MARKETS UPDATE (7:00 pm EDT)
Today the DOW and S&P 500 edged to new weekly highs into mid-day trading while the NASDAQ remained below its high from last week (bearish divergence), and then all three indices collapsed and dropped sharply into the closing bell at 4 pm. This is bearish behavior and today's highs may be the top we've been waiting for, but we are going to allow for the possibility of a higher top into next week's minor reversal zone centered on Aug. 4. There are also two strong potential "pivot points" for the broad stock market next Tuesday/Wednesday and Thursday/Friday, in other words all next week. If today was the top, however, we could see a sharp decline into next week's reversals, and they may correspond to a significant bottom instead of a top. We will hold our short position in the DOW for now with our stop loss based on the NASDAQ making a new weekly high or the DOW closing above 36,000 (whichever comes first).
Gold and silver prices fell sharply today which means both metals haven't finished their corrective drop from last Thursday's highs which were near the center of our reversal zone for these metals. Today both metals made new weekly lows so our bullish divergence signal has been negated. The timing is right for a significant sub-cycle correction now, but prices shouldn't go too low as long as the current medium-term cycle in both metals is bullish (very likely). We also note that there is a strong potential "pivot point" for gold today, tomorrow, and especially next Monday, so a bottom to this corrective drop could be imminent. Gold is also testing its 45-day moving average today as silver approaches its 45-day moving average, both of which could act as support. As long as gold remains above $1900, it should be bullish. We also want silver to stay above $23 to maintain our bullish outlook. We continue to hold our long position in gold (entered on June 30), and we may look to go long in silver if it finds support near its 45-day moving average this week or next.
Not surprisingly, today's plunge in precious metal prices corresponded with a strong surge in the U.S. Dollar Index.
We note that a reversal zone specifically for currencies ended today, so today's high could easily be a top, and a downturn could be imminent. If so, it could help kick gold and silver prices back up.
Crude oil prices edged higher today and continue to test resistance at $80. A sub-cycle top is now due (overdue) in crude's current medium-term cycle and we expect it this week or possibly in next week's extended reversal zones. This current cycle seems very bullish, so we are looking to buy any significant sub-cycle corrective bottom that may end up somewhere between the 15-day and 45-day moving averages (now at $76 and $73, respectively, and rising). For now, we remain on the sidelines of crude.
Today the DOW and S&P 500 edged to new weekly highs into mid-day trading while the NASDAQ remained below its high from last week (bearish divergence), and then all three indices collapsed and dropped sharply into the closing bell at 4 pm. This is bearish behavior and today's highs may be the top we've been waiting for, but we are going to allow for the possibility of a higher top into next week's minor reversal zone centered on Aug. 4. There are also two strong potential "pivot points" for the broad stock market next Tuesday/Wednesday and Thursday/Friday, in other words all next week. If today was the top, however, we could see a sharp decline into next week's reversals, and they may correspond to a significant bottom instead of a top. We will hold our short position in the DOW for now with our stop loss based on the NASDAQ making a new weekly high or the DOW closing above 36,000 (whichever comes first).
Gold and silver prices fell sharply today which means both metals haven't finished their corrective drop from last Thursday's highs which were near the center of our reversal zone for these metals. Today both metals made new weekly lows so our bullish divergence signal has been negated. The timing is right for a significant sub-cycle correction now, but prices shouldn't go too low as long as the current medium-term cycle in both metals is bullish (very likely). We also note that there is a strong potential "pivot point" for gold today, tomorrow, and especially next Monday, so a bottom to this corrective drop could be imminent. Gold is also testing its 45-day moving average today as silver approaches its 45-day moving average, both of which could act as support. As long as gold remains above $1900, it should be bullish. We also want silver to stay above $23 to maintain our bullish outlook. We continue to hold our long position in gold (entered on June 30), and we may look to go long in silver if it finds support near its 45-day moving average this week or next.
Not surprisingly, today's plunge in precious metal prices corresponded with a strong surge in the U.S. Dollar Index.
We note that a reversal zone specifically for currencies ended today, so today's high could easily be a top, and a downturn could be imminent. If so, it could help kick gold and silver prices back up.
Crude oil prices edged higher today and continue to test resistance at $80. A sub-cycle top is now due (overdue) in crude's current medium-term cycle and we expect it this week or possibly in next week's extended reversal zones. This current cycle seems very bullish, so we are looking to buy any significant sub-cycle corrective bottom that may end up somewhere between the 15-day and 45-day moving averages (now at $76 and $73, respectively, and rising). For now, we remain on the sidelines of crude.
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