MARKETS UPDATE and GOLD TRADE ALERT (5:30 pm)
The DOW continues to slump down this week while the S&P 500 and NASDAQ edge higher. Both the S&P 500 and NASDAQ are making new weekly highs, and today the S&P 500 is even making a new all-time high. This is giving us several bearish divergence signals. We have also just entered our new, wide "back to back" reversal zone period, which will be in effect through the first week of July (June 10 - July 7). We especially want to watch June 23 and July 2 for possible major turning points. Basically, this market could turn down for a sharp correction anytime now. The NASDAQ was especially bullish last week and is on the verge of making a new all-time high (actually, the NASDAQ 100 E-mini contract chart for September did make a new all-time high yesterday). We are thus getting VERY strong bearish divergence signals now (until the DOW makes a new all-time high), but there are also some short-term bullish signals that seem to be keeping this market buoyant. Both the DOW and S&P 500 are remaining above their 45-day moving averages, and the S&P 500 is still above its 15-day moving average. Any break below those supports would suggest a major correction is starting.
The Federal Reserve concludes its monthly FOMC meeting tomorrow afternoon, and investors and traders will be waiting with "bated breath" to see if Fed Chairman Powell will make any statements about tapering back its QE (oops...I mean bond-buying program) in light of the recent lifting of Covid-19 restrictions across the country. Most analysts are speculating that he will probably steer clear of any such hawkish rhetoric to avoid a panic on Wall Street. After all, many investors realize that it is mostly QE (sorry...bond buying) and near-zero interest rates that are keeping this equity bubble (sorry...I mean healthy market) perpetually bullish. But the Fed is sometimes unpredictable. If Mr. Powell does turn hawkish, we could see a sudden turn down in a market that is clearly ripe for a big correction.
I generally do not like to trade equities on the cusp of a Fed policy meeting, so let's stay on the sidelines for now and see if those support levels (45 and 15-day moving averages) in the DOW and S&P 500 will hold into the end of the week (which will bring us closer to June 23 - a possible turning point).
Yesterday, gold prices got down to $1845 which is pretty close to our target of $1835 for a sub-cycle correction (which is due by the end of this week). There seems to be some support around $1850, so this looks like a good spot to buy. I am going to put a buy order in tonight for tomorrow's market open. If it opens lower, we may even get a better price closer to $1835. If this is a sub-cycle low, we could easily see prices rally back to $1915 and probably higher. Going long in gold for tomorrow's market open.
Silver's cycle is similar to gold's now except that silver may have already made its sub-cycle low back on June 3 (at $27.10), which would explain why prices haven't gone even close to our $26.25 target. There's still a chance it could do that, but it has to happen this week. If silver falls closer to $26 by Friday, we may look to buy; otherwise, we will stay on the sidelines and just stay with our long position in gold. Remaining on the sidelines of silver for now.
Crude oil has overcome a resistance level at $70 (July contract chart) and is now trading near $72. Our target range for this rally was (is) $75 - $78. It is getting there, but today we entered a reversal zone specifically for crude (June 15 - 23). This means a sub-cycle top could be imminent. This market looks very bullish now, so I'm inclined to look to buy the bottom of any corrective drop instead of selling short at a top. However, if the broad stock market starts to head south in a big way, crude may follow suit, and we may have to change that bullish view. Let's stay on the sidelines of crude for now and see how high it can go in this reversal zone.
The DOW continues to slump down this week while the S&P 500 and NASDAQ edge higher. Both the S&P 500 and NASDAQ are making new weekly highs, and today the S&P 500 is even making a new all-time high. This is giving us several bearish divergence signals. We have also just entered our new, wide "back to back" reversal zone period, which will be in effect through the first week of July (June 10 - July 7). We especially want to watch June 23 and July 2 for possible major turning points. Basically, this market could turn down for a sharp correction anytime now. The NASDAQ was especially bullish last week and is on the verge of making a new all-time high (actually, the NASDAQ 100 E-mini contract chart for September did make a new all-time high yesterday). We are thus getting VERY strong bearish divergence signals now (until the DOW makes a new all-time high), but there are also some short-term bullish signals that seem to be keeping this market buoyant. Both the DOW and S&P 500 are remaining above their 45-day moving averages, and the S&P 500 is still above its 15-day moving average. Any break below those supports would suggest a major correction is starting.
The Federal Reserve concludes its monthly FOMC meeting tomorrow afternoon, and investors and traders will be waiting with "bated breath" to see if Fed Chairman Powell will make any statements about tapering back its QE (oops...I mean bond-buying program) in light of the recent lifting of Covid-19 restrictions across the country. Most analysts are speculating that he will probably steer clear of any such hawkish rhetoric to avoid a panic on Wall Street. After all, many investors realize that it is mostly QE (sorry...bond buying) and near-zero interest rates that are keeping this equity bubble (sorry...I mean healthy market) perpetually bullish. But the Fed is sometimes unpredictable. If Mr. Powell does turn hawkish, we could see a sudden turn down in a market that is clearly ripe for a big correction.
I generally do not like to trade equities on the cusp of a Fed policy meeting, so let's stay on the sidelines for now and see if those support levels (45 and 15-day moving averages) in the DOW and S&P 500 will hold into the end of the week (which will bring us closer to June 23 - a possible turning point).
Yesterday, gold prices got down to $1845 which is pretty close to our target of $1835 for a sub-cycle correction (which is due by the end of this week). There seems to be some support around $1850, so this looks like a good spot to buy. I am going to put a buy order in tonight for tomorrow's market open. If it opens lower, we may even get a better price closer to $1835. If this is a sub-cycle low, we could easily see prices rally back to $1915 and probably higher. Going long in gold for tomorrow's market open.
Silver's cycle is similar to gold's now except that silver may have already made its sub-cycle low back on June 3 (at $27.10), which would explain why prices haven't gone even close to our $26.25 target. There's still a chance it could do that, but it has to happen this week. If silver falls closer to $26 by Friday, we may look to buy; otherwise, we will stay on the sidelines and just stay with our long position in gold. Remaining on the sidelines of silver for now.
Crude oil has overcome a resistance level at $70 (July contract chart) and is now trading near $72. Our target range for this rally was (is) $75 - $78. It is getting there, but today we entered a reversal zone specifically for crude (June 15 - 23). This means a sub-cycle top could be imminent. This market looks very bullish now, so I'm inclined to look to buy the bottom of any corrective drop instead of selling short at a top. However, if the broad stock market starts to head south in a big way, crude may follow suit, and we may have to change that bullish view. Let's stay on the sidelines of crude for now and see how high it can go in this reversal zone.
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