle should be in by the end of the month."
Well, gold and silver prices are going lower. As I write this (Sunday, July 19, 11 pm) gold prices have fallen to $1108 and silver to $14.60. We should be looking for a reversal in this market any time now, ideally this week or next. We will watch for signs of a medium-term cycle bottom to buy in both gold and silver in this time period. On the sidelines of gold and silver but looking to buy soon.
I am anticipating a medium-term cycle bottom in crude oil as well over the next several weeks, and this week's reversal zone is especially strong for crude. Prices seem to be stabilizing at $50, but directional momentum is still 100% bearish in this market so prices could still go lower. I would like to see a stronger bullish momentum signal in crude charts before considering a long position. We may get that this week. Out of this market for now.
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