UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:00 PM EDT)
In my last blog (Oct. 7), I wrote on the broad stock market:
"All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now."
Well, it looks like our second scenario (new highs in the reversal zone) is unfolding as the DOW, S&P 500, and NASDAQ are all making new highs this week as we approach the end of the reversal zone this Friday. We also note that both the DOW and S&P 500 are making new ALL-TIME highs while the NASDAQ is not (although it is close). This gives us a strong bearish divergence signal suggesting a significant top could be imminent. Our trading strategy remains the same here. We will look to buy any significant corrective drop that doesn't go TOO low. It looks like new all-time highs could continue into early 2025. These indices continue to look bullish, but we need to be aware that the trend could suddenly turn bearish if any corrective drops make new lows - especially below support zones. For now we remain on the sidelines of this market.
I continue to think it is late in gold's medium-term cycle and also very late in a longer-term 50-week cycle. If this is the case, prices should be ready to decline sharply to the final bottom of both cycles due in the next 2 or 3 weeks. A good price target would be between $2350 - $2450. However, gold prices have been rising since last Thursday's low at $2606 (Oct. 10). If they continue to rise, we have to consider the possibility that last week's low could be the 50-week and medium-term cycle bottom. Arguing against this idea would be the fact that $2606 is way above our projected normal target minimum of $2450. A third possibility could see the medium-term cycle expand a bit and bottom 5 to 7 weeks from now around mid-November (just after the U.S. presidential election) along with the 50-week cycle. A break significantly above the Sept. 26 high ($2709) would be bullish and suggest that the second scenario (new cycles starting last week) is playing out. Otherwise, we'll wait for this current rally to top out by Friday and look to buy a significant correction into that $2350 - $ 2450 range. We are on the sidelines of gold for now.
I am staying with the labeling of silver's medium-term cycle starting from the low of $26.52 on Aug. 8. A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now. But I still think it's more likely our original idea of an older 4.3 year cycle bottoming by the end of December is correct. In that case, prices should top out under $32.70 by Friday and start descending to an initial target around $29 and eventually even down to a range between $22 - $25 by Jan. 2025. With all this in mind, I am still holding my short position in silver entered on Oct. 1 with a stop loss now based on a clear break above $32.70.
In my last blog (Oct. 7), I wrote on the broad stock market:
"All three indices could now be falling to a significant sub-cycle bottom which could be inside a new reversal zone this week or next (Oct. 8 - 17). It's also possible for this market to push up to new highs and form a top in this reversal zone before falling. We will watch this carefully. A bottom that doesn't go TOO low may give us a good buying opportunity; however, we will refrain from selling short any new tops as this market's trend looks to be bullish for now."
Well, it looks like our second scenario (new highs in the reversal zone) is unfolding as the DOW, S&P 500, and NASDAQ are all making new highs this week as we approach the end of the reversal zone this Friday. We also note that both the DOW and S&P 500 are making new ALL-TIME highs while the NASDAQ is not (although it is close). This gives us a strong bearish divergence signal suggesting a significant top could be imminent. Our trading strategy remains the same here. We will look to buy any significant corrective drop that doesn't go TOO low. It looks like new all-time highs could continue into early 2025. These indices continue to look bullish, but we need to be aware that the trend could suddenly turn bearish if any corrective drops make new lows - especially below support zones. For now we remain on the sidelines of this market.
I continue to think it is late in gold's medium-term cycle and also very late in a longer-term 50-week cycle. If this is the case, prices should be ready to decline sharply to the final bottom of both cycles due in the next 2 or 3 weeks. A good price target would be between $2350 - $2450. However, gold prices have been rising since last Thursday's low at $2606 (Oct. 10). If they continue to rise, we have to consider the possibility that last week's low could be the 50-week and medium-term cycle bottom. Arguing against this idea would be the fact that $2606 is way above our projected normal target minimum of $2450. A third possibility could see the medium-term cycle expand a bit and bottom 5 to 7 weeks from now around mid-November (just after the U.S. presidential election) along with the 50-week cycle. A break significantly above the Sept. 26 high ($2709) would be bullish and suggest that the second scenario (new cycles starting last week) is playing out. Otherwise, we'll wait for this current rally to top out by Friday and look to buy a significant correction into that $2350 - $ 2450 range. We are on the sidelines of gold for now.
I am staying with the labeling of silver's medium-term cycle starting from the low of $26.52 on Aug. 8. A significant sub-cycle correction may have happened with last Tuesday's isolated low at $30.23. If that's the case, prices could rally now and break above last week's high of $32.70. If that happens, we may have to assume that a longer-term 4.3 year cycle bottomed over a year ago in October 2023 at $22.21 and is NOT going to bottom by the end of this year. That scenario would make silver very bullish now. But I still think it's more likely our original idea of an older 4.3 year cycle bottoming by the end of December is correct. In that case, prices should top out under $32.70 by Friday and start descending to an initial target around $29 and eventually even down to a range between $22 - $25 by Jan. 2025. With all this in mind, I am still holding my short position in silver entered on Oct. 1 with a stop loss now based on a clear break above $32.70.
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