MARKETS UPDATE (3:00 pm EDST)
In Monday's blog on the broad stock market I wrote:
"Final cycle corrections almost always take 2-5 weeks so last Thursday was a bit early for a bottom. There are no major reversal zones until the month of November (but there are some minor potential reversal points Oct. 18, 22, and 24 - we will watch these carefully). Ideally we would like to see the final bottom to the medium-term cycle in November. In the meantime, however, we could get a significant bounce or relief rally from the current support around 25,000 in the DOW and 2,700 in the S&P 500."
We have indeed been getting a strong bounce from those support levels, but today (Oct.18) we are hitting one of those minor potential reversal points, and the rally seems to be losing some momentum. If the market doesn't turn back down here, there are two more reversal points (next Monday and Wednesday) that could potentially turn the market down for our ideal scenario of a final medium-term cycle bottom in November. We are now ending the second week of the final correction (from early October's highs), but as stated above, corrections to the final cycle bottom could take up to five weeks. We need to keep in mind, however, that It's still possible the DOW's and NASDAQ's final cycle bottoms happened last Thursday (that would be bullish). We need to see those lows break soon to support the alternative (preferred) scenario of a final cycle bottom coming in November. We are anticipating that as we continue to hold our short position in the broad stock market.
Gold and silver have both been falling slightly from highs earlier in the week so unless they jump to new highs tomorrow, it looks like we took profits in our long positions near the top of the rally. The correction thus far has not been strong which is a good sign that this market is bullish and that gold and silver started new medium-term cycles in August and September, respectively. Gold may even be starting a new longer-term cycle, which is even more bullish. We are waiting for a good spot to go long again in both metals soon. On the sidelines of both metals at the moment.
The U.S. Dollar Index has rallied strongly this week but is now approaching a strong resistance zone from 96 to 96.80. If it backs down from this resistance, we could see gold and silver rally again. On the other hand, if the dollar breaks through this resistance, gold and silver prices could fall lower. As I mentioned in Monday's blog, the U.S. dollar may be losing some of its appeal as a safe haven investment, but we can't completely abandon the idea of panic selling in equities (like we're seeing now) giving some strength to the greenback. We should also note that it is possible under some circumstances for the precious metals and the U.S. dollar to rise together.
Crude oil prices continue to fall and now look like they are heading to the final bottom of the current medium-term cycle which is due any time over the next three or four weeks (probably in November). We missed our opportunity to sell short near the cycle high in early October so we may just have to wait for the final bottom to buy. A normal target bottom for the medium-term cycle would be around $68 - $72 (we are there now - Nov. contract chart), but because crude may also be completing a longer-term cycle, it could go lower. Out of crude oil for now.
In Monday's blog on the broad stock market I wrote:
"Final cycle corrections almost always take 2-5 weeks so last Thursday was a bit early for a bottom. There are no major reversal zones until the month of November (but there are some minor potential reversal points Oct. 18, 22, and 24 - we will watch these carefully). Ideally we would like to see the final bottom to the medium-term cycle in November. In the meantime, however, we could get a significant bounce or relief rally from the current support around 25,000 in the DOW and 2,700 in the S&P 500."
We have indeed been getting a strong bounce from those support levels, but today (Oct.18) we are hitting one of those minor potential reversal points, and the rally seems to be losing some momentum. If the market doesn't turn back down here, there are two more reversal points (next Monday and Wednesday) that could potentially turn the market down for our ideal scenario of a final medium-term cycle bottom in November. We are now ending the second week of the final correction (from early October's highs), but as stated above, corrections to the final cycle bottom could take up to five weeks. We need to keep in mind, however, that It's still possible the DOW's and NASDAQ's final cycle bottoms happened last Thursday (that would be bullish). We need to see those lows break soon to support the alternative (preferred) scenario of a final cycle bottom coming in November. We are anticipating that as we continue to hold our short position in the broad stock market.
Gold and silver have both been falling slightly from highs earlier in the week so unless they jump to new highs tomorrow, it looks like we took profits in our long positions near the top of the rally. The correction thus far has not been strong which is a good sign that this market is bullish and that gold and silver started new medium-term cycles in August and September, respectively. Gold may even be starting a new longer-term cycle, which is even more bullish. We are waiting for a good spot to go long again in both metals soon. On the sidelines of both metals at the moment.
The U.S. Dollar Index has rallied strongly this week but is now approaching a strong resistance zone from 96 to 96.80. If it backs down from this resistance, we could see gold and silver rally again. On the other hand, if the dollar breaks through this resistance, gold and silver prices could fall lower. As I mentioned in Monday's blog, the U.S. dollar may be losing some of its appeal as a safe haven investment, but we can't completely abandon the idea of panic selling in equities (like we're seeing now) giving some strength to the greenback. We should also note that it is possible under some circumstances for the precious metals and the U.S. dollar to rise together.
Crude oil prices continue to fall and now look like they are heading to the final bottom of the current medium-term cycle which is due any time over the next three or four weeks (probably in November). We missed our opportunity to sell short near the cycle high in early October so we may just have to wait for the final bottom to buy. A normal target bottom for the medium-term cycle would be around $68 - $72 (we are there now - Nov. contract chart), but because crude may also be completing a longer-term cycle, it could go lower. Out of crude oil for now.
RSS Feed