The threat of U.S. military intervention in Syria this week has apparently spooked the broad stock market into a continuation of its downtrend, and the DOW could therefore be forming a bottom instead of a top into the final days of August (which is a major reversal zone for all markets). This has been good for our short position in this market, but we need to watch now for a possible reversal to the upside this week or early next week. The possibility of a military strike on Syria has now become a "wild card" factor affecting the broad stock market, and how the market reacts will depend on how serious this situation becomes over the next several days (especially as Russia and China are expressing strong opposition to any type of military intervention). If investors choose to ignore the Syrian conflict and the market does reverse up here, any rally still may not get very far before turning down again if the unemployment and payroll report in early September proves dissappointing. Technical signals are currently mixed between bullish and bearish so we will have to wait and see how all of this plays out. I am going to continue to hold my short position in the broad stock market until I see stronger bullish signals as the possibility of a more severe correction remains.
Crude oil, of course, has been soaring on the news of possible military intervention in Syria, and (unlike the broad stock market) crude prices are making a new high into August's final days. Based on this late August reversal zone we should be seeing a turndown now, but again, the "wild card" factor of a conflict in the Middle East may interfere with normal market timing. Momentum in this market is now almost 100% bullish, so if prices do turn down here we will probably be looking to go long at the bottom of the correction. Still on the sidelines of this market.
Gold and silver prices have also been rising into these final days of August but are now pausing at resistance levels around $1420 for gold and $25 for silver. Based on short-term cycles and timing we should be seeing some sort of correction now, but the Syrian conflict may be affecting this market as well and giving it some extra lift. Note that we have only stepped temporarily out of our long positions in precious metals and will be looking to get back in at the bottom of any correction. The medium and long-term picture for gold and silver continues to be very bullish. On the sidelines of this market for now.