This morning equity markets took a "breather" from their severe tumble, bouncing off the support levels I outlined in my previous blog. This rebound was short-lived, however, as all three indices (DOW, S&P 500, NASDAQ) plunged into the closing bell with another day of heavy losses. Despite this bearish sell-off, we need to be aware of the fact that we are near the end of our strong reversal zone (we will extend it into Monday), so some sort of rebound is possible now, unless the reversal turns into a "breakdown" sell-off instead (very possible). I am reluctant to take profits in my short NASDAQ trade just yet as the short-term technical situation still looks rather bearish. The DOW broke and closed below 35,000. There may be some support at 34,665, and after that at 34,000. A break below 34,000 and especially 33,613 would be VERY bearish. The S&P 500 looks poised to fall to at least 4,400 as long as it stays below an upper resistance line around 4,610. Closing back above 4,610 would be bullish. The NASDAQ closed slightly below the start of its current medium-term cycle on Oct. 4 (14,181). If it can't close above that mark tomorrow or early next week, this market is in trouble. We will hold on to our short NASDAQ position which already has a profit of 10% since we entered the trade three weeks ago.
Gold and silver prices pushed a bit higher today, but they may be peaking over the next day or two as their reversal zone comes to an end. Silver could reach $25 and gold around $1860. Silver is especially overbought at the moment and ripe for a correction. We are still on the sidelines and watching for some sort of correction to buy in both metals.
Saber rattling between the U.S. and Russia has recently been fueling the parabolic rise in crude oil prices. Crude edged even higher today, but like gold and silver, its reversal zone is coming to an end tomorrow. Thus a corrective drop could be imminent which might give us a good buying opportunity next week. We are still on the sidelines of crude.