MARKETS UPDATE (4:30 pm EST)
It looks like the broad stock market is falling into the Oct. 7-8 reversal date instead of rising into it, so instead of a top we will be looking for a bottom into next week. Early today the DOW dropped over 100 points but then it nearly completely recovered those points and closed with only a 3.5 point loss. This is bullish behavior and may indicate that this week's sharp correction is starting to find a bottom already. If a bottom does form by next week, the cycle pattern is suggesting another sharp but brief rally into the second half of October (or even into November) to be followed by another more severe correction to the final cycle low (which may turn out to be the 10% or greater correction we have been anticipating for some time). If the market continues to fall past next week we may just get a complete washout into the final bottom of this current cycle into the end of the year. The currently mixed bullish and bearish momentum signals in the DOW, S&P 500 and NASDAQ indices as well as other technical factors supports the idea of a second rally, so my strategy now is to anticipate short selling the top of that rally which could peak later this month or in November. But first we need to see the current correction stall and find support. We will look for this next week. On the sidelines of this market.
Crude oil seems to taking its cues from the broad stock market as prices plummeted briefly today to just above $88 and then snapped back dramatically. They are closing the day just above our $91 stop loss area so I am maintaining my long position in crude. As I've stated in previous blogs, we are nearing the end of a major cycle in crude oil (which is due by next week) so this plunge to the $88 level could represent the final bottom. If so, this market should be bullish for at least several weeks. We need to be careful here because if the broad stock market starts to collapse it could take oil down with it. We want to see both these markets find support over the next several trading days for at least a short-term rally. Maintaining a long position in crude oil for now.
The U.S. Dollar Index has been dropping over the last two days and appears to be taking a breather from its steep two month rally. Short-term bearish signals are now manifesting in the charts for this currency so a correction seems to be in progress. Hopefully, this will help propel at least a short-term rally in the precious metals and support the long position we are holding in gold at the moment.
It looks like the broad stock market is falling into the Oct. 7-8 reversal date instead of rising into it, so instead of a top we will be looking for a bottom into next week. Early today the DOW dropped over 100 points but then it nearly completely recovered those points and closed with only a 3.5 point loss. This is bullish behavior and may indicate that this week's sharp correction is starting to find a bottom already. If a bottom does form by next week, the cycle pattern is suggesting another sharp but brief rally into the second half of October (or even into November) to be followed by another more severe correction to the final cycle low (which may turn out to be the 10% or greater correction we have been anticipating for some time). If the market continues to fall past next week we may just get a complete washout into the final bottom of this current cycle into the end of the year. The currently mixed bullish and bearish momentum signals in the DOW, S&P 500 and NASDAQ indices as well as other technical factors supports the idea of a second rally, so my strategy now is to anticipate short selling the top of that rally which could peak later this month or in November. But first we need to see the current correction stall and find support. We will look for this next week. On the sidelines of this market.
Crude oil seems to taking its cues from the broad stock market as prices plummeted briefly today to just above $88 and then snapped back dramatically. They are closing the day just above our $91 stop loss area so I am maintaining my long position in crude. As I've stated in previous blogs, we are nearing the end of a major cycle in crude oil (which is due by next week) so this plunge to the $88 level could represent the final bottom. If so, this market should be bullish for at least several weeks. We need to be careful here because if the broad stock market starts to collapse it could take oil down with it. We want to see both these markets find support over the next several trading days for at least a short-term rally. Maintaining a long position in crude oil for now.
The U.S. Dollar Index has been dropping over the last two days and appears to be taking a breather from its steep two month rally. Short-term bearish signals are now manifesting in the charts for this currency so a correction seems to be in progress. Hopefully, this will help propel at least a short-term rally in the precious metals and support the long position we are holding in gold at the moment.
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