MARKETS UPDATE (4:00 pm EDST)
Today is the first day of this month's FOMC meeting. It will conclude tomorrow afternoon when the Fed releases a statement on changes (if any) in their monetary policy. As usual, financial analysts, traders, and investors will be waiting with "bated breath" for the Fed's statement and any dovish or hawkish statements or signals it may contain. Equity markets are, of course, very overbought right now and would likely be sensitive to any hawkish rhetoric from the Fed. Of course, the Fed is aware of this and will likely be careful in the wording of its statement (unless it wants to plunge the market).
It looks like we covered our short position in the NASDAQ too soon yesterday as all three broad stock market indices (DOW, S&P 500, and NASDAQ) took a steep dive today. We are probably seeing a brief and moderate early sub-cycle correction in the young DOW and S&P 500 medium-term cycles, and possibly the same thing in a young NASDAQ cycle that could have started with last week's low at 14,178. If this is the case, we shouldn't see the NASDAQ get below that low. If it does, we will know the NASDAQ is an older cycle moving to its final bottom closer to 14,000 or even lower. Any trading this week could be tricky as we have the "wild card" factor of the Fed's meeting and how markets react to the Fed's statement on Wednesday. We also have another strong reversal zone for equities (and most other markets) coming up on Friday (July 30 - Aug. 10). That time frame could see an important high or low in equities (and other markets). But which will it be - high or low? We will have to wait and see how markets react to the Fed tomorrow to better answer that question. We are now on the sidelines of the broad stock market.
It still looks like gold started a new medium-term cycle with its low of $1752 on June 29. If so, it is probably bullish now, and prices should stay above $1752. Silver, on the other hand, appears to be completing an older cycle as it plunged to a new weekly and cycle low today ($24.49). This is giving us a strong intermarket bullish divergence signal between the two metals. We already have a long position in gold, so we will hold on to that for now. We may look to buy silver over the next several days as it seems to be forming its final medium-term cycle bottom. We enter a reversal zone specifically for the precious metals June 30 - Aug. 11 (same as for equities), so we might see a bottom in that time frame. Of course, this week's Fed meeting could make prices volatile, so we need to be careful with any trading. We are still on the sidelines of silver.
The U.S. Dollar Index appears to be falling from last week's high, but it could find a bottom soon as its medium-term cycle is old, and we are moving into a strong reversal zone on Friday. After the last Fed meeting, Fed Chairman Jerome Powell surprised the markets with some hawkish rhetoric that strongly boosted the U.S. dollar. We will therefore be watching carefully to see how tomorrow's Fed statement affects the greenback.
Crude oil may have started a new medium-term cycle with last week's low at $65.01 (Sept. contract chart). If this is the case, crude would most likely be bullish, and prices could start moving up into the $80s or even low $90s. But alternatively, crude may also be nearing the end of an older cycle. If that's true, then this current rally could end shortly, and crude could fall steeply to its final cycle bottom. As I've said before, crude's direction now could follow the broad stock market. If equities push higher (very likely), then crude could rally too. Let's stay on the sidelines of crude for now. A close above the July 6 high ($76.07) would support the bullish view.
Today is the first day of this month's FOMC meeting. It will conclude tomorrow afternoon when the Fed releases a statement on changes (if any) in their monetary policy. As usual, financial analysts, traders, and investors will be waiting with "bated breath" for the Fed's statement and any dovish or hawkish statements or signals it may contain. Equity markets are, of course, very overbought right now and would likely be sensitive to any hawkish rhetoric from the Fed. Of course, the Fed is aware of this and will likely be careful in the wording of its statement (unless it wants to plunge the market).
It looks like we covered our short position in the NASDAQ too soon yesterday as all three broad stock market indices (DOW, S&P 500, and NASDAQ) took a steep dive today. We are probably seeing a brief and moderate early sub-cycle correction in the young DOW and S&P 500 medium-term cycles, and possibly the same thing in a young NASDAQ cycle that could have started with last week's low at 14,178. If this is the case, we shouldn't see the NASDAQ get below that low. If it does, we will know the NASDAQ is an older cycle moving to its final bottom closer to 14,000 or even lower. Any trading this week could be tricky as we have the "wild card" factor of the Fed's meeting and how markets react to the Fed's statement on Wednesday. We also have another strong reversal zone for equities (and most other markets) coming up on Friday (July 30 - Aug. 10). That time frame could see an important high or low in equities (and other markets). But which will it be - high or low? We will have to wait and see how markets react to the Fed tomorrow to better answer that question. We are now on the sidelines of the broad stock market.
It still looks like gold started a new medium-term cycle with its low of $1752 on June 29. If so, it is probably bullish now, and prices should stay above $1752. Silver, on the other hand, appears to be completing an older cycle as it plunged to a new weekly and cycle low today ($24.49). This is giving us a strong intermarket bullish divergence signal between the two metals. We already have a long position in gold, so we will hold on to that for now. We may look to buy silver over the next several days as it seems to be forming its final medium-term cycle bottom. We enter a reversal zone specifically for the precious metals June 30 - Aug. 11 (same as for equities), so we might see a bottom in that time frame. Of course, this week's Fed meeting could make prices volatile, so we need to be careful with any trading. We are still on the sidelines of silver.
The U.S. Dollar Index appears to be falling from last week's high, but it could find a bottom soon as its medium-term cycle is old, and we are moving into a strong reversal zone on Friday. After the last Fed meeting, Fed Chairman Jerome Powell surprised the markets with some hawkish rhetoric that strongly boosted the U.S. dollar. We will therefore be watching carefully to see how tomorrow's Fed statement affects the greenback.
Crude oil may have started a new medium-term cycle with last week's low at $65.01 (Sept. contract chart). If this is the case, crude would most likely be bullish, and prices could start moving up into the $80s or even low $90s. But alternatively, crude may also be nearing the end of an older cycle. If that's true, then this current rally could end shortly, and crude could fall steeply to its final cycle bottom. As I've said before, crude's direction now could follow the broad stock market. If equities push higher (very likely), then crude could rally too. Let's stay on the sidelines of crude for now. A close above the July 6 high ($76.07) would support the bullish view.
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