MARKETS UPDATE (11:30 pm EDT)
Our main concern with the broad stock market right now is the likelihood of a potential peak (top) in a long-term 4-year cycle which is ideally due anytime now through the end of August. The correction down from this peak should be at least 16% - 26% from the top, and it would ideally bottom by the end of this year. If a longer-term 90-year correction is also in progress, the fall could be much more severe and last longer (i.e. into 2025-2026). For these reasons, I am now switching to a bearish trading strategy in this market.
Although the market could push a bit higher into August, I am going to focus on finding a good spot to sell short and ride this correction down.
Today was the last day of our strong general reversal zone, and the DOW made a new all-time high (41,376) before falling sharply and closing the day with a 533 point loss. The S&P 500 also made a new all-time high on Tuesday inside the reversal zone, and it has been falling sharply from there. The NASDAQ made a new all-time high last week on Thursday (also within the reversal zone) and it has fallen significantly from there (it is now below its 15-day moving average). These tops are significant sub-cycle crests, and they may even be the 4-year cycle crest I referred to above. We now wait for a sub-cycle corrective bottom to follow. If the correction is modest, we could still see another rally into August that may or may not make new all-time highs. But as I stated above, a 4-year cycle crest is imminent and should happen before the end of August, so we are not interested in chasing any possible rally at this point. If we do get any type of 'blow-off" top, we will be more interested in selling short near the peak. I am remaining on the sidelines of the broad stock market for now.
My decision to take profits in my gold long position on Tuesday seems to have been a good one as prices peaked on Wednesday and have been falling from there. Silver prices are also falling steeply this week. While gold made a new weekly (and all-time) high this week, silver did not, and this creates a strong bearish divergence signal in the precious metal market. While it's possible for gold to make a modest sub--cycle correction (say, testing the 15-day moving average around $2400) and then rally back up to a new high, silver's bearish behavior (it is already below its 15-day AND 45-day moving averages) suggests both metals are turning bearish. I am staying on the sidelines of both gold and silver for the time being.
Crude oil prices are rallying from last Tuesday's low at $80.22 (Aug. contract chart). That was near the center of our reversal zone and was likely a significant sub-cycle low. I entered a long position in crude on July 11, so today's rally puts this trade back in the black (profit). I am going to stay long here, but prices need to start closing above the recent high of $84.52 and then $85.27 to confirm that the current medium-term cycle is bullish. If it is, crude could rise to the $90 level fairly quickly. I am remaining long in my crude oil position for now.
Our main concern with the broad stock market right now is the likelihood of a potential peak (top) in a long-term 4-year cycle which is ideally due anytime now through the end of August. The correction down from this peak should be at least 16% - 26% from the top, and it would ideally bottom by the end of this year. If a longer-term 90-year correction is also in progress, the fall could be much more severe and last longer (i.e. into 2025-2026). For these reasons, I am now switching to a bearish trading strategy in this market.
Although the market could push a bit higher into August, I am going to focus on finding a good spot to sell short and ride this correction down.
Today was the last day of our strong general reversal zone, and the DOW made a new all-time high (41,376) before falling sharply and closing the day with a 533 point loss. The S&P 500 also made a new all-time high on Tuesday inside the reversal zone, and it has been falling sharply from there. The NASDAQ made a new all-time high last week on Thursday (also within the reversal zone) and it has fallen significantly from there (it is now below its 15-day moving average). These tops are significant sub-cycle crests, and they may even be the 4-year cycle crest I referred to above. We now wait for a sub-cycle corrective bottom to follow. If the correction is modest, we could still see another rally into August that may or may not make new all-time highs. But as I stated above, a 4-year cycle crest is imminent and should happen before the end of August, so we are not interested in chasing any possible rally at this point. If we do get any type of 'blow-off" top, we will be more interested in selling short near the peak. I am remaining on the sidelines of the broad stock market for now.
My decision to take profits in my gold long position on Tuesday seems to have been a good one as prices peaked on Wednesday and have been falling from there. Silver prices are also falling steeply this week. While gold made a new weekly (and all-time) high this week, silver did not, and this creates a strong bearish divergence signal in the precious metal market. While it's possible for gold to make a modest sub--cycle correction (say, testing the 15-day moving average around $2400) and then rally back up to a new high, silver's bearish behavior (it is already below its 15-day AND 45-day moving averages) suggests both metals are turning bearish. I am staying on the sidelines of both gold and silver for the time being.
Crude oil prices are rallying from last Tuesday's low at $80.22 (Aug. contract chart). That was near the center of our reversal zone and was likely a significant sub-cycle low. I entered a long position in crude on July 11, so today's rally puts this trade back in the black (profit). I am going to stay long here, but prices need to start closing above the recent high of $84.52 and then $85.27 to confirm that the current medium-term cycle is bullish. If it is, crude could rise to the $90 level fairly quickly. I am remaining long in my crude oil position for now.
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