MARKETS UPDATE (7:00 pm EDST)
In Friday's blog on the broad stock market I wrote:
"...it looks like we are seeing a significant sub-cycle correction in progress, so we will be watching for a bottom to buy, perhaps in next week's reversal zone (Aug, 23 - 31)..."
The market is continuing to push down as it now enters that reversal zone. This sub-cycle correction has already broken below the 15-day moving averages in all three of our market indices (DOW, S&P 500, NASDAQ), which is what we want to see on a significant corrective dip. Good general target ranges for this correction would be 32,000 - 33,000 in the DOW, 4,000 - 4,200 in the S&P 500, and 12,400 - 12,700 in the NASDAQ. We are now inside those ranges, so we should be looking to buy soon. It is early in our reversal zone (the mid-point is Friday and it ends next week on Wednesday), so there is plenty of time for these indices to push lower. We don't want to see them push TOO low, however, as this could mean the cycle is turning bearish. Once a sub-cycle low is in, we will expect another strong rally into September where these indices could challenge their all-time highs. Let's stay on the sidelines for now and be alert for a good buy spot this week or early next week.
We went long in gold on July 21 around $1720 with the idea that it was the start of a new medium-term cycle (and possibly even the start of a new longer-term 16 month cycle). Prices rallied strongly from there confirming the new cycle. A sub-cycle peak was reached on Aug. 10 ($1805), and a corrective dip has been in progress since then. This "dip" has gone a little too far and could be indicating that this medium-term cycle is peaking early and turning bearish. If that's the case, prices could be headed lower to break below the start of the cycle (i.e. below $1681). But we are still inside a reversal zone for the precious metals (Aug. 15 - 23) and prices are turning up today. If prices can't break and hold above $1755 over the next few days, or if prices break below yesterday's low ($1728), we will likely sell our long position in gold (it is still above our buy price), and wait to see if the cycle turns bearish (closes below $1681).
If gold's cycle is still bullish, we are expecting a strong rally into October with prices at least to $1850, and possibly as high as $1900 - $2000 ! (Hence our interest in going long now. I should note, however, that if and when such a high is achieved - below the all-time high of $2070, at the $2070 high (double-top), or even slightly above $2070 - it will probably be the FINAL top in the long-term 23 year cycle, and prices would fall steeply from there down to the $1000 - $1200 area over the next several years.) We will hold our long position in gold for now.
The U.S. Dollar Index has been rallying strongly, but it may be forming a "double-top" right now near its 109.29 high from July 14. We also entered a reversal zone specifically for currencies today (Aug. 23 - 31). This means a top could be imminent and the dollar could back down (at least short-term). If that happens, it could help push up the price of gold and silver.
Silver's situation is very similar to gold's in that it is fairly clear a new medium-term cycle started in mid July (July 14 at $18.15). This means it is a young cycle, and like gold, the cycle may be peaking early and turning bearish. From a sub-cycle high of $20.87 on Aug.15, silver prices fell to $18.60 yesterday. That is a steep correction. If prices can rally from yesterday's low, we could still have a young bullish cycle ready to make new highs. But if prices continue lower and break below the start of the cycle ($18.01), the cycle will turn bearish and prices will be headed lower for many more weeks. As with gold, if prices instead turn bullish now, we could see some strong rallying into October that would support the idea that July 14 was also the start of a new longer-term (26 month) cycle. If that's the case, silver could rally as high as $37 as we move into 2023. But for that to happen, silver has to rally now and not drop below $18.01. If it can do that, we will be looking to buy - soon. For now, we are still on the sidelines of silver.
In last Friday's blog on crude oil I wrote:
"...prices have been rallying from a low ($85.73 - Sept. contract chart) on Tuesday. That deep low stopped us out of our long position, but the low was in a general reversal zone and may have been the final medium-term cycle bottom. Were we "whipsawed" out of a good trade? Maybe, but we enter another reversal zone next week (Aug. 23 - 31), and technical signals show an ideal cycle bottom could happen between Aug. 18 - Sept. 6, and especially next week (Aug. 22 - 26). Let's wait and see if prices can push lower next week for a final bottom to buy. If not, we may look to buy on any close above $95."
Well, prices continue to rise sharply from that bottom ($85.37 - October contract chart) last Tuesday, so that still could have been the cycle bottom. But crude is now rising into a new reversal zone (Aug. 23 - 31). It could top out here and reverse down again and still make a final cycle bottom in our ideal time band Aug. 18 - Sept. 6. We'll watch for that. If it doesn't happen, we'll probe the long side on any short-term dips. We are still on the sidelines of crude.
In Friday's blog on the broad stock market I wrote:
"...it looks like we are seeing a significant sub-cycle correction in progress, so we will be watching for a bottom to buy, perhaps in next week's reversal zone (Aug, 23 - 31)..."
The market is continuing to push down as it now enters that reversal zone. This sub-cycle correction has already broken below the 15-day moving averages in all three of our market indices (DOW, S&P 500, NASDAQ), which is what we want to see on a significant corrective dip. Good general target ranges for this correction would be 32,000 - 33,000 in the DOW, 4,000 - 4,200 in the S&P 500, and 12,400 - 12,700 in the NASDAQ. We are now inside those ranges, so we should be looking to buy soon. It is early in our reversal zone (the mid-point is Friday and it ends next week on Wednesday), so there is plenty of time for these indices to push lower. We don't want to see them push TOO low, however, as this could mean the cycle is turning bearish. Once a sub-cycle low is in, we will expect another strong rally into September where these indices could challenge their all-time highs. Let's stay on the sidelines for now and be alert for a good buy spot this week or early next week.
We went long in gold on July 21 around $1720 with the idea that it was the start of a new medium-term cycle (and possibly even the start of a new longer-term 16 month cycle). Prices rallied strongly from there confirming the new cycle. A sub-cycle peak was reached on Aug. 10 ($1805), and a corrective dip has been in progress since then. This "dip" has gone a little too far and could be indicating that this medium-term cycle is peaking early and turning bearish. If that's the case, prices could be headed lower to break below the start of the cycle (i.e. below $1681). But we are still inside a reversal zone for the precious metals (Aug. 15 - 23) and prices are turning up today. If prices can't break and hold above $1755 over the next few days, or if prices break below yesterday's low ($1728), we will likely sell our long position in gold (it is still above our buy price), and wait to see if the cycle turns bearish (closes below $1681).
If gold's cycle is still bullish, we are expecting a strong rally into October with prices at least to $1850, and possibly as high as $1900 - $2000 ! (Hence our interest in going long now. I should note, however, that if and when such a high is achieved - below the all-time high of $2070, at the $2070 high (double-top), or even slightly above $2070 - it will probably be the FINAL top in the long-term 23 year cycle, and prices would fall steeply from there down to the $1000 - $1200 area over the next several years.) We will hold our long position in gold for now.
The U.S. Dollar Index has been rallying strongly, but it may be forming a "double-top" right now near its 109.29 high from July 14. We also entered a reversal zone specifically for currencies today (Aug. 23 - 31). This means a top could be imminent and the dollar could back down (at least short-term). If that happens, it could help push up the price of gold and silver.
Silver's situation is very similar to gold's in that it is fairly clear a new medium-term cycle started in mid July (July 14 at $18.15). This means it is a young cycle, and like gold, the cycle may be peaking early and turning bearish. From a sub-cycle high of $20.87 on Aug.15, silver prices fell to $18.60 yesterday. That is a steep correction. If prices can rally from yesterday's low, we could still have a young bullish cycle ready to make new highs. But if prices continue lower and break below the start of the cycle ($18.01), the cycle will turn bearish and prices will be headed lower for many more weeks. As with gold, if prices instead turn bullish now, we could see some strong rallying into October that would support the idea that July 14 was also the start of a new longer-term (26 month) cycle. If that's the case, silver could rally as high as $37 as we move into 2023. But for that to happen, silver has to rally now and not drop below $18.01. If it can do that, we will be looking to buy - soon. For now, we are still on the sidelines of silver.
In last Friday's blog on crude oil I wrote:
"...prices have been rallying from a low ($85.73 - Sept. contract chart) on Tuesday. That deep low stopped us out of our long position, but the low was in a general reversal zone and may have been the final medium-term cycle bottom. Were we "whipsawed" out of a good trade? Maybe, but we enter another reversal zone next week (Aug. 23 - 31), and technical signals show an ideal cycle bottom could happen between Aug. 18 - Sept. 6, and especially next week (Aug. 22 - 26). Let's wait and see if prices can push lower next week for a final bottom to buy. If not, we may look to buy on any close above $95."
Well, prices continue to rise sharply from that bottom ($85.37 - October contract chart) last Tuesday, so that still could have been the cycle bottom. But crude is now rising into a new reversal zone (Aug. 23 - 31). It could top out here and reverse down again and still make a final cycle bottom in our ideal time band Aug. 18 - Sept. 6. We'll watch for that. If it doesn't happen, we'll probe the long side on any short-term dips. We are still on the sidelines of crude.
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