MARKETS UPDATE and GOLD TRADE ALERT (2:30 pm EDST)
Gold most likely started a new medium-term cycle with its low of $1752 on June 29. This means it is a young cycle and probably bullish. Silver, however, seems to be completing an older cycle and may have formed the final bottom to that cycle yesterday at $24.78. If it did, then it too is now bullish. Last Thursday we unloaded our long position in gold and I wrote:
"Both metals could take a correction now with silver making a new low and gold staying above its June 29 low ($1752). Let's use this opportunity to reclaim much of our loss from our June 16th long position in gold. If gold does drop and stays above that $1752 low, we will go long again soon. We may also go long in silver if it moves to its final medium-term cycle bottom over the next few weeks."
Well, both metals did correct down with silver making a new low (yesterday) while gold seems to be leveling off around $1800. This is giving us a strong bullish divergence between the two metals, and there is also a mild short-term reversal zone for the precious metals in effect this week. This looks like a good time to go long in gold again. Silver may have bottomed yesterday, but there's a chance it could push a little lower, possibly into next week. Another major reversal zone for the precious metals starts next Friday - July 30-August 11 - so it could bottom then. If silver did start a new cycle yesterday, we should see it close above $25.65 soon, and that would be a good signal to buy.
Let's enter a long position in gold today with an initial stop loss on a close below $1752.
We will stay on the sidelines of silver for now.
The U.S. Dollar Index seems to be encountering resistance around 93 and may be topping out this week. If it falls, it will give a boost to any rally in the precious metals. Will watch for this
The broad stock market seems reluctant to rally this morning and could be ready to turn down again. The S&P 500 and NASDAQ are still below their all-time highs from last week, and the DOW is still below its all-time high of 35,091 from May 10 as well as below its high from last week (at the time of this writing). Let's continue to hold our short position in the NASDAQ with a stop loss based on all three indices making new all-time highs.
Crude oil is rallying some more today, so it was probably a good idea to cover our short position yesterday (with a small profit). Crude is likely starting its third and final sub-cycle within an older medium-term cycle. It could do two things from here. If the cycle is still bullish, prices could soar as high as $84 (September contract chart) to the final top of the medium-term cycle. But if its going to turn bearish, prices may not exceed the July 6 high of $76.07 before falling steeply to the final cycle bottom. What happens may depend on the broad stock market. If equities turn down now, it could put a damper on any strong rally in crude. We are now on the sidelines of crude.
Gold most likely started a new medium-term cycle with its low of $1752 on June 29. This means it is a young cycle and probably bullish. Silver, however, seems to be completing an older cycle and may have formed the final bottom to that cycle yesterday at $24.78. If it did, then it too is now bullish. Last Thursday we unloaded our long position in gold and I wrote:
"Both metals could take a correction now with silver making a new low and gold staying above its June 29 low ($1752). Let's use this opportunity to reclaim much of our loss from our June 16th long position in gold. If gold does drop and stays above that $1752 low, we will go long again soon. We may also go long in silver if it moves to its final medium-term cycle bottom over the next few weeks."
Well, both metals did correct down with silver making a new low (yesterday) while gold seems to be leveling off around $1800. This is giving us a strong bullish divergence between the two metals, and there is also a mild short-term reversal zone for the precious metals in effect this week. This looks like a good time to go long in gold again. Silver may have bottomed yesterday, but there's a chance it could push a little lower, possibly into next week. Another major reversal zone for the precious metals starts next Friday - July 30-August 11 - so it could bottom then. If silver did start a new cycle yesterday, we should see it close above $25.65 soon, and that would be a good signal to buy.
Let's enter a long position in gold today with an initial stop loss on a close below $1752.
We will stay on the sidelines of silver for now.
The U.S. Dollar Index seems to be encountering resistance around 93 and may be topping out this week. If it falls, it will give a boost to any rally in the precious metals. Will watch for this
The broad stock market seems reluctant to rally this morning and could be ready to turn down again. The S&P 500 and NASDAQ are still below their all-time highs from last week, and the DOW is still below its all-time high of 35,091 from May 10 as well as below its high from last week (at the time of this writing). Let's continue to hold our short position in the NASDAQ with a stop loss based on all three indices making new all-time highs.
Crude oil is rallying some more today, so it was probably a good idea to cover our short position yesterday (with a small profit). Crude is likely starting its third and final sub-cycle within an older medium-term cycle. It could do two things from here. If the cycle is still bullish, prices could soar as high as $84 (September contract chart) to the final top of the medium-term cycle. But if its going to turn bearish, prices may not exceed the July 6 high of $76.07 before falling steeply to the final cycle bottom. What happens may depend on the broad stock market. If equities turn down now, it could put a damper on any strong rally in crude. We are now on the sidelines of crude.
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