MARKETS UPDATE and SILVER and CRUDE OIL TRADE ALERT (7:00 pm EDT)
NOTE: I will be traveling tomorrow (Friday) and probably won't have time to post another blog until Sunday. Depending on how the markets move tomorrow, I may have trading recommendations on Sunday.
In last week's blog on Thursday I wrote:
"...we should be watching for a top (high) from which a significant correction (to the end of the cycle) will follow. Technical studies are showing that this correction could be in the 8-10% range or possibly more. This top will most likely happen sometime between July 18 and August 23. Timing and reversal studies are pointing to July 21, July 26, Aug.3, and Aug. 21 as possible pivot points for a significant reversal."
We are now approaching July 21 (tomorrow), and the S&P 500 and NASDAQ are both making new all-time highs while the DOW remains a bit below its all-time high (21,682 from last week). We are therefore seeing intermarket bearish divergence, and we are in a strong reversal zone. Could the market turn down here? It is possible, but there aren't many other technical signals pointing to a top yet, and if the DOW rallies a bit more tomorrow it could easily breach its all-time high and negate its bearish divergence with the other two indices. I am going to stay on the sidelines for now and see if these markets (especially the DOW) can push higher tomorrow.
Gold and silver prices are pushing a bit higher today as we approach another reversal zone specifically for these metals (July 21-31) so it looks like we may get a top in this time period. We shorted gold yesterday with a stop loss at $1270. Today's high of $1247 is still well below that stop. Silver is now pushing against resistance in the $16.30 - $16.50 range. I won't be able to post any trade suggestions tomorrow so I will now recommend entering a short position in silver tomorrow as long as the spot price closes below $16.50. Still holding our short position in gold.
Crude oil's chart and cycle pattern is a little ambiguous right now. It is possible that crude started a new medium-term and longer-term cycle from its $42.05 low on June 21 (Aug. contract chart). If that is the case then crude could be quite bullish and ready to push much higher over the next several weeks or even months. The other possibility is that crude is still finishing its old medium-term and long-term cycle and will bottom over the next several weeks, probably around $40. Even if we have started a new bullish cycle, prices are rising into the center of a reversal zone for crude (July 14 - 28) right now so some sort of correction is likely imminent. In the bullish scenario (new cycle), that correction may not be severe, but if this market is still bearish (old cycle), the correction could be substantial. Today crude prices got to $47.55 but then dropped and are closing around $46.80 near the low of the day's range. This is a bearish sign. Prices are also testing resistance around $47. I am going to enter a short position in crude oil tonight for tomorrows market open. We can set a very close stop loss for this trade on a close above $48.
NOTE: I will be traveling tomorrow (Friday) and probably won't have time to post another blog until Sunday. Depending on how the markets move tomorrow, I may have trading recommendations on Sunday.
In last week's blog on Thursday I wrote:
"...we should be watching for a top (high) from which a significant correction (to the end of the cycle) will follow. Technical studies are showing that this correction could be in the 8-10% range or possibly more. This top will most likely happen sometime between July 18 and August 23. Timing and reversal studies are pointing to July 21, July 26, Aug.3, and Aug. 21 as possible pivot points for a significant reversal."
We are now approaching July 21 (tomorrow), and the S&P 500 and NASDAQ are both making new all-time highs while the DOW remains a bit below its all-time high (21,682 from last week). We are therefore seeing intermarket bearish divergence, and we are in a strong reversal zone. Could the market turn down here? It is possible, but there aren't many other technical signals pointing to a top yet, and if the DOW rallies a bit more tomorrow it could easily breach its all-time high and negate its bearish divergence with the other two indices. I am going to stay on the sidelines for now and see if these markets (especially the DOW) can push higher tomorrow.
Gold and silver prices are pushing a bit higher today as we approach another reversal zone specifically for these metals (July 21-31) so it looks like we may get a top in this time period. We shorted gold yesterday with a stop loss at $1270. Today's high of $1247 is still well below that stop. Silver is now pushing against resistance in the $16.30 - $16.50 range. I won't be able to post any trade suggestions tomorrow so I will now recommend entering a short position in silver tomorrow as long as the spot price closes below $16.50. Still holding our short position in gold.
Crude oil's chart and cycle pattern is a little ambiguous right now. It is possible that crude started a new medium-term and longer-term cycle from its $42.05 low on June 21 (Aug. contract chart). If that is the case then crude could be quite bullish and ready to push much higher over the next several weeks or even months. The other possibility is that crude is still finishing its old medium-term and long-term cycle and will bottom over the next several weeks, probably around $40. Even if we have started a new bullish cycle, prices are rising into the center of a reversal zone for crude (July 14 - 28) right now so some sort of correction is likely imminent. In the bullish scenario (new cycle), that correction may not be severe, but if this market is still bearish (old cycle), the correction could be substantial. Today crude prices got to $47.55 but then dropped and are closing around $46.80 near the low of the day's range. This is a bearish sign. Prices are also testing resistance around $47. I am going to enter a short position in crude oil tonight for tomorrows market open. We can set a very close stop loss for this trade on a close above $48.
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