MARKETS UPDATE (2:00 pm EST)
It seems that more "saber-rattling" today between the U.S. and Russia may be throwing a wet blanket on this week's rally in the broad stock market. All three market indices (DOW, S&P 500, NASDAQ) are moving back down towards support near their January lows. We are now out of our reversal zone. If all three indices break below their lows from last week, they could be down for another two weeks - if they can also penetrate their January lows. We will hold our short position in the NASDAQ for now, but if we see support holding around 34,000 - 34,500 in the DOW, 4,300 - 4,400 in the S&P 500, or 13.500- 14,000 in the NASDAQ, we will consider taking profits and covering that short position. It still looks like a major long-term correction is unfolding from the all-time highs we saw in November in the NASDAQ, and in January in the DOW and S&P 500.
Both gold and silver made new weekly highs on Tuesday (in our reversal zone) before prices took a slight correction. We are out of that reversal zone today, and prices are taking off again (especially gold). These metals are 'breaking out", and the cycles have turned definitively bullish. We have not had any significant corrective drops to buy, so we will remain on the sidelines until we get one. We could see a significant high (or low) form late next week. We are still on the sidelines of both gold and silver.
I should mention here that it is very late in gold's 23 year long-term cycle (it started around 2001), so unless gold can overcome resistance around $1900 - $1960 soon, it will not challenge or exceed the all-time high of $2070, and prices should be headed down for a steep correction over the next several years - possibly down to $1000 or even lower (see my GOLD Update on the Home page). We are looking to buy any significant short-term corrections now to possibly take advantage of a potential "blow-off" rally if gold can challenge and even make a new all-time high. But we obviously need to be careful here. If that resistance around $1900 - $1980 holds, we will want to switch to bearish trading strategies (i.e. looking to sell short).
Crude oil prices have been dropping from Monday's high at $95.82 (March contract chart). That high was in our reversal zone (which ended yesterday), so a significant sub-cycle correction could be underway here. As with gold, I would prefer to buy at a lower price, but with U.S./Russia tensions so high, we may not get that. But then again, with the "wildcard" factor of geopolitical instability influencing and creating potential volatility (both up and down) in crude prices now, it may be best to stay on the sidelines . And so we shall.
It seems that more "saber-rattling" today between the U.S. and Russia may be throwing a wet blanket on this week's rally in the broad stock market. All three market indices (DOW, S&P 500, NASDAQ) are moving back down towards support near their January lows. We are now out of our reversal zone. If all three indices break below their lows from last week, they could be down for another two weeks - if they can also penetrate their January lows. We will hold our short position in the NASDAQ for now, but if we see support holding around 34,000 - 34,500 in the DOW, 4,300 - 4,400 in the S&P 500, or 13.500- 14,000 in the NASDAQ, we will consider taking profits and covering that short position. It still looks like a major long-term correction is unfolding from the all-time highs we saw in November in the NASDAQ, and in January in the DOW and S&P 500.
Both gold and silver made new weekly highs on Tuesday (in our reversal zone) before prices took a slight correction. We are out of that reversal zone today, and prices are taking off again (especially gold). These metals are 'breaking out", and the cycles have turned definitively bullish. We have not had any significant corrective drops to buy, so we will remain on the sidelines until we get one. We could see a significant high (or low) form late next week. We are still on the sidelines of both gold and silver.
I should mention here that it is very late in gold's 23 year long-term cycle (it started around 2001), so unless gold can overcome resistance around $1900 - $1960 soon, it will not challenge or exceed the all-time high of $2070, and prices should be headed down for a steep correction over the next several years - possibly down to $1000 or even lower (see my GOLD Update on the Home page). We are looking to buy any significant short-term corrections now to possibly take advantage of a potential "blow-off" rally if gold can challenge and even make a new all-time high. But we obviously need to be careful here. If that resistance around $1900 - $1980 holds, we will want to switch to bearish trading strategies (i.e. looking to sell short).
Crude oil prices have been dropping from Monday's high at $95.82 (March contract chart). That high was in our reversal zone (which ended yesterday), so a significant sub-cycle correction could be underway here. As with gold, I would prefer to buy at a lower price, but with U.S./Russia tensions so high, we may not get that. But then again, with the "wildcard" factor of geopolitical instability influencing and creating potential volatility (both up and down) in crude prices now, it may be best to stay on the sidelines . And so we shall.
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