MARKETS UPDATE (10:45 pm EST)
This week the broad stock market is definitely falling strongly into the center of our timing window (Dec.12-15) for a likely market reversal. This steep fall has triggered major bearish momentum signals in the charts of the DOW and S&P 500 which makes these two indices now mixed bullish and bearish (the NASDAQ remains mostly bullish). The DOW has fallen over 300 points so far, but the cycle pattern and technical signals are suggesting the possibility of more downside with the DOW possibly reaching the 17,300 area and the S&P 500 perhaps dipping to the 1980 level. This could happen tomorrow or early next week. These may be good entry points to go long as the cycle structures still indicate that this correction should be brief in duration and will reverse back up soon. Still on the sidelines.
On Tuesday gold and silver prices surged up with a major shift in several technical and cycle indicators that seem to be turning this market bullish. Directional momentum is now mixed bullish and bearish for both gold and silver.
It appears that both metals are now beginning new medium-term cycles and should be bullish for at least another month (probably longer) as long as gold remains above $1140 and silver stays above $14.50. It's even possible that the new long-term cycles in these metals are now starting, and if so, prices could be bullish for some time and would likely move to new all time highs over the next several years. The long-term cycle bottoms cannot be confirmed just yet, however, so for now we will focus on medium and short-term trading. Gold has been rising this week into a reversal zone and still has not exceeded strong resistance in the $1220 - $1250 area so some sort of correction seems imminent. However, because the precious metals seem to be turning bullish, I am more inclined to buy the bottom of any correction now instead of selling short any top. Both gold and silver are down today so a correction may already be starting. On the other hand, if prices surge higher tomorrow and into next week, we may have to wait a little longer for a corrective low. Still on the sidelines.
The U.S. Dollar Index this week aborted a technical breakout pattern it had been forming since early November and is now dropping steeply. This seems to be at least part of the reason for the gold and silver rally. While the bullish directional momentum in this index is still strong, there are signs of it weakening, and the current correction could become more severe. A further breakdown in the dollar would support the bullish view of gold and silver discussed above. A key area to watch in the dollar is 87- 87.5. A clear break below that area would be bearish and could lead to a breakdown of the dollar.
Two major factors influencing crude oil prices recently are a glut in supply (made worse by OPEC's recent decision to not scale back production) and the possibility of the U.S. and EU manipulating prices down to weaken Russia's economy in a new cold war over the Ukraine crisis. One clue that points to manipulation is the distortion of normal cycle patterns in oil price charts. We have been seeing this for several months now as normal sub-cycle structures (i.e. pronounced rising and falling of prices at regular intervals) have been absent in this market as crude prices continue down in a relatively straight sloping line. Because a major part of my trading strategy is based on cycle timing, this cycle distortion has been making the crude oil market difficult to trade as it obscures the normal lows and highs that would be ideal points to buy and sell. In a "normal" market, the timing of the current cycle in crude would point to a brief rally now to be followed by lower lows (possibly down to the $50 area), but this market does not seem to want to rally at all. The end of this week through early next week is a likely reversal time for crude so we could still see a rally that might give us a good spot to sell short. If crude doesn't start to rally by the end of next week, prices may just plunge straight into an early cycle bottom (which could be a good spot to buy). We will have to wait and see if this market can muster a rally over the next several days. Out of this market for now.
This week the broad stock market is definitely falling strongly into the center of our timing window (Dec.12-15) for a likely market reversal. This steep fall has triggered major bearish momentum signals in the charts of the DOW and S&P 500 which makes these two indices now mixed bullish and bearish (the NASDAQ remains mostly bullish). The DOW has fallen over 300 points so far, but the cycle pattern and technical signals are suggesting the possibility of more downside with the DOW possibly reaching the 17,300 area and the S&P 500 perhaps dipping to the 1980 level. This could happen tomorrow or early next week. These may be good entry points to go long as the cycle structures still indicate that this correction should be brief in duration and will reverse back up soon. Still on the sidelines.
On Tuesday gold and silver prices surged up with a major shift in several technical and cycle indicators that seem to be turning this market bullish. Directional momentum is now mixed bullish and bearish for both gold and silver.
It appears that both metals are now beginning new medium-term cycles and should be bullish for at least another month (probably longer) as long as gold remains above $1140 and silver stays above $14.50. It's even possible that the new long-term cycles in these metals are now starting, and if so, prices could be bullish for some time and would likely move to new all time highs over the next several years. The long-term cycle bottoms cannot be confirmed just yet, however, so for now we will focus on medium and short-term trading. Gold has been rising this week into a reversal zone and still has not exceeded strong resistance in the $1220 - $1250 area so some sort of correction seems imminent. However, because the precious metals seem to be turning bullish, I am more inclined to buy the bottom of any correction now instead of selling short any top. Both gold and silver are down today so a correction may already be starting. On the other hand, if prices surge higher tomorrow and into next week, we may have to wait a little longer for a corrective low. Still on the sidelines.
The U.S. Dollar Index this week aborted a technical breakout pattern it had been forming since early November and is now dropping steeply. This seems to be at least part of the reason for the gold and silver rally. While the bullish directional momentum in this index is still strong, there are signs of it weakening, and the current correction could become more severe. A further breakdown in the dollar would support the bullish view of gold and silver discussed above. A key area to watch in the dollar is 87- 87.5. A clear break below that area would be bearish and could lead to a breakdown of the dollar.
Two major factors influencing crude oil prices recently are a glut in supply (made worse by OPEC's recent decision to not scale back production) and the possibility of the U.S. and EU manipulating prices down to weaken Russia's economy in a new cold war over the Ukraine crisis. One clue that points to manipulation is the distortion of normal cycle patterns in oil price charts. We have been seeing this for several months now as normal sub-cycle structures (i.e. pronounced rising and falling of prices at regular intervals) have been absent in this market as crude prices continue down in a relatively straight sloping line. Because a major part of my trading strategy is based on cycle timing, this cycle distortion has been making the crude oil market difficult to trade as it obscures the normal lows and highs that would be ideal points to buy and sell. In a "normal" market, the timing of the current cycle in crude would point to a brief rally now to be followed by lower lows (possibly down to the $50 area), but this market does not seem to want to rally at all. The end of this week through early next week is a likely reversal time for crude so we could still see a rally that might give us a good spot to sell short. If crude doesn't start to rally by the end of next week, prices may just plunge straight into an early cycle bottom (which could be a good spot to buy). We will have to wait and see if this market can muster a rally over the next several days. Out of this market for now.
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