MARKETS UPDATE (10:30 pm EDT)
"Bingo!" on our decision to short gold and silver at the beginning of this week. Anyone reading this blog over the last few weeks will know that I had been anticipating a top and a significant correction in the precious metals. That is finally happening as gold and especially silver prices plunged dramatically yesterday. It looks like we are on our way to the bottom of the current medium-term cycle in both gold and silver. That could come as early as next week, but it could also be as late as mid-April. We will watch this correction carefully for signs of a bottom now. Gold could get down to the $1150 area and silver to $14.70 or even lower. Holding short positions in both gold and silver.
Crude oil prices also dropped significantly after we entered our short position on Monday. The high of March 18 in crude oil ($42.49 in the May contract now) seems to be a subcycle top so we could see a correction to the $36 area or possibly lower. This correction, unlike the one in gold and silver, could be brief (3-8 days), and we need to watch carefully for a bottom now. Holding my short position in crude for now.
The broad stock market appears to be rolling over after the DOW and S&P 500 made new weekly highs on Tuesday, but I'm starting to feel a little apprehensive about shorting this market right now. As I discussed in last Sunday's blog, central banks seem intent on keeping equity markets propped up, possibly into the U.S. presidential election later this year. We could therefore start to see normal market corrections truncated or even averted as bullish manipulations occur. This week's reversal zone could extend into early next week so there is still time for another equity surge to a new high into next Monday-Wednesday. If one or two (but not all three) of the major market indices (DOW, S&P 500, NASDAQ) make(s) a new high next week, we may get an intermarket bearish divergence signal to sell short. If this week's highs were it then markets will likely keep falling, but the correction may not get that far before turning back up. In that situation we would want to look for a bottom to buy as the market would likely be turning bullish into the summer. How the market moves next week should tell us what trading strategy we will take. Still on the sidelines of the broad stock market.
"Bingo!" on our decision to short gold and silver at the beginning of this week. Anyone reading this blog over the last few weeks will know that I had been anticipating a top and a significant correction in the precious metals. That is finally happening as gold and especially silver prices plunged dramatically yesterday. It looks like we are on our way to the bottom of the current medium-term cycle in both gold and silver. That could come as early as next week, but it could also be as late as mid-April. We will watch this correction carefully for signs of a bottom now. Gold could get down to the $1150 area and silver to $14.70 or even lower. Holding short positions in both gold and silver.
Crude oil prices also dropped significantly after we entered our short position on Monday. The high of March 18 in crude oil ($42.49 in the May contract now) seems to be a subcycle top so we could see a correction to the $36 area or possibly lower. This correction, unlike the one in gold and silver, could be brief (3-8 days), and we need to watch carefully for a bottom now. Holding my short position in crude for now.
The broad stock market appears to be rolling over after the DOW and S&P 500 made new weekly highs on Tuesday, but I'm starting to feel a little apprehensive about shorting this market right now. As I discussed in last Sunday's blog, central banks seem intent on keeping equity markets propped up, possibly into the U.S. presidential election later this year. We could therefore start to see normal market corrections truncated or even averted as bullish manipulations occur. This week's reversal zone could extend into early next week so there is still time for another equity surge to a new high into next Monday-Wednesday. If one or two (but not all three) of the major market indices (DOW, S&P 500, NASDAQ) make(s) a new high next week, we may get an intermarket bearish divergence signal to sell short. If this week's highs were it then markets will likely keep falling, but the correction may not get that far before turning back up. In that situation we would want to look for a bottom to buy as the market would likely be turning bullish into the summer. How the market moves next week should tell us what trading strategy we will take. Still on the sidelines of the broad stock market.
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