GOLD and SILVER and BROAD STOCK MARKET UPDATE (3:15 pm EDT)
It looks like gold and silver are thumbing their noses at my decision to sell these metals short on Monday. The price of gold soared up today and edged a little above last Friday's high of $1,270.50 to make a new monthly high at $1,272.65. Please note, however, that we are still in the center of a strong reversal zone for the precious metals (it ends Friday but could extend a bit into early next week) and that silver is not making a new high today. We therefore have another case of bearish divergence in a reversal zone. A significant turn down is still likely here because the bottom of the current medium-term cycle in both metals is due sometime over the few several weeks. Commitments of Traders (COT) charts are also currently suggesting a downturn in gold and especially silver. In Monday's blog I suggested a stop loss for our short position in gold and silver based on both metals making new cycle highs. Gold did this today, but silver still has to exceed $18.54 for the bearish divergence signal to be negated. I am going to stay bearish (short) in both metals until silver exceeds that high.
The broad stock market still can't seem to decide whether it wants to go up or down. We are waiting for a significant low this week or next to cover our short position and possibly go long. That drop could be steep, but it doesn't have to be. If one or two (but not all three) of the three major stock indices (DOW, S&P 500, NASDAQ) make(s) a new low below their March 27th low (20,412 in the DOW, 2,322 in the S&P 500, and 5,769 in the NASDAQ) this week or next then we would have a bullish intermarket divergence signal that may be a good buy spot. Of course, if the market decides to push higher before testing those lows, we would likely stay with our short position (unless stopped out) and watch for a top this week or next to be followed by a reversal down. Right now either scenario is possible, but a bottom seems more likely. Holding my short position in the broad stock market.
It looks like gold and silver are thumbing their noses at my decision to sell these metals short on Monday. The price of gold soared up today and edged a little above last Friday's high of $1,270.50 to make a new monthly high at $1,272.65. Please note, however, that we are still in the center of a strong reversal zone for the precious metals (it ends Friday but could extend a bit into early next week) and that silver is not making a new high today. We therefore have another case of bearish divergence in a reversal zone. A significant turn down is still likely here because the bottom of the current medium-term cycle in both metals is due sometime over the few several weeks. Commitments of Traders (COT) charts are also currently suggesting a downturn in gold and especially silver. In Monday's blog I suggested a stop loss for our short position in gold and silver based on both metals making new cycle highs. Gold did this today, but silver still has to exceed $18.54 for the bearish divergence signal to be negated. I am going to stay bearish (short) in both metals until silver exceeds that high.
The broad stock market still can't seem to decide whether it wants to go up or down. We are waiting for a significant low this week or next to cover our short position and possibly go long. That drop could be steep, but it doesn't have to be. If one or two (but not all three) of the three major stock indices (DOW, S&P 500, NASDAQ) make(s) a new low below their March 27th low (20,412 in the DOW, 2,322 in the S&P 500, and 5,769 in the NASDAQ) this week or next then we would have a bullish intermarket divergence signal that may be a good buy spot. Of course, if the market decides to push higher before testing those lows, we would likely stay with our short position (unless stopped out) and watch for a top this week or next to be followed by a reversal down. Right now either scenario is possible, but a bottom seems more likely. Holding my short position in the broad stock market.
RSS Feed