MARKETS UPDATE (8:00 pm EST)
The DOW dropped to a new weekly low of 16,937 last Friday (still a good distance away from my target of 16,800) and today is surging up to touch the recent all-time high of 17,161. Does this mean the "correction" is over? Maybe, but there are several bearish factors in this market now that suggests further downside. While the DOW is making a new all-time high today, the S&P 500 and NASDAQ are still below their recent highs so we are seeing intermarket bearish divergence here (until the S&P 500 and NASDAQ clear those highs). This week strong bearish signals appeared in the S&P 500 and NASDAQ charts which makes directional momentum in these indices mixed bullish and bearish (the DOW remains 100% bullish). So the DOW is telling us to be bullish, but the S&P 500 and NASDAQ are suggesting the opposite. The beginning of next week is the center point of another timing window where a reversal in several financial markets is likely. This suggests that any rally now could be short-lived and followed by more downside. My original stop loss point for my short position in the broad stock market was 17,200 in the DOW, and since we have not crossed that yet, I am going to remain short for today. Still holding my short position in the broad stock market.
Gold and silver prices have taken a break from their steep fall over the last two weeks and are rising a bit this week. Directional momentum in both these metals, however, is still very bearish and it doesn't look like any rally will get very far. As with the broad stock market, there is also a timing window early next week for a likely reversal in gold and silver so we may have an opportunity to sell this market short later this week into next week if prices are rising. One support level in gold to keep an eye on right now is the $1,180 area. The current correction may find support there, but If prices break clearly below that level we may have to revise our long-term cycle picture for gold. For now we are trading short-term and will watch for a high to sell short later this week or early next. On the sidelines of gold and silver.
Crude oil appears to be forming a significant cycle bottom now, and the ideal timing for this bottom would be sometime next week. Prices are surging today but could start to fall again for a double bottom in the $91 area or a lower low next week. If prices continue to rise into the end of this week we might see a good opportunity to go short. Out of this market for now.
The DOW dropped to a new weekly low of 16,937 last Friday (still a good distance away from my target of 16,800) and today is surging up to touch the recent all-time high of 17,161. Does this mean the "correction" is over? Maybe, but there are several bearish factors in this market now that suggests further downside. While the DOW is making a new all-time high today, the S&P 500 and NASDAQ are still below their recent highs so we are seeing intermarket bearish divergence here (until the S&P 500 and NASDAQ clear those highs). This week strong bearish signals appeared in the S&P 500 and NASDAQ charts which makes directional momentum in these indices mixed bullish and bearish (the DOW remains 100% bullish). So the DOW is telling us to be bullish, but the S&P 500 and NASDAQ are suggesting the opposite. The beginning of next week is the center point of another timing window where a reversal in several financial markets is likely. This suggests that any rally now could be short-lived and followed by more downside. My original stop loss point for my short position in the broad stock market was 17,200 in the DOW, and since we have not crossed that yet, I am going to remain short for today. Still holding my short position in the broad stock market.
Gold and silver prices have taken a break from their steep fall over the last two weeks and are rising a bit this week. Directional momentum in both these metals, however, is still very bearish and it doesn't look like any rally will get very far. As with the broad stock market, there is also a timing window early next week for a likely reversal in gold and silver so we may have an opportunity to sell this market short later this week into next week if prices are rising. One support level in gold to keep an eye on right now is the $1,180 area. The current correction may find support there, but If prices break clearly below that level we may have to revise our long-term cycle picture for gold. For now we are trading short-term and will watch for a high to sell short later this week or early next. On the sidelines of gold and silver.
Crude oil appears to be forming a significant cycle bottom now, and the ideal timing for this bottom would be sometime next week. Prices are surging today but could start to fall again for a double bottom in the $91 area or a lower low next week. If prices continue to rise into the end of this week we might see a good opportunity to go short. Out of this market for now.
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