MARKETS UPDATE (5:00 pm EST)
The DOW, S&P 500 and NASDAQ are all now making new all-time highs so our bearish divergence signal from last week is negated. Nevertheless, we are nearing the end of our current reversal zone for the broad stock market (Oct. 29 - Nov. 8) and we could still see a top and a reversal by the end of this week (or maybe early next week). A sub-cycle correction is also due now. I suspect it will be a minor corrective dip and will give us a good spot to buy for another strong rally. We will watch for that. If these indices push higher into next week with no significant correction, it's possible rallying could continue into our next reversal zone coming up Nov. 20 - 27 before correcting down. For now, let's watch for a high this week or early next week and a corrective dip to buy.
Longer-term, we are still anticipating a 10-15% correction once the current medium-term cycle reaches its final peak (most likely at least several weeks or more from now). After that correction, another medium-term cycle will begin with a rally into 2020. The top of that new cycle may or may not make a new high, but once that high is in, a very severe correction (corresponding to a long-term 75 year cycle) could start that could be as severe as the 2008-2009 "crash". But I am getting ahead of myself here. We will certainly want to short sell the market if and when that opportunity comes next year, but for now we are being short-term bullish as it seems likely this market wants to rally some more. Still on the sidelines of the broad stock market.
In last Sunday's blog on gold and silver I wrote:
"Gold and silver markets are presenting mixed signals right now. There is the potential for a strong rally in both metals now, but there are also signals suggesting a corrective downturn. It still looks like both metals started new medium-term cycles on Oct. 1 and are young and therefore likely bullish. We will continue to watch for a corrective dip to buy in both gold and silver, but we don't want to see gold fall below $1456 or silver fall below $16.93 as that could mean the cycles are turning bearish."
It looks like the precious metals have decided on a corrective downturn instead of a strong rally. On Tuesday gold prices plunged dramatically, and today they are sharply down again. Silver prices are also falling steeply this week. Today gold's spot price reached $1462.50 and silver's spot price got to $17. Directional momentum in both metals also turned from 100% bullish to mixed bullish and bearish. It appears there is a good chance gold and silver could break below their Oct. 1 lows ($1456 and $16.93, respectively) or at least form double bottoms to those lows. I am hesitant to buy here as the trend of this market may be turning bearish. Let's stay on the sidelines for now.
We are now in a reversal zone specifically for crude oil (Nov. 5-14) and prices have been edging higher this week. Today they got to $57.88 (Dec. contract chart) before backing off a bit. We are in our range (and timing) for our first sub-cycle top ($57 - $58) so we could see a reversal any day now. It is tempting to sell short here, but I think this market is turning bullish, and like the broad stock market, any correction now could be short and shallow (perhaps to the $54 - $55 area). Let's wait for a corrective dip and see how far it goes for a possible spot to buy. Any break and close below the Oct. 3 low of $50.89 would turn this market bearish and negate our buy strategy. Staying on the sidelines of crude oil for now.
The DOW, S&P 500 and NASDAQ are all now making new all-time highs so our bearish divergence signal from last week is negated. Nevertheless, we are nearing the end of our current reversal zone for the broad stock market (Oct. 29 - Nov. 8) and we could still see a top and a reversal by the end of this week (or maybe early next week). A sub-cycle correction is also due now. I suspect it will be a minor corrective dip and will give us a good spot to buy for another strong rally. We will watch for that. If these indices push higher into next week with no significant correction, it's possible rallying could continue into our next reversal zone coming up Nov. 20 - 27 before correcting down. For now, let's watch for a high this week or early next week and a corrective dip to buy.
Longer-term, we are still anticipating a 10-15% correction once the current medium-term cycle reaches its final peak (most likely at least several weeks or more from now). After that correction, another medium-term cycle will begin with a rally into 2020. The top of that new cycle may or may not make a new high, but once that high is in, a very severe correction (corresponding to a long-term 75 year cycle) could start that could be as severe as the 2008-2009 "crash". But I am getting ahead of myself here. We will certainly want to short sell the market if and when that opportunity comes next year, but for now we are being short-term bullish as it seems likely this market wants to rally some more. Still on the sidelines of the broad stock market.
In last Sunday's blog on gold and silver I wrote:
"Gold and silver markets are presenting mixed signals right now. There is the potential for a strong rally in both metals now, but there are also signals suggesting a corrective downturn. It still looks like both metals started new medium-term cycles on Oct. 1 and are young and therefore likely bullish. We will continue to watch for a corrective dip to buy in both gold and silver, but we don't want to see gold fall below $1456 or silver fall below $16.93 as that could mean the cycles are turning bearish."
It looks like the precious metals have decided on a corrective downturn instead of a strong rally. On Tuesday gold prices plunged dramatically, and today they are sharply down again. Silver prices are also falling steeply this week. Today gold's spot price reached $1462.50 and silver's spot price got to $17. Directional momentum in both metals also turned from 100% bullish to mixed bullish and bearish. It appears there is a good chance gold and silver could break below their Oct. 1 lows ($1456 and $16.93, respectively) or at least form double bottoms to those lows. I am hesitant to buy here as the trend of this market may be turning bearish. Let's stay on the sidelines for now.
We are now in a reversal zone specifically for crude oil (Nov. 5-14) and prices have been edging higher this week. Today they got to $57.88 (Dec. contract chart) before backing off a bit. We are in our range (and timing) for our first sub-cycle top ($57 - $58) so we could see a reversal any day now. It is tempting to sell short here, but I think this market is turning bullish, and like the broad stock market, any correction now could be short and shallow (perhaps to the $54 - $55 area). Let's wait for a corrective dip and see how far it goes for a possible spot to buy. Any break and close below the Oct. 3 low of $50.89 would turn this market bearish and negate our buy strategy. Staying on the sidelines of crude oil for now.
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