MARKETS UPDATE (11:00 pm EDT)
The rebound from the "Brexit crash" has been quite strong. This rally could still be a "dead cat bounce", but it needs to start turning down now (i.e. over the next several trading days) for the bearish view to be valid as the DOW and S&P 500 are approaching their recent cycle highs. If they break above those highs it would suggest that they are starting new medium-term cycles from Monday's "crash" low. It would be better in terms of timing and cycle patterns for the final cycle lows to go lower and bottom sometime in July (ideally next week), but we don't always get ideal technical patterns (especially in volatile markets as we have now), and it is possible that Monday's lows represent an early cycle bottom and the start of a new medium-term cycle in the broad stock market. If so, this market is turning bullish. Arguing against this is the fact that the current rally is now at the dead center of a very strong reversal zone, and all three major market indices (DOW, S&P 500, and NASDAQ) are approaching strong resistance levels in their charts. Also, there was no intermarket bullish divergence with Monday's bottoms (all three indices made new lows). The S&P 500 is now just below our entry point from June 8th for our short position so any traders wishing to break even on this trade could cover that position now. I'm going to be a bit stubborn, however, and hold my short position with a stop loss on a break and close above 2,130 (a tad above the yearly high). This is just a little above our entry level (around 2,120) and would create very little loss if triggered. Frankly, I am a bit annoyed that the strong rebound has taken away our profit on this trade and I am reluctant to bail out too early, especially considering the technical factors mentioned above. Holding my short position in the broad stock market with a stop loss based on the S&P 500 breaking and closing above 2,130.
Crude oil may also be starting a new medium-term cycle from it's Monday low of $45.83 (August contract chart), but (as with the broad stock market) maybe not. It would fit cycle and timing patterns better if crude fell lower and closer to our target price price range of $40 - $45, ideally next week. Since we are still on the sidelines of this market, we will wait to see if crude's price moves lower into next week and gives us a good spot to buy. On the sidelines of crude oil for now.
As I've been suggesting in recent blogs, gold and silver's medium-term (and maybe long-term) cycles seem to be turning very bullish. This means we should be looking for opportunities to buy. Right at the moment, though, gold and silver are rising into a very strong reversal zone so it is likely that some sort of correction is imminent. This is especially true for silver because silver's medium-term cycle has not bottomed yet (it is due soon) so it's correction may be steep. (Gold's cycle probably bottomed - and a new one started- on May 31.) Silver prices soared today and closed above $19 which is a new weekly (and yearly) high. Gold prices remained below last week's highs so we have a strong case of intermarket bearish divergence in a reversal zone. I may look to enter a short position in silver as soon as tomorrow or early next week. This would be a short-term trade. Longer-term traders may want to just wait for silver's cycle bottom as well as some sort of correction in gold as an opportunity to buy both metals. On the sidelines of both gold and silver for now.
The rebound from the "Brexit crash" has been quite strong. This rally could still be a "dead cat bounce", but it needs to start turning down now (i.e. over the next several trading days) for the bearish view to be valid as the DOW and S&P 500 are approaching their recent cycle highs. If they break above those highs it would suggest that they are starting new medium-term cycles from Monday's "crash" low. It would be better in terms of timing and cycle patterns for the final cycle lows to go lower and bottom sometime in July (ideally next week), but we don't always get ideal technical patterns (especially in volatile markets as we have now), and it is possible that Monday's lows represent an early cycle bottom and the start of a new medium-term cycle in the broad stock market. If so, this market is turning bullish. Arguing against this is the fact that the current rally is now at the dead center of a very strong reversal zone, and all three major market indices (DOW, S&P 500, and NASDAQ) are approaching strong resistance levels in their charts. Also, there was no intermarket bullish divergence with Monday's bottoms (all three indices made new lows). The S&P 500 is now just below our entry point from June 8th for our short position so any traders wishing to break even on this trade could cover that position now. I'm going to be a bit stubborn, however, and hold my short position with a stop loss on a break and close above 2,130 (a tad above the yearly high). This is just a little above our entry level (around 2,120) and would create very little loss if triggered. Frankly, I am a bit annoyed that the strong rebound has taken away our profit on this trade and I am reluctant to bail out too early, especially considering the technical factors mentioned above. Holding my short position in the broad stock market with a stop loss based on the S&P 500 breaking and closing above 2,130.
Crude oil may also be starting a new medium-term cycle from it's Monday low of $45.83 (August contract chart), but (as with the broad stock market) maybe not. It would fit cycle and timing patterns better if crude fell lower and closer to our target price price range of $40 - $45, ideally next week. Since we are still on the sidelines of this market, we will wait to see if crude's price moves lower into next week and gives us a good spot to buy. On the sidelines of crude oil for now.
As I've been suggesting in recent blogs, gold and silver's medium-term (and maybe long-term) cycles seem to be turning very bullish. This means we should be looking for opportunities to buy. Right at the moment, though, gold and silver are rising into a very strong reversal zone so it is likely that some sort of correction is imminent. This is especially true for silver because silver's medium-term cycle has not bottomed yet (it is due soon) so it's correction may be steep. (Gold's cycle probably bottomed - and a new one started- on May 31.) Silver prices soared today and closed above $19 which is a new weekly (and yearly) high. Gold prices remained below last week's highs so we have a strong case of intermarket bearish divergence in a reversal zone. I may look to enter a short position in silver as soon as tomorrow or early next week. This would be a short-term trade. Longer-term traders may want to just wait for silver's cycle bottom as well as some sort of correction in gold as an opportunity to buy both metals. On the sidelines of both gold and silver for now.
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