MARKETS UPDATE (4:15 pm EST)
The incredibly buoyant broad stock market is falling this week, but not by very much, at least so far. While there are still technical and cycle factors in place that could produce a serious fall now, it seems more likely that this correction will be minor and followed by a rally to new highs and possibly a more substantial correction later this year. It is important to note here that this market is extremely overbought and is overdue for a correction of 5 -10% (possibly more) which could occur anytime now. Cycle, timing, and technical studies can point us to "time windows" when corrections are most likely to happen. If corrections are delayed (through unusual market circumstances or market manipulation - see my blog on Sept. 2) they are likely to be stronger and more abrupt when the next timing window comes around. We need to keep this "bearish" factor in mind even though stock markets appear very bullish right now. I am still holding on to my short positions in the broad stock market as short-term indicators still point to a correction to at least the 16,800 area in the DOW. If this can be achieved by the end of next week that could be an ideal spot to cover short positions and possibly go long. Holding short positions for now.
The big news in financial markets this week is the dramatic breakdown of gold and silver prices. In my blog last Sunday I wrote:
"...There are technical signals that point to a strong move in gold and silver this coming week that would normally be bullish, but last week's price movements were bearish which is suggesting the move could be down instead of up."
The big move has indeed been down as gold has dropped nearly 2.5% this week and silver a little over 3%. Directional momentum in both metals is now 100% bearish (the gold and silver mining company stock indices HUI and XAU are currently mixed bullish and bearish). This downturn means that we are likely approaching new long-term cycle bottoms in both metals (or double bottoms to the June 2013 lows of $1,183 in gold and $18.25 in silver).
As I've discussed in past blogs, these long-term cycle bottoms will most likely be ideal buying points for gold and
silver, especially for long-term investors. As long as gold prices remain above $1000, the new long-term cycles should carry gold (and silver) to new all-time highs over the next several years. But until those bottoms are established, we are still in short-term trading mode. Any significant short-term rally, especially into late next week, may present an opportunity to sell short as these metals move towards their long-term cycle bottoms. Still on the sidelines of this market.
As I stated in my last blog, crude oil seems to be at the end of its current medium-term cycle and is in the process of forming the bottom to that cycle. The fourth week of September may be a significant turning point for crude prices so we will wait until then to see how low it can go. There is currently support at $91 - $92, but there is also a possibility of prices breaking down towards $88. We will have to wait and see. A cycle bottom at the end of September may turn out to be a good buy spot. Out of this market for now.
The incredibly buoyant broad stock market is falling this week, but not by very much, at least so far. While there are still technical and cycle factors in place that could produce a serious fall now, it seems more likely that this correction will be minor and followed by a rally to new highs and possibly a more substantial correction later this year. It is important to note here that this market is extremely overbought and is overdue for a correction of 5 -10% (possibly more) which could occur anytime now. Cycle, timing, and technical studies can point us to "time windows" when corrections are most likely to happen. If corrections are delayed (through unusual market circumstances or market manipulation - see my blog on Sept. 2) they are likely to be stronger and more abrupt when the next timing window comes around. We need to keep this "bearish" factor in mind even though stock markets appear very bullish right now. I am still holding on to my short positions in the broad stock market as short-term indicators still point to a correction to at least the 16,800 area in the DOW. If this can be achieved by the end of next week that could be an ideal spot to cover short positions and possibly go long. Holding short positions for now.
The big news in financial markets this week is the dramatic breakdown of gold and silver prices. In my blog last Sunday I wrote:
"...There are technical signals that point to a strong move in gold and silver this coming week that would normally be bullish, but last week's price movements were bearish which is suggesting the move could be down instead of up."
The big move has indeed been down as gold has dropped nearly 2.5% this week and silver a little over 3%. Directional momentum in both metals is now 100% bearish (the gold and silver mining company stock indices HUI and XAU are currently mixed bullish and bearish). This downturn means that we are likely approaching new long-term cycle bottoms in both metals (or double bottoms to the June 2013 lows of $1,183 in gold and $18.25 in silver).
As I've discussed in past blogs, these long-term cycle bottoms will most likely be ideal buying points for gold and
silver, especially for long-term investors. As long as gold prices remain above $1000, the new long-term cycles should carry gold (and silver) to new all-time highs over the next several years. But until those bottoms are established, we are still in short-term trading mode. Any significant short-term rally, especially into late next week, may present an opportunity to sell short as these metals move towards their long-term cycle bottoms. Still on the sidelines of this market.
As I stated in my last blog, crude oil seems to be at the end of its current medium-term cycle and is in the process of forming the bottom to that cycle. The fourth week of September may be a significant turning point for crude prices so we will wait until then to see how low it can go. There is currently support at $91 - $92, but there is also a possibility of prices breaking down towards $88. We will have to wait and see. A cycle bottom at the end of September may turn out to be a good buy spot. Out of this market for now.
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