MARKETS UPDATE (3:30 pm EDST)
Our broad stock market indices (DOW, S&P 500, NASDAQ) have been edging down since Tuesday as they have encountered "congestion zone" resistance, and all three are now making lows as they enter a potential "pivot point" zone today which extends into tomorrow and possibly Monday. This could lead to a reversal back up, but if not, we soon enter another general reversal zone next week (April 11 - 20) that could keep this market from going too low and even turn it around for another rally. Alternatively, if the market rallies up from this week's lows into the new reversal zone, we will have to keep our eye out for a significant top in that time frame.
All three indices just began new medium-term cycles from their mid-March lows and are therefore very young. Most cycles are bullish in their early phase, and these seem to be no exception as their rallies have been steep from those lows. But to maintain the bullish trend, all three now need to break above the high of their last medium-term cycle. For the DOW, that would be the 34,712 high from Dec.13, 2022, and for the S&P 500 and NASDAQ it would be their highs from Feb. 2, 2023 (4,195 and 12,270, respectively). The S&P 500 and NASDAQ are very close to those highs, while the DOW is further away from its high, a situation that could soon lead to a bearish divergence signal if the S&P 500 and/or NASDAQ make new highs without the DOW. We will have to watch this situation carefully as even young cycles can peak early and turn bearish. We note that all three indices are still above their 45-day and 15-day averages (although the NASDAQ is testing its 15-day moving average today). If they can stay above those averages, we could see more rallying. We will continue to hold hold our long position in the broad stock market for now.
Both gold and silver made new highs for the year yesterday (at $2032 and $25.13, respectively) and are backing down just a bit from those highs today. Monday and Tuesday of next week are potential "pivot points" for gold (and especially silver) so prices may edge up for a higher top over the next few days. We also enter that new general reversal zone next Tuesday (April 11 - 20) which is applicable to the precious metals. If these metals are going to be bullish, we could also see higher prices in that time frame.
As I've been discussing in previous blogs, we are at a major crossroads in determining the longer-term direction of gold. If gold remains above $2000 and starts to break and close significantly above its all-time high of $2070, we will have to go with the idea that a NEW long-term 23-year cycle in gold started last year. If that's the case, gold would be VERY bullish now, and prices would be rising strongly for many more years. Alternatively, the current high in gold may be a "triple-top" to an older 23-year cycle (that began in 1999) and is ready to correct down to its final bottom with a potential 50% drop in price into the end of this year or next year. This scenario, of course, is very bearish, but it's important to note that once that 23-year low is in (possibly around $1000), a new (bullish) 23-year cycle would be starting which would be a "golden opportunity" to buy. (Yes indeed, timing is everything right now.)
So what is our strategy for trading gold right now? We are currently holding our short position in gold with a tight stop loss based on prices breaking and closing above $2070. If that stop is triggered, we will cover our short position and start looking for opportunities to go long.
If instead gold prices start to fall now, we will hold our short position, but we note that prices will have to break below the 15-day and 45-day moving averages (currently $1982 and $1895, respectively. and rising) and then $1807 (the start of the current medium-term cycle) to confirm that the trend is turning bearish with gold falling steeply to the bottom of an older 23-year cycle due this year or next.
Silver will likely be taking its cues from gold. Like gold, silver started a new medium-term cycle about a month ago and is in its early phase (young), but it is also due for a sub-cycle correction. As with gold, we will carefully watch any corrective drop in silver. If prices break below the 15-day and 45-day moving averages and especially the $19.91 low that started the new medium-term cycle, then the cycle would be turning bearish. Otherwise, a more modest sub-cycle correction might be a good spot to buy for another rally that could coincide with a rally in gold. We will stay on the sidelines of silver for now.
Crude oil prices seem to be stabilizing just above $80 (May contract chart) after being dramatically kicked up there by OPEC's surprise announcement of their cuts in production earlier this week. We still need to see prices break above $83.04 - the top of the previous medium-term cycle - to confirm that the new medium-term cycle that started with the $64.36 low on March 20 is going to be bullish (and likely the start of a new 3-year cycle). If that's the case, we will be looking to buy any significant corrective dips in this market. For now we will stay on the sidelines of crude.
Our broad stock market indices (DOW, S&P 500, NASDAQ) have been edging down since Tuesday as they have encountered "congestion zone" resistance, and all three are now making lows as they enter a potential "pivot point" zone today which extends into tomorrow and possibly Monday. This could lead to a reversal back up, but if not, we soon enter another general reversal zone next week (April 11 - 20) that could keep this market from going too low and even turn it around for another rally. Alternatively, if the market rallies up from this week's lows into the new reversal zone, we will have to keep our eye out for a significant top in that time frame.
All three indices just began new medium-term cycles from their mid-March lows and are therefore very young. Most cycles are bullish in their early phase, and these seem to be no exception as their rallies have been steep from those lows. But to maintain the bullish trend, all three now need to break above the high of their last medium-term cycle. For the DOW, that would be the 34,712 high from Dec.13, 2022, and for the S&P 500 and NASDAQ it would be their highs from Feb. 2, 2023 (4,195 and 12,270, respectively). The S&P 500 and NASDAQ are very close to those highs, while the DOW is further away from its high, a situation that could soon lead to a bearish divergence signal if the S&P 500 and/or NASDAQ make new highs without the DOW. We will have to watch this situation carefully as even young cycles can peak early and turn bearish. We note that all three indices are still above their 45-day and 15-day averages (although the NASDAQ is testing its 15-day moving average today). If they can stay above those averages, we could see more rallying. We will continue to hold hold our long position in the broad stock market for now.
Both gold and silver made new highs for the year yesterday (at $2032 and $25.13, respectively) and are backing down just a bit from those highs today. Monday and Tuesday of next week are potential "pivot points" for gold (and especially silver) so prices may edge up for a higher top over the next few days. We also enter that new general reversal zone next Tuesday (April 11 - 20) which is applicable to the precious metals. If these metals are going to be bullish, we could also see higher prices in that time frame.
As I've been discussing in previous blogs, we are at a major crossroads in determining the longer-term direction of gold. If gold remains above $2000 and starts to break and close significantly above its all-time high of $2070, we will have to go with the idea that a NEW long-term 23-year cycle in gold started last year. If that's the case, gold would be VERY bullish now, and prices would be rising strongly for many more years. Alternatively, the current high in gold may be a "triple-top" to an older 23-year cycle (that began in 1999) and is ready to correct down to its final bottom with a potential 50% drop in price into the end of this year or next year. This scenario, of course, is very bearish, but it's important to note that once that 23-year low is in (possibly around $1000), a new (bullish) 23-year cycle would be starting which would be a "golden opportunity" to buy. (Yes indeed, timing is everything right now.)
So what is our strategy for trading gold right now? We are currently holding our short position in gold with a tight stop loss based on prices breaking and closing above $2070. If that stop is triggered, we will cover our short position and start looking for opportunities to go long.
If instead gold prices start to fall now, we will hold our short position, but we note that prices will have to break below the 15-day and 45-day moving averages (currently $1982 and $1895, respectively. and rising) and then $1807 (the start of the current medium-term cycle) to confirm that the trend is turning bearish with gold falling steeply to the bottom of an older 23-year cycle due this year or next.
Silver will likely be taking its cues from gold. Like gold, silver started a new medium-term cycle about a month ago and is in its early phase (young), but it is also due for a sub-cycle correction. As with gold, we will carefully watch any corrective drop in silver. If prices break below the 15-day and 45-day moving averages and especially the $19.91 low that started the new medium-term cycle, then the cycle would be turning bearish. Otherwise, a more modest sub-cycle correction might be a good spot to buy for another rally that could coincide with a rally in gold. We will stay on the sidelines of silver for now.
Crude oil prices seem to be stabilizing just above $80 (May contract chart) after being dramatically kicked up there by OPEC's surprise announcement of their cuts in production earlier this week. We still need to see prices break above $83.04 - the top of the previous medium-term cycle - to confirm that the new medium-term cycle that started with the $64.36 low on March 20 is going to be bullish (and likely the start of a new 3-year cycle). If that's the case, we will be looking to buy any significant corrective dips in this market. For now we will stay on the sidelines of crude.
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