MARKETS UPDATE (3:00 pm EST)
In Monday's blog on the broad stock market I wrote:
"If...they (DOW S&P 500, NASDAQ) move higher this week, we could easily see a parabolic "blow-off" rally into next week or even the first week of March. In that situation we would be looking for a top to sell short, most likely next week. A moderate correction over the next few days might give us a spot to go long, but right now it looks like it may be best to just wait for the top of this rally as it moves into the center of the next strong reversal zone next week."
We didn't get any corrective dips to buy, and we are now entering the early part of this reversal zone (which could extend into the first week of March, but is strongest early next week). Today the DOW and S&P 500 are edging to new all-time highs, but the NASDAQ is falling a bit from its high on Wednesday. This rally may be running out of steam. We should be looking for a top to sell short now, but we have to be careful because we have the potential for a "blow-off" top within this reversal zone which could extend through March 7. If we get a case of bearish intermarket divergence next week (where one or two of these indices, but not all three, make(s) a new high), that may be a good signal to sell short. Still on the sidelines of this market.
Gold and silver are both making new weekly highs today as we enter another reversal zone for these metals. The center of this reversal zone is Monday-Tuesday next week. Unless prices drop quickly from today's highs, it appears that we are going to get a top for this reversal so we may be looking for signals to sell short over the next several trading days (ideally early next week). A low target for the current gold rally would be around $1,270, but the $1,290 area would not be out of the question if prices really take off. A good price target for silver would be $18 - $18.60 (it is in that range today). If one metal makes a new high next week while the other does not (bearish divergence) we may have a good signal to sell short. On the sidelines of gold and silver for now.
Crude oil's high on Tuesday was a little early for a sub-cycle top so I think prices could push higher into early next week (the center of the current reversal zone). I am going to hold my long position in crude for now. We can keep our stop loss based on a close below $52 (April contract chart).
In Monday's blog on the broad stock market I wrote:
"If...they (DOW S&P 500, NASDAQ) move higher this week, we could easily see a parabolic "blow-off" rally into next week or even the first week of March. In that situation we would be looking for a top to sell short, most likely next week. A moderate correction over the next few days might give us a spot to go long, but right now it looks like it may be best to just wait for the top of this rally as it moves into the center of the next strong reversal zone next week."
We didn't get any corrective dips to buy, and we are now entering the early part of this reversal zone (which could extend into the first week of March, but is strongest early next week). Today the DOW and S&P 500 are edging to new all-time highs, but the NASDAQ is falling a bit from its high on Wednesday. This rally may be running out of steam. We should be looking for a top to sell short now, but we have to be careful because we have the potential for a "blow-off" top within this reversal zone which could extend through March 7. If we get a case of bearish intermarket divergence next week (where one or two of these indices, but not all three, make(s) a new high), that may be a good signal to sell short. Still on the sidelines of this market.
Gold and silver are both making new weekly highs today as we enter another reversal zone for these metals. The center of this reversal zone is Monday-Tuesday next week. Unless prices drop quickly from today's highs, it appears that we are going to get a top for this reversal so we may be looking for signals to sell short over the next several trading days (ideally early next week). A low target for the current gold rally would be around $1,270, but the $1,290 area would not be out of the question if prices really take off. A good price target for silver would be $18 - $18.60 (it is in that range today). If one metal makes a new high next week while the other does not (bearish divergence) we may have a good signal to sell short. On the sidelines of gold and silver for now.
Crude oil's high on Tuesday was a little early for a sub-cycle top so I think prices could push higher into early next week (the center of the current reversal zone). I am going to hold my long position in crude for now. We can keep our stop loss based on a close below $52 (April contract chart).
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