In Monday's blog on gold and silver I wrote:
"This market is very tricky to call right now. We are currently in a strong reversal zone specifically for the precious metals (Sept. 13 - 27). It's possible that last Wednesday's low in gold at $1484 was the final cycle bottom. If so, a new bullish cycle is starting now and prices will rally strongly. Silver too may have started a new cycle with that $17.41 low on Sept. 13, although that was not the ideal time for a bottom. Ideally, one of these metals (not both) will make a new low this week (bullish divergence) and give us a good spot to buy."
Well, we are near the end of this precious metals reversal zone and neither metal has made a new low so far this week. This could happen tomorrow, but even if it doesn't, there are other strong technical factors suggesting a significant bottom is forming now and a strong rally could follow. What I'm going to do is buy gold today with a close stop loss on a close below $1490 and wait a day or two on silver (silver is more volatile than gold and poses a greater trading risk). Going long in gold today but still on the sidelines of silver.
We are now technically out of our reversal zone for the broad stock market. None of our three major market indices (DOW, S&P 500, NASDAQ) made new highs this week so we are not getting a bearish divergence signal to sell short (unless it happens tomorrow). The next reversal zone for this market is coming up Oct. 4 - 16. The markets may rally into that time frame for a top, but right now it seems just as likely they could fall into a bottom. In other words, this market is still ambiguous so we will remain on the sidelines for now.
Crude oil prices are edging down some more. We are near the end of the current medium-term cycle in this market so we are anticipating the final cycle bottom soon. A good time for that to happen would be in that next reversal zone (Oct. 4 - 16), but we can't rule out some short-term rallying before then. It's still unclear whether or not this market is turning bearish, but if prices break below $52 (Nov. contract chart) that will most likely be confirmed. Still on the sidelines of crude oil.