BROAD STOCK MARKET TRADE ALERT and MARKETS UPDATE (2:00 pm EST)
Well, that turned out to be a short trade! Our long position entered in the broad stock market yesterday afternoon was stopped out early this morning when the DOW breached our stop loss at 17,600 (a low of 17,579 around 10:15 am). Our entry point was close to the stop so this was actually not unexpected. The DOW is snapping back this afternoon and is at the time of this writing sitting above 17,700. While it appears that we have been "whipsawed" out of this trade (we may have been), the fact that the DOW broke below the low of March 11 is not a good sign, and I think it is a little risky to be long at the moment. I would therefore advise any traders who went long yesterday and were not stopped out to sell any long positions now (for a 1% or less loss). The S&P 500 has not yet broken below its March 11 low, but if it does it will support the idea of a new downtrend in this market. Out of the broad stock market for now.
On a more positive note, our long position in gold is doing very well as precious metal prices continue to rise. Both gold and silver are approaching some resistance now so we may see a small pullback which might give us a good opportunity to go long in silver. If gold and silver continue to rise into the first week of April, I may reverse my position in these metals (go short) as a more serious correction may start from new highs at that time. We need to keep in mind that it is still not clear whether or not the longer-term trend in precious metals has turned bullish, and we don't want to get too attached to our long positions until that has been established. Holding my long position in gold but out of silver for now.
Crude oil prices surged to a new weekly high above $52 today. In Monday's blog on crude I wrote: "If prices start to exceed $50, however, I may have to reconsider the labeling of the current crude cycle. It is possible that last week's low could be the start of the new cycle (instead of the Jan.29 low at $45). If this is the case, the market could start to turn bullish." This is happening so the possibility of the new cycle starting from March 18 is now strong. This is significant because a start on March 18 would mean that prices have not yet gone below the start of the cycle (at $44) and therefore the trend is not necessarily pointed down. I am staying on the sidelines of crude until the cycle structure is a little less ambiguous.
Well, that turned out to be a short trade! Our long position entered in the broad stock market yesterday afternoon was stopped out early this morning when the DOW breached our stop loss at 17,600 (a low of 17,579 around 10:15 am). Our entry point was close to the stop so this was actually not unexpected. The DOW is snapping back this afternoon and is at the time of this writing sitting above 17,700. While it appears that we have been "whipsawed" out of this trade (we may have been), the fact that the DOW broke below the low of March 11 is not a good sign, and I think it is a little risky to be long at the moment. I would therefore advise any traders who went long yesterday and were not stopped out to sell any long positions now (for a 1% or less loss). The S&P 500 has not yet broken below its March 11 low, but if it does it will support the idea of a new downtrend in this market. Out of the broad stock market for now.
On a more positive note, our long position in gold is doing very well as precious metal prices continue to rise. Both gold and silver are approaching some resistance now so we may see a small pullback which might give us a good opportunity to go long in silver. If gold and silver continue to rise into the first week of April, I may reverse my position in these metals (go short) as a more serious correction may start from new highs at that time. We need to keep in mind that it is still not clear whether or not the longer-term trend in precious metals has turned bullish, and we don't want to get too attached to our long positions until that has been established. Holding my long position in gold but out of silver for now.
Crude oil prices surged to a new weekly high above $52 today. In Monday's blog on crude I wrote: "If prices start to exceed $50, however, I may have to reconsider the labeling of the current crude cycle. It is possible that last week's low could be the start of the new cycle (instead of the Jan.29 low at $45). If this is the case, the market could start to turn bullish." This is happening so the possibility of the new cycle starting from March 18 is now strong. This is significant because a start on March 18 would mean that prices have not yet gone below the start of the cycle (at $44) and therefore the trend is not necessarily pointed down. I am staying on the sidelines of crude until the cycle structure is a little less ambiguous.
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