MARKETS UPDATE (2:45 pm EST)
It is looking like the correction that I've been anticipating in the broad stock market may be finally kicking in. At the time of this writing the DOW has lost over 200 points and a major bearish momentum signal has appeared in the chart of this index. As I have been stating in recent blogs, we are near the end of a significant cycle in this index (as well as in the S&P 500 and NASDAQ indices) so it is a normal time for this correction to occur. Such a correction could bring the DOW towards the 15,800 area or lower, and this could happen quickly with the bottom occurring ideally around Jan. 31st (the next major time zone for a market reversal). One note of caution here is that the NASDAQ's directional momentum is still 100% bullish. This divergence from the DOW and S&P 500 (which are both mixed bullish and bearish now) could be indicating an underlying strength in the broad stock market that minimizes any correction, or it may simply be reflecting a longer-term bullishness in the market that will resume after a steep short-term correction is over. We have been short in the broad stock market since last Friday. Maintaining short positions here.
Gold and silver are rallying today and many gold and silver stock indices are looking quite bullish, which is a good sign for the precious metals sector in general. An ideal bullish technical pattern may be setting up now which could see gold and silver prices drop back from today's prices towards $1220 in gold and $19.20 in silver by the end of this month. If this happens and those lower prices hold, it will be a good point to go long in silver (and also gold if not long already) as a very strong rally could follow. An alternate scenario would be for these metals to continue rallying from here. There are some technical signals that indicate precious metal prices could be volatile over the next week. It is important now to keep in mind that the overall long-term picture for gold and silver is still very bullish, and we are simply waiting for confirmation that the long-term cycle bottoms are in for these metals. Those bottoms may already have occurred, but we can't be certain until both metals break through several upper resistance levels, and this may take them a few more months to do. If gold does go lower, I don't expect it to get below the $1000 - $1100 area. We are currently long in gold, but out of silver for now.
Crude oil prices continued to rise today. We were stopped out of our short positions yesterday as crude prices surged on news of Syrian civil war tensions. There is considerable resistance for crude in the $97 - $99 area so we may see prices leveling off somewhere in this range over the next week or two. Should this resistance hold into the end of next week (with momentum remaining bearish), we may have another good opportunity to sell short. Of course, with so much tension and the potential for conflicts in the Middle East, going short in crude oil can have an extra risk factor now. The cycle picture for crude is looking a little unclear at the moment so I am going to stay on the sidelines of this market at least until the end of next week. At that time I will assess the trading situation and risk factors. Out of this market for now.
It is looking like the correction that I've been anticipating in the broad stock market may be finally kicking in. At the time of this writing the DOW has lost over 200 points and a major bearish momentum signal has appeared in the chart of this index. As I have been stating in recent blogs, we are near the end of a significant cycle in this index (as well as in the S&P 500 and NASDAQ indices) so it is a normal time for this correction to occur. Such a correction could bring the DOW towards the 15,800 area or lower, and this could happen quickly with the bottom occurring ideally around Jan. 31st (the next major time zone for a market reversal). One note of caution here is that the NASDAQ's directional momentum is still 100% bullish. This divergence from the DOW and S&P 500 (which are both mixed bullish and bearish now) could be indicating an underlying strength in the broad stock market that minimizes any correction, or it may simply be reflecting a longer-term bullishness in the market that will resume after a steep short-term correction is over. We have been short in the broad stock market since last Friday. Maintaining short positions here.
Gold and silver are rallying today and many gold and silver stock indices are looking quite bullish, which is a good sign for the precious metals sector in general. An ideal bullish technical pattern may be setting up now which could see gold and silver prices drop back from today's prices towards $1220 in gold and $19.20 in silver by the end of this month. If this happens and those lower prices hold, it will be a good point to go long in silver (and also gold if not long already) as a very strong rally could follow. An alternate scenario would be for these metals to continue rallying from here. There are some technical signals that indicate precious metal prices could be volatile over the next week. It is important now to keep in mind that the overall long-term picture for gold and silver is still very bullish, and we are simply waiting for confirmation that the long-term cycle bottoms are in for these metals. Those bottoms may already have occurred, but we can't be certain until both metals break through several upper resistance levels, and this may take them a few more months to do. If gold does go lower, I don't expect it to get below the $1000 - $1100 area. We are currently long in gold, but out of silver for now.
Crude oil prices continued to rise today. We were stopped out of our short positions yesterday as crude prices surged on news of Syrian civil war tensions. There is considerable resistance for crude in the $97 - $99 area so we may see prices leveling off somewhere in this range over the next week or two. Should this resistance hold into the end of next week (with momentum remaining bearish), we may have another good opportunity to sell short. Of course, with so much tension and the potential for conflicts in the Middle East, going short in crude oil can have an extra risk factor now. The cycle picture for crude is looking a little unclear at the moment so I am going to stay on the sidelines of this market at least until the end of next week. At that time I will assess the trading situation and risk factors. Out of this market for now.
RSS Feed