Last Thursday's surge and fall in the broad stock market after the Fed announced it would not be raising interest rates in September left behind classic bearish "shooting star" candlestick patterns in the charts of the DOW, S&P 500 and NASDAQ indices. Not surprisingly, Friday was another strong down day in this market with the DOW falling another 290 points (following Thursdays's 65 point loss). As I've been saying in recent blogs, this market could be very bearish into October, and I am still expecting new lows (at or below the lows of Aug.24) over the next three to six weeks. That said, we might see a relief rally next week in response to last week's plunge, but we won't be concerned unless it exceeds 17,000 in the DOW or 2040 in the S&P 500. Holding my short position in the broad stock market.
Gold and silver are still looking quite bearish despite a price surge last week triggered by the Fed's dovish decision to postpone an interest rate hike. Several short-term technical signals are strongly suggesting that gold and silver prices will turn down this week, and we are now in the center of a strong reversal zone for these metals. For this reason we will be looking to sell short both metals possibly as early as tomorrow. A strong sell signal might take the form of intermarket bearish divergence where either gold or silver (but not both) makes a new weekly high and then closes in the lower part of that day's price range. On the sidelines of gold and silver but looking to go short next week.