MARKETS UPDATE (3:30 pm EDST)
As we move towards this Fourth of July holiday week-end, the S&P 500 and NASDAQ are making new all-time highs while the DOW seems reluctant to rally and has not even made a new weekly high (yet). Thus our intermarket bearish divergence between these indices continues. Because we are now entering another strong reversal zone (June 29 - July 9), we are on the lookout for a significant top to sell short - especially AFTER the July 4th holiday (although it could come sooner). As I've mentioned in previous blogs, the NASDAQ is most likely near the end of its current medium-term cycle and is thus most ripe for a steep correction to its final cycle bottom. Today the NASDAQ is breaking through the 14,500 level. Let's see how high it gets by the end of this week. Now on the sidelines of the broad stock market.
After rallying a bit last week, gold and silver prices seem to be turning down again. It is late in the medium-term cycles of both metals, so a final cycle low is due in both over the next several weeks. It could even be this week as we entered a new reversal zone specifically for precious metals today (June 29 - July 15). The question is how low will the final bottom go? Today gold is testing support at the $1750 level (our stop loss for our current long position in gold). It made a new weekly low, but silver did not (yet), so we may have a bullish divergence signal here. If that $1750 line can hold, we might see a cycle bottom forming now. Let's lower that stop loss a bit and base it now on a clear break and close below $1730. We will hold our long position in gold for now and stay on the sidelines of silver.
It is also late in the medium-term cycle of the U.S. Dollar Index. This means a significant top is due anytime now to be followed by a sharp correction. Last week, this index made a new high (92.40) in a reversal zone specifically for currencies. We are now out of that reversal zone, but the greenback seems to be challenging that high this week. Perhaps we will get a "double-top" (bearish signal) now or even next week when we enter another reversal zone for currencies (July 6 - 14). A cycle top and sharp correction in the dollar could coincide with the start of new cycles in gold and silver, so we will watch for this.
Crude oil made a new weekly and cycle high on Monday at $74.45 (which could be a "double-top" to last Wednesday's high of $74.25 - Aug. contract chart). Last week's high was inside a reversal zone for crude, but today's high is also in our general reversal zone for equities and other markets. A top could be forming here. Let's hold our short position in crude for now as a correction could be imminent. If the broad stock market falls, crude could go with it.
As we move towards this Fourth of July holiday week-end, the S&P 500 and NASDAQ are making new all-time highs while the DOW seems reluctant to rally and has not even made a new weekly high (yet). Thus our intermarket bearish divergence between these indices continues. Because we are now entering another strong reversal zone (June 29 - July 9), we are on the lookout for a significant top to sell short - especially AFTER the July 4th holiday (although it could come sooner). As I've mentioned in previous blogs, the NASDAQ is most likely near the end of its current medium-term cycle and is thus most ripe for a steep correction to its final cycle bottom. Today the NASDAQ is breaking through the 14,500 level. Let's see how high it gets by the end of this week. Now on the sidelines of the broad stock market.
After rallying a bit last week, gold and silver prices seem to be turning down again. It is late in the medium-term cycles of both metals, so a final cycle low is due in both over the next several weeks. It could even be this week as we entered a new reversal zone specifically for precious metals today (June 29 - July 15). The question is how low will the final bottom go? Today gold is testing support at the $1750 level (our stop loss for our current long position in gold). It made a new weekly low, but silver did not (yet), so we may have a bullish divergence signal here. If that $1750 line can hold, we might see a cycle bottom forming now. Let's lower that stop loss a bit and base it now on a clear break and close below $1730. We will hold our long position in gold for now and stay on the sidelines of silver.
It is also late in the medium-term cycle of the U.S. Dollar Index. This means a significant top is due anytime now to be followed by a sharp correction. Last week, this index made a new high (92.40) in a reversal zone specifically for currencies. We are now out of that reversal zone, but the greenback seems to be challenging that high this week. Perhaps we will get a "double-top" (bearish signal) now or even next week when we enter another reversal zone for currencies (July 6 - 14). A cycle top and sharp correction in the dollar could coincide with the start of new cycles in gold and silver, so we will watch for this.
Crude oil made a new weekly and cycle high on Monday at $74.45 (which could be a "double-top" to last Wednesday's high of $74.25 - Aug. contract chart). Last week's high was inside a reversal zone for crude, but today's high is also in our general reversal zone for equities and other markets. A top could be forming here. Let's hold our short position in crude for now as a correction could be imminent. If the broad stock market falls, crude could go with it.
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