UPDATE ON THE BROAD STOCK MARKET, GOLD, SILVER and BRIEF COMMENT ON "TRUMPHORIA"
(4:00 pm EDST)
Today is technically the last day in our current reversal zone for equities; however, there is another one coming up soon (Sept. 7 -17). The S&P 500 and NASDAQ are making new all-time highs today while the DOW is still below its all-time high of 26,617 so we are seeing intermarket bearish divergence in our reversal zone. I am tempted to sell short here, but there are several other factors that make me hesitant to do so. First, the DOW did make a new weekly high this week which is bullish, and two of the three indices are making new all-time highs. It would be more bearish if only one index made a new all-time high not supported by the other two. Furthermore, this week-end is a holiday in the U.S. (Labor Day next Monday), and equities tend to rally into holiday week-ends. Because our next reversal zone is so close (it starts next Wednesday), I would not be surprised to see this bullish equity market push higher and make a significant top then instead of now. While we could see a reversal here, I am going to remain on the sidelines and hold off selling short for now.
President Trump's new U.S.- Mexico trade deal announced on Monday seemed to fuel more of the "Trumphoria" effect on the broad stock market as more people in business and financial sectors give the president and his policies a big thumbs up despite much controversy and criticism from other analysts and the mainstream media. As cautious traders and investors, however, we do not want to fall into the trap of thinking "Trumphoria" will last forever. At the risk of sounding like a conspiracy theorist, there may be people in very high places who want to defeat Trump, and manipulating a crash in the stock market near an important mid-term election could help this along. Please note that I am politically neutral here and am only trying to identify potential factors that could influence the financial markets. When it comes to investing my money, I want the truth regardless of whether or not it supports a left wing or right wing view. Our technical and cycle analysis of equity markets is pointing to a significant top and a possible severe correction soon, and it could easily happen near the time of mid-term elections in the U.S. (Nov. 6, 2018). My point here is that this overbought market is now ripe for a significant correction, and it wouldn't take much to trigger one.
Today is also the last day of our reversal zone for precious metals. Both gold and silver have been rising into this reversal, and today both metals made new weekly highs early in the day (with gold touching $1214 and silver nearly touching $15) but are now falling steeply with gold closing back near $1200 and silver near $14.65. This could be the turning point for another correction. Unless these prices recover and rally higher tomorrow, it looks like gold and/or silver could be challenging their Aug. 15 lows. Still out of both gold and silver.
An argument for falling gold and silver prices now could be coming from the U.S. Dollar Index chart. The dollar is falling steeply this week, but today it may have found support at 94.5. We are in a reversal zone for currencies (it ends Wednesday) so if this support holds, the greenback may turn back up now. If that happens, we would have more downward pressure on the precious metals.
(4:00 pm EDST)
Today is technically the last day in our current reversal zone for equities; however, there is another one coming up soon (Sept. 7 -17). The S&P 500 and NASDAQ are making new all-time highs today while the DOW is still below its all-time high of 26,617 so we are seeing intermarket bearish divergence in our reversal zone. I am tempted to sell short here, but there are several other factors that make me hesitant to do so. First, the DOW did make a new weekly high this week which is bullish, and two of the three indices are making new all-time highs. It would be more bearish if only one index made a new all-time high not supported by the other two. Furthermore, this week-end is a holiday in the U.S. (Labor Day next Monday), and equities tend to rally into holiday week-ends. Because our next reversal zone is so close (it starts next Wednesday), I would not be surprised to see this bullish equity market push higher and make a significant top then instead of now. While we could see a reversal here, I am going to remain on the sidelines and hold off selling short for now.
President Trump's new U.S.- Mexico trade deal announced on Monday seemed to fuel more of the "Trumphoria" effect on the broad stock market as more people in business and financial sectors give the president and his policies a big thumbs up despite much controversy and criticism from other analysts and the mainstream media. As cautious traders and investors, however, we do not want to fall into the trap of thinking "Trumphoria" will last forever. At the risk of sounding like a conspiracy theorist, there may be people in very high places who want to defeat Trump, and manipulating a crash in the stock market near an important mid-term election could help this along. Please note that I am politically neutral here and am only trying to identify potential factors that could influence the financial markets. When it comes to investing my money, I want the truth regardless of whether or not it supports a left wing or right wing view. Our technical and cycle analysis of equity markets is pointing to a significant top and a possible severe correction soon, and it could easily happen near the time of mid-term elections in the U.S. (Nov. 6, 2018). My point here is that this overbought market is now ripe for a significant correction, and it wouldn't take much to trigger one.
Today is also the last day of our reversal zone for precious metals. Both gold and silver have been rising into this reversal, and today both metals made new weekly highs early in the day (with gold touching $1214 and silver nearly touching $15) but are now falling steeply with gold closing back near $1200 and silver near $14.65. This could be the turning point for another correction. Unless these prices recover and rally higher tomorrow, it looks like gold and/or silver could be challenging their Aug. 15 lows. Still out of both gold and silver.
An argument for falling gold and silver prices now could be coming from the U.S. Dollar Index chart. The dollar is falling steeply this week, but today it may have found support at 94.5. We are in a reversal zone for currencies (it ends Wednesday) so if this support holds, the greenback may turn back up now. If that happens, we would have more downward pressure on the precious metals.
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