MARKETS UPDATE (5:00 pm EDST)
As we move into the center of our current reversal zone for several markets (Oct. 3 - 16), we still have no confirmation as to whether or not the Oct. 3 lows in all three broad stock market indices (DOW, S&P 500, NASDAQ) were the starting points for new medium-term cycles. If they were, equities should be rallying now to challenge their all-time highs (not far away). So far, Monday's rally was encouraging, but Tuesday's plunge was not. Yesterday and today's rallies seem a bit half-hearted so it's still not clear where this market wants to go. Despite President Trump's new trade negotiations with China this week, Wall Street still seems nervous and insecure. The ongoing efforts by Democrats to impeach Mr.Trump (whether you agree with them or not) is also most likely contributing significantly to market instability (Wall Street never likes uncertainty). Even if new cycles started on Oct. 3, any rallying may be short-lived if this market's trend is turning bearish. If these indices cannot exceed their all-time highs (that would be 27,399 for the DOW, 3,028 for the S&P 500, and 8,340 in the NASDAQ) then this market is turning bearish. (One or two, but not all three indices making new highs would also be a bearish sign.) If Trump's trade talks with China go well, it could kick this market higher. But if the talks go sour, we will probably see equities turn south rather quickly. Even if trade negotiations go well, we may get a case of "buy the rumor, sell the news" where a rally tops out and then falls sharply. Let's remain on the sidelines for now but be on the lookout for a possible top to sell short.
Silver rallied a bit this week, but gold prices have stayed relatively flat. As we near the end of our reversal zone specifically for precious metals (Sept. 30 - Oct. 11), both metals may be topping out and ready to turn down. Today silver made a new weekly high while gold did not, and both metals are closing in the lower part of today's range. This is a bearish signal. It may be that one or both metals are still completing an older cycle and are now headed to their final medium-term cycle bottom (s). If this happens, we will look to buy at those final lows. I haven't completely given up on the idea that gold and/or silver started new cycles from last week's lows ($1456 in gold and $16.94 in silver), but we would have to see these metals "break out" now to new highs instead of reversing down, and I think a reversal is more likely. Lets's stay on the sidelines of gold and silver for now.
Crude oil's medium-term cycle is presenting an interesting picture now. The cycle began on June 5 at $51.54 (Nov. contract chart). It made a double bottom to that low on Aug. 7 at $52.06, and yesterday and today made a triple bottom at $51.38. Prices closed today at the top of the day's range ($53.90), we are in the center of a reversal zone, and the end of this current medium-term cycle is due. We could easily be seeing the start of a new cycle here, and if so, prices could rally strongly now. We still can't rule out another plunge down tomorrow or early next week, but right now it looks very bullish. If this is the start of a new cycle in crude, it may be corresponding to a new cycle in the broad stock market as well. Let's remain on the sidelines for now.
As we move into the center of our current reversal zone for several markets (Oct. 3 - 16), we still have no confirmation as to whether or not the Oct. 3 lows in all three broad stock market indices (DOW, S&P 500, NASDAQ) were the starting points for new medium-term cycles. If they were, equities should be rallying now to challenge their all-time highs (not far away). So far, Monday's rally was encouraging, but Tuesday's plunge was not. Yesterday and today's rallies seem a bit half-hearted so it's still not clear where this market wants to go. Despite President Trump's new trade negotiations with China this week, Wall Street still seems nervous and insecure. The ongoing efforts by Democrats to impeach Mr.Trump (whether you agree with them or not) is also most likely contributing significantly to market instability (Wall Street never likes uncertainty). Even if new cycles started on Oct. 3, any rallying may be short-lived if this market's trend is turning bearish. If these indices cannot exceed their all-time highs (that would be 27,399 for the DOW, 3,028 for the S&P 500, and 8,340 in the NASDAQ) then this market is turning bearish. (One or two, but not all three indices making new highs would also be a bearish sign.) If Trump's trade talks with China go well, it could kick this market higher. But if the talks go sour, we will probably see equities turn south rather quickly. Even if trade negotiations go well, we may get a case of "buy the rumor, sell the news" where a rally tops out and then falls sharply. Let's remain on the sidelines for now but be on the lookout for a possible top to sell short.
Silver rallied a bit this week, but gold prices have stayed relatively flat. As we near the end of our reversal zone specifically for precious metals (Sept. 30 - Oct. 11), both metals may be topping out and ready to turn down. Today silver made a new weekly high while gold did not, and both metals are closing in the lower part of today's range. This is a bearish signal. It may be that one or both metals are still completing an older cycle and are now headed to their final medium-term cycle bottom (s). If this happens, we will look to buy at those final lows. I haven't completely given up on the idea that gold and/or silver started new cycles from last week's lows ($1456 in gold and $16.94 in silver), but we would have to see these metals "break out" now to new highs instead of reversing down, and I think a reversal is more likely. Lets's stay on the sidelines of gold and silver for now.
Crude oil's medium-term cycle is presenting an interesting picture now. The cycle began on June 5 at $51.54 (Nov. contract chart). It made a double bottom to that low on Aug. 7 at $52.06, and yesterday and today made a triple bottom at $51.38. Prices closed today at the top of the day's range ($53.90), we are in the center of a reversal zone, and the end of this current medium-term cycle is due. We could easily be seeing the start of a new cycle here, and if so, prices could rally strongly now. We still can't rule out another plunge down tomorrow or early next week, but right now it looks very bullish. If this is the start of a new cycle in crude, it may be corresponding to a new cycle in the broad stock market as well. Let's remain on the sidelines for now.
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