Gold prices have moved down to our ideal target in the $1140 area and seem to be finding some support there.
There are also some short-term technical signals suggesting we could see a bounce now in the precious metals.
The U.S. Dollar Index rose to a new high of 88 today but looks a little overbought. Because we are now approaching the center of a timing window (Nov. 5-13) when currencies could suddenly reverse direction, it is possible the dollar could turn down here and trigger at least a short-term rally in gold and silver. For all of these reasons I am going to take profits in my gold short position today. I went short in gold on Oct. 23rd so we have a good profit on this trade (a little over 7%). Ideally, gold will rally briefly now, perhaps to the $1170 - $1180 area into next week, and we will look to sell it short again. If any rally breaks and closes above $1180 we will have to consider the possibility that gold is turning bullish and adjust our trading accordingly. If gold continues lower into next week there is still a good chance it will find a bottom (below $1140) and rally from there. (If that happens I may consider going long). Covering (unloading) my short position in gold today, taking profits and standing aside gold and silver for now.
The broad stock market is continuing its bullish rise this week, with the DOW, S&P 500 and NASDAQ all edging up to new highs. These markets are quite overbought now and this steep rally is getting a little long in the tooth. It is entitled to at least a little breather. It may get that soon as we are about to enter another reversal zone (the second two weeks of November) when there is a high probability of markets reversing directional trend. However, the charts for all three of these indices are now showing very strong bullish directional momentum, so even if we do get a correction now I think it will be brief and followed by more rallying. Ideally, I would like to see the DOW correct back down to the $17,000 area and find support there over the next two weeks. That setup would give us an ideal spot to go long. Should this market move higher into next week, we may even get a good opportunity to sell short. We will have to wait and see how the market moves into next week. Still on the sidelines here.
We are now at the center of a timing window for a reversal in crude oil (it lasts through the 17th) and this market still seems to be trying to find a bottom to its overdue cycle. On Monday it made a new bottom at 75.84, but it still has all next week to go lower before the reversal period ends. I'm thinking it might do that because momentum remains strongly bearish in crude charts, and there are other short-term indicators suggesting lower prices. This cycle is now distorted (overdue) so we are standing aside this market until a clear bottom forms and we see a new cycle starting. On the sidelines of crude oil.