MARKETS UPDATE (9:30 pm EST)
Well, here we are with one trading day left before the New Year holiday week-end, and after slumping for most of the week, the broad stock market rallied strongly today. This could be from a sudden burst of holiday optimism or perhaps a reaction to positive jobless claims data released today, or both. We also got a bullish divergence signal in equities yesterday because the NASDAQ made a new weekly low, but the DOW and S&P 500 did not (yet), and we are also expecting a sub-cycle bottom either this week or next. Yesterday may have been it for the NASDAQ, and maybe Dec. 22 (last Thursday) was it for the DOW and S&P 500. To confirm a bottom, however, we need to see these indices close back above their 45-day moving averages, which is now resistance. The DOW tested that resistance today, but the S&P 500, and especially the NASDAQ, are still well below their 45-day moving averages. It's still possible for these indices to fall lower into next week - perhaps with another bullish divergence signal. Let's wait to see if at least the DOW and S&P 500 can close back above their 45-day averages before we consider going long.
Gold and silver are up just a bit today, but we still have a bearish divergence signal in effect from Tuesday when gold made a new weekly high and silver did not. Let's stay on the sidelines of these metals for now and see if they can fall lower into our target ranges for a sub-cycle correction in gold and a final medium-term cycle bottom in silver (see earlier blogs).
Crude oil couldn't close above $80 earlier this week, and prices are now falling again. In Tuesday's blog on crude I wrote:
"Our "lines in the sand" here are $80 and then $83.27. I would still like to see prices drop back to $70 or below over the next three weeks for a final cycle bottom to buy. But if crude can first break and close above those lines, we may have to go with the idea that a new bullish cycle started on Dec. 9."
Well, it's still too early to tell if prices will get back down to $70. There is some support around $75, so crude could bounce from there in another attempt to break above $80. We will stay on the sidelines until prices break one way or the other out of the "congestion zone" between $75 and $80.
Well, here we are with one trading day left before the New Year holiday week-end, and after slumping for most of the week, the broad stock market rallied strongly today. This could be from a sudden burst of holiday optimism or perhaps a reaction to positive jobless claims data released today, or both. We also got a bullish divergence signal in equities yesterday because the NASDAQ made a new weekly low, but the DOW and S&P 500 did not (yet), and we are also expecting a sub-cycle bottom either this week or next. Yesterday may have been it for the NASDAQ, and maybe Dec. 22 (last Thursday) was it for the DOW and S&P 500. To confirm a bottom, however, we need to see these indices close back above their 45-day moving averages, which is now resistance. The DOW tested that resistance today, but the S&P 500, and especially the NASDAQ, are still well below their 45-day moving averages. It's still possible for these indices to fall lower into next week - perhaps with another bullish divergence signal. Let's wait to see if at least the DOW and S&P 500 can close back above their 45-day averages before we consider going long.
Gold and silver are up just a bit today, but we still have a bearish divergence signal in effect from Tuesday when gold made a new weekly high and silver did not. Let's stay on the sidelines of these metals for now and see if they can fall lower into our target ranges for a sub-cycle correction in gold and a final medium-term cycle bottom in silver (see earlier blogs).
Crude oil couldn't close above $80 earlier this week, and prices are now falling again. In Tuesday's blog on crude I wrote:
"Our "lines in the sand" here are $80 and then $83.27. I would still like to see prices drop back to $70 or below over the next three weeks for a final cycle bottom to buy. But if crude can first break and close above those lines, we may have to go with the idea that a new bullish cycle started on Dec. 9."
Well, it's still too early to tell if prices will get back down to $70. There is some support around $75, so crude could bounce from there in another attempt to break above $80. We will stay on the sidelines until prices break one way or the other out of the "congestion zone" between $75 and $80.
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