MARKETS UPDATE (10:00 pm EDST)
The Fed announced yesterday that interest rates would remain unchanged at near zero and that there would be no changes to its bond-buying program - yet. Fed Chairman Jerome Powell did hint in his rhetoric that the clock on bond-purchasing was ticking with tapering likely on the horizon. That slightly hawkish tone may have had a dampening effect on the broad stock market as the DOW closed with a 127 point loss yesterday. The DOW did recover all of that loss with today's 153 point gain, so maybe the markets are now shrugging off yesterday's pessimism. The DOW and S&P 500 both made new all-time highs today, and the NASDAQ made a new all-time high on Monday, so we have no bearish divergence signal this week. Tomorrow starts our new strong reversal zone (July 30 - Aug. 10). If this market is going to fall into it, it has to start falling now. Otherwise, it is likely we will see a significant top form within this time frame. We are still not sure if the NASDAQ is an old cycle or new cycle. If it is an old cycle, it is ready to take a steep correction - perhaps from a new high in this new reversal zone. We will watch for this. For now, we remain on the sidelines.
Crude oil is making a new weekly high today, but it is still not exceeding its July 6 high at $76.07 (Sept. contract chart). Like the broad stock market, crude could be ready to turn down now, unless it wants to push higher into this new reversal zone. We are still not sure if crude started a new medium-term cycle with last Tuesday's low at $65.01. If it did, prices should be bullish now, and that July 6 high should be taken out soon. Let's stay on the sidelines of crude for now.
Gold and silver prices shot up strongly today. Apparently the Fed's slightly hawkish statements from yesterday were not enough to boost the U.S. Dollar Index. The greenback fell today, and this boosted the precious metals. Our long position in gold benefited from this, but now we have to be concerned that prices are rising sharply into an upcoming reversal zone specifically for these metals (July 30 - Aug.11, same as for equities). That means a top could be imminent. Let's see if this rally can gain some legs before we think about selling our long position. Silver may have started a new medium-term cycle with Tueday's low at $24.49, but this upcoming reversal zone (it starts tomorrow) makes me reluctant to chase this rally. If silver makes a top soon, we may watch for a modest sub-cycle correction to go long. Let's stay on the sidelines of silver for now.
The Fed announced yesterday that interest rates would remain unchanged at near zero and that there would be no changes to its bond-buying program - yet. Fed Chairman Jerome Powell did hint in his rhetoric that the clock on bond-purchasing was ticking with tapering likely on the horizon. That slightly hawkish tone may have had a dampening effect on the broad stock market as the DOW closed with a 127 point loss yesterday. The DOW did recover all of that loss with today's 153 point gain, so maybe the markets are now shrugging off yesterday's pessimism. The DOW and S&P 500 both made new all-time highs today, and the NASDAQ made a new all-time high on Monday, so we have no bearish divergence signal this week. Tomorrow starts our new strong reversal zone (July 30 - Aug. 10). If this market is going to fall into it, it has to start falling now. Otherwise, it is likely we will see a significant top form within this time frame. We are still not sure if the NASDAQ is an old cycle or new cycle. If it is an old cycle, it is ready to take a steep correction - perhaps from a new high in this new reversal zone. We will watch for this. For now, we remain on the sidelines.
Crude oil is making a new weekly high today, but it is still not exceeding its July 6 high at $76.07 (Sept. contract chart). Like the broad stock market, crude could be ready to turn down now, unless it wants to push higher into this new reversal zone. We are still not sure if crude started a new medium-term cycle with last Tuesday's low at $65.01. If it did, prices should be bullish now, and that July 6 high should be taken out soon. Let's stay on the sidelines of crude for now.
Gold and silver prices shot up strongly today. Apparently the Fed's slightly hawkish statements from yesterday were not enough to boost the U.S. Dollar Index. The greenback fell today, and this boosted the precious metals. Our long position in gold benefited from this, but now we have to be concerned that prices are rising sharply into an upcoming reversal zone specifically for these metals (July 30 - Aug.11, same as for equities). That means a top could be imminent. Let's see if this rally can gain some legs before we think about selling our long position. Silver may have started a new medium-term cycle with Tueday's low at $24.49, but this upcoming reversal zone (it starts tomorrow) makes me reluctant to chase this rally. If silver makes a top soon, we may watch for a modest sub-cycle correction to go long. Let's stay on the sidelines of silver for now.
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