The broad stock market has been rallying strongly this week, and the DOW is now approaching the upper level of my target area (16,500 -16,800) to sell short. We are also entering a timing window (Oct. 22 - 29) when a market reversal is likely so this looks like an ideal time to enter short positions in this market. As I mentioned in my last blog, many analysts that I follow feel that the current rally is a "sucker rally" and will turn back down to make new lows, and the technical and cycle analysis continues to support this idea. I am therefore going to sell short the broad stock market today with a close stop loss on a close above 16,850 in the DOW (this is only 150 points from our entry price - a good risk/reward setup). It looks like the October Federal Reserve meeting next week is falling right into our reversal zone so that could be the catalyst that turns the market down. Selling short the broad stock market today.
Gold prices made a top on Tuesday at $1254 (in our target zone) and are now falling. As I stated in Monday's blog:
"...Technical and cycle data are suggesting a reversal soon in the precious metals that could take prices down to new lows (and possibly the long-term cycle bottoms in both gold and silver). We will now watch for signs of that reversal which could be sometime this week..."
A short-term sell signal appeared in today's gold charts so I am going to sell gold short today with a tight stop loss on a close above $1250. I am again avoiding trading silver at the moment as silver tends to be more volatile than gold and is a higher trade risk in the currently erratic market environment. Entering short positions in gold today.