MARKETS UPDATE (3:00 pm EDT)
We are about to enter another reversal zone for the broad stock market (and other markets) from June 28 - July 5. The DOW, S&P 500 and NASDAQ still have time to make either a high or low in this period. The upcoming holiday week-end (Fourth of July -Independence Day- in the U.S.) suggests a high (equities often rally into holiday week-ends), but a correction in these markets is imminent so we cannot rule out a low. If these indices do drop, we would probably look to buy around 20,600 -20,800 in the DOW and 2,400 in the S&P 500. Still on the sidelines of the broad stock market.
Yesterday's strong drop in gold prices in early morning trading was apparently caused by a large sell order "given by mistake" according to some news sources. It is known that gold prices are sometimes manipulated by unknown traders who place such orders. The recent gold cycle has been setting up a pattern where it could "break out" and embark on a major rally if prices break above the $1300 level. A major surge in gold prices could make equity markets vulnerable to a sell-off and tank the U.S. dollar among other things so there are reasons to suggest a possible manipulation here. This is not a "conspiracy" website, however, so we will focus mostly on the technical ramifications of yesterday's price drop. As I stated in yesterday's blog, gold's sudden drop below a support line at $1240 introduces the possibility of a sharp sub-cycle correction into the upcoming reversal zone for gold and silver (June 28 - July 6). If such a correction sends gold below $1214, the overall trend could turn very bearish. If yesterday's "accidental" sell order produces only a short-term downward glitch in gold's chart then I will take off my tin foil hat and reconsider more bullish strategies for trading. In the meantime we will stay on the sidelines of gold and silver and watch how prices move into the end of the week and early next week.
Crude oil prices have been rising from last week's low of $42.05 (Aug. contract chart), but we are entering a reversal zone specifically for crude all next week. Last Thursday I wrote:
"Crude oil prices have now broken below the May 5th low of $44.45 (August contract chart) which most likely indicates that a long-term cycle is bottoming and prices will continue lower for at least 3 more weeks (possibly longer). The final cycle low could be in the $40 area. There are two reversal zones specifically related to crude coming up in July. That would be in the first week of July and the last two weeks of July."
If prices continue to rise into next week's reversal zone, we could see them turn down and fall lower into the second half of July closer to our target of $40 for the end of the cycle. Let's go with that scenario for now with the idea of buying a cycle bottom near $40. Still on the sidelines of crude oil.
We are about to enter another reversal zone for the broad stock market (and other markets) from June 28 - July 5. The DOW, S&P 500 and NASDAQ still have time to make either a high or low in this period. The upcoming holiday week-end (Fourth of July -Independence Day- in the U.S.) suggests a high (equities often rally into holiday week-ends), but a correction in these markets is imminent so we cannot rule out a low. If these indices do drop, we would probably look to buy around 20,600 -20,800 in the DOW and 2,400 in the S&P 500. Still on the sidelines of the broad stock market.
Yesterday's strong drop in gold prices in early morning trading was apparently caused by a large sell order "given by mistake" according to some news sources. It is known that gold prices are sometimes manipulated by unknown traders who place such orders. The recent gold cycle has been setting up a pattern where it could "break out" and embark on a major rally if prices break above the $1300 level. A major surge in gold prices could make equity markets vulnerable to a sell-off and tank the U.S. dollar among other things so there are reasons to suggest a possible manipulation here. This is not a "conspiracy" website, however, so we will focus mostly on the technical ramifications of yesterday's price drop. As I stated in yesterday's blog, gold's sudden drop below a support line at $1240 introduces the possibility of a sharp sub-cycle correction into the upcoming reversal zone for gold and silver (June 28 - July 6). If such a correction sends gold below $1214, the overall trend could turn very bearish. If yesterday's "accidental" sell order produces only a short-term downward glitch in gold's chart then I will take off my tin foil hat and reconsider more bullish strategies for trading. In the meantime we will stay on the sidelines of gold and silver and watch how prices move into the end of the week and early next week.
Crude oil prices have been rising from last week's low of $42.05 (Aug. contract chart), but we are entering a reversal zone specifically for crude all next week. Last Thursday I wrote:
"Crude oil prices have now broken below the May 5th low of $44.45 (August contract chart) which most likely indicates that a long-term cycle is bottoming and prices will continue lower for at least 3 more weeks (possibly longer). The final cycle low could be in the $40 area. There are two reversal zones specifically related to crude coming up in July. That would be in the first week of July and the last two weeks of July."
If prices continue to rise into next week's reversal zone, we could see them turn down and fall lower into the second half of July closer to our target of $40 for the end of the cycle. Let's go with that scenario for now with the idea of buying a cycle bottom near $40. Still on the sidelines of crude oil.
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