BROAD STOCK MARKET TRADE ALERT and MARKETS UPDATE (10:00 pm EST)
We are now at the center of this week's "minor" reversal zone (Feb. 13 - 21), and the broad stock market. We may have just seen a top with Tuesday's highs in the DOW and S&P 500 and Wednesday's high in the NASDAQ, although this market still seems buoyant and reluctant to fall (so far). It is very late in the medium-term cycles of the DOW and S&P 500. This means their final medium-term cycle highs are PROBABLY in (that would be the Dec. 13, 2022 high for the DOW at 34,712 and the Feb. 2, 2023 high for the S&P 500 at 4,195).
This week's rally could peak now and then head down sharply for several weeks to the final medium-term cycle bottoms of the DOW and S&P 500 (probably in our next strong reversal zone coming up March 14 - 23). Supporting this idea is the fact that we are seeing a strong bearish divergence signal this week as the DOW made a new weekly high but not the S&P 500 or NASDAQ (yet). We also still have a bearish divergence signal based on the S&P 500 and NASDAQ exceeding their Dec. 13 highs with the DOW still below its Dec. 13 high. Today we saw all three indices close at the bottom of their ranges for the day - yet another bearish signal in this reversal zone. I am going to enter a short position in this market (DOW or S&P 500) for tomorrow's market open. We can place an initial stop loss for this trade based on all three indices (DOW, S&P 500, NASDAQ) making new weekly highs.
Gold prices continue to push lower this week. It is very late in the current medium-term cycle of gold, and prices have been falling steeply from the Feb. 2 high at $1959. I am going to assume that was the final top in this cycle and that prices are now falling to the final bottom of the cycle due anytime over the next six weeks (possibly in mid-March).
A good range for this final medium-term cycle bottom would be $1770 - $1810. We may look to buy there for a short-term rally, but I don't expect that rally to exceed the previous high of $1959. The next medium-term cycle will likely peak early and become very bearish as it falls to its final bottom - a bottom that could also correspond to the final bottom of a longer-term 23-year cycle (that started with the double-bottom lows of 1999 and 2002 around $280). This 23-year cycle low is now due (overdue) sometime in 2023 - 2024, at a price level that could get close to $1000. This is our preferred scenario at the moment, but there is an alternate scenario.
There is a small possibility (not likely, but possible) that a new 23-year cycle started with the low of $1046 in December 2015. If that's the case, this cycle would be young ( 7 years old) and bullish and would be on its way to challenge and likely exceed the $2070 high from August 2020. A good trading strategy now is to wait for the final medium-term cycle bottom in the range mentioned above ($1770-$1810). We will look to buy that bottom for a short-term rally and then sell short at a presumed top under $1959. If the rally exceeds $1959, it would start to support the idea of a young (bullish) 23-yr cycle and we would then hold (or re-buy) our long position. We are on the sidelines of gold for now.
Silver's current medium-term cycle is now due (overdue), and prices are still moving lower. The price of this metal is now in the upper part of our target range for a cycle bottom ($20 - $22), but gold is not, which suggests silver may fall lower until gold reaches its target, Our general reversal zone extends into next Tuesday, and there may be a "pivot point" for silver on Wednesday. It would be nice to see bearish divergence (silver or gold, but not both, make a new weekly low) at the bottom of these cycles before buying, and we are not getting that this week. Let's see if it happens next week - closer to gold's target range - for a possible buying opportunity. We are still on the sidelines of silver.
The U.S. Dollar Index looks quite bullish at the moment. If it continues to rally, it will put more downward pressure on the precious metals.
It's still not clear if we are dealing with a new or old medium-term cycle in crude oil. A close above $83 (March contract chart) would suggest a new cycle, but a close below $72 would suggest an older one (or a newer one that is turning bearish). Let's stay out of this market until the cycle and trend is more clearly established.
We are now at the center of this week's "minor" reversal zone (Feb. 13 - 21), and the broad stock market. We may have just seen a top with Tuesday's highs in the DOW and S&P 500 and Wednesday's high in the NASDAQ, although this market still seems buoyant and reluctant to fall (so far). It is very late in the medium-term cycles of the DOW and S&P 500. This means their final medium-term cycle highs are PROBABLY in (that would be the Dec. 13, 2022 high for the DOW at 34,712 and the Feb. 2, 2023 high for the S&P 500 at 4,195).
This week's rally could peak now and then head down sharply for several weeks to the final medium-term cycle bottoms of the DOW and S&P 500 (probably in our next strong reversal zone coming up March 14 - 23). Supporting this idea is the fact that we are seeing a strong bearish divergence signal this week as the DOW made a new weekly high but not the S&P 500 or NASDAQ (yet). We also still have a bearish divergence signal based on the S&P 500 and NASDAQ exceeding their Dec. 13 highs with the DOW still below its Dec. 13 high. Today we saw all three indices close at the bottom of their ranges for the day - yet another bearish signal in this reversal zone. I am going to enter a short position in this market (DOW or S&P 500) for tomorrow's market open. We can place an initial stop loss for this trade based on all three indices (DOW, S&P 500, NASDAQ) making new weekly highs.
Gold prices continue to push lower this week. It is very late in the current medium-term cycle of gold, and prices have been falling steeply from the Feb. 2 high at $1959. I am going to assume that was the final top in this cycle and that prices are now falling to the final bottom of the cycle due anytime over the next six weeks (possibly in mid-March).
A good range for this final medium-term cycle bottom would be $1770 - $1810. We may look to buy there for a short-term rally, but I don't expect that rally to exceed the previous high of $1959. The next medium-term cycle will likely peak early and become very bearish as it falls to its final bottom - a bottom that could also correspond to the final bottom of a longer-term 23-year cycle (that started with the double-bottom lows of 1999 and 2002 around $280). This 23-year cycle low is now due (overdue) sometime in 2023 - 2024, at a price level that could get close to $1000. This is our preferred scenario at the moment, but there is an alternate scenario.
There is a small possibility (not likely, but possible) that a new 23-year cycle started with the low of $1046 in December 2015. If that's the case, this cycle would be young ( 7 years old) and bullish and would be on its way to challenge and likely exceed the $2070 high from August 2020. A good trading strategy now is to wait for the final medium-term cycle bottom in the range mentioned above ($1770-$1810). We will look to buy that bottom for a short-term rally and then sell short at a presumed top under $1959. If the rally exceeds $1959, it would start to support the idea of a young (bullish) 23-yr cycle and we would then hold (or re-buy) our long position. We are on the sidelines of gold for now.
Silver's current medium-term cycle is now due (overdue), and prices are still moving lower. The price of this metal is now in the upper part of our target range for a cycle bottom ($20 - $22), but gold is not, which suggests silver may fall lower until gold reaches its target, Our general reversal zone extends into next Tuesday, and there may be a "pivot point" for silver on Wednesday. It would be nice to see bearish divergence (silver or gold, but not both, make a new weekly low) at the bottom of these cycles before buying, and we are not getting that this week. Let's see if it happens next week - closer to gold's target range - for a possible buying opportunity. We are still on the sidelines of silver.
The U.S. Dollar Index looks quite bullish at the moment. If it continues to rally, it will put more downward pressure on the precious metals.
It's still not clear if we are dealing with a new or old medium-term cycle in crude oil. A close above $83 (March contract chart) would suggest a new cycle, but a close below $72 would suggest an older one (or a newer one that is turning bearish). Let's stay out of this market until the cycle and trend is more clearly established.
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