MARKETS UPDATE (6:30 pm EST)
Several cycle, timing, and technical factors are coming together now in many financial markets that could lead to major turning points and trend reversals soon. All financial markets discussed on this site are now poised to make significant moves over the next several weeks. The two time periods we want to watch carefully are the middle of this week (now) and the middle of the second week of October (Oct 8th). With seeming synchronicity, global geopolitical tensions are also increasing now as the U.S.and its Arab allies launched their first major military assault against ISIL targets in Syria on Monday. A military spokesman for the White House stated today that these airstrikes were just "the beginning of a sustainable and credible" campaign that could last for years. So it looks like this new war is not going away anytime soon and could have a significant impact on financial markets going forward.
The threat of war does make equity markets nervous so it was not surprising to see the DOW drop significantly yesterday and today. Janet Yellens's soothing rhetoric after last week's Federal Reserve meeting calmed investor's fears about rising interest rates and propelled the DOW to new highs which, unfortunately, stopped us out of our short position in the broad stock market on Thursday. Did we get "whipsawed" out prematurely? Possibly, but the DOW's directional momentum is still strongly bullish and the index is now approaching a support area just above 17,000. If the market rebounds from here and makes new highs into next week, we will look for another peak to sell short around Oct. 8. On the other hand, if the DOW breaks and closes below 17,000 this week, we could see a more serious correction now triggered by ISIL war news. My preference is for a new high in October, but we will have to wait and see how seriously the markets react to this new war. On the sidelines for now.
Gold and silver prices are rebounding a bit from last week's lows. Could those lows already be the bottom to the current correction? It's possible as we are in a reversal zone for gold, but from a technical standpoint it would be better for gold prices to get closer to the $1180 area before any significant rallying (last week's low was $1208). Directional momentum is still strongly bearish in all gold and silver market indices so this price rise over the last two days may not get very far before turning down again. I am going to maintain my short position in gold until I see stronger evidence of a bottom and more bullish signals. A good stop loss for our short position in gold right now would be a clear break and close above resistance in the $1240 area. At the moment silver seems to have a little more room to rally than gold and could make it to the $18.50 area before encountering strong resistance and potentially turning back down. Holding my short position in gold and out of silver for now.
Crude oil prices have been falling since last Wednesday and appear to be headed to the final bottom of the current crude cycle which is ideally due this week. We will therefore watch for a double bottom to the Sept.11 low of $90.43 or a new low over the next few days. If this turns out to be the cycle bottom (and the start of a new cycle), that would be bullish and we may get a good opportunity to go long, On the sidelines of this market and possibly looking to go long.
Several cycle, timing, and technical factors are coming together now in many financial markets that could lead to major turning points and trend reversals soon. All financial markets discussed on this site are now poised to make significant moves over the next several weeks. The two time periods we want to watch carefully are the middle of this week (now) and the middle of the second week of October (Oct 8th). With seeming synchronicity, global geopolitical tensions are also increasing now as the U.S.and its Arab allies launched their first major military assault against ISIL targets in Syria on Monday. A military spokesman for the White House stated today that these airstrikes were just "the beginning of a sustainable and credible" campaign that could last for years. So it looks like this new war is not going away anytime soon and could have a significant impact on financial markets going forward.
The threat of war does make equity markets nervous so it was not surprising to see the DOW drop significantly yesterday and today. Janet Yellens's soothing rhetoric after last week's Federal Reserve meeting calmed investor's fears about rising interest rates and propelled the DOW to new highs which, unfortunately, stopped us out of our short position in the broad stock market on Thursday. Did we get "whipsawed" out prematurely? Possibly, but the DOW's directional momentum is still strongly bullish and the index is now approaching a support area just above 17,000. If the market rebounds from here and makes new highs into next week, we will look for another peak to sell short around Oct. 8. On the other hand, if the DOW breaks and closes below 17,000 this week, we could see a more serious correction now triggered by ISIL war news. My preference is for a new high in October, but we will have to wait and see how seriously the markets react to this new war. On the sidelines for now.
Gold and silver prices are rebounding a bit from last week's lows. Could those lows already be the bottom to the current correction? It's possible as we are in a reversal zone for gold, but from a technical standpoint it would be better for gold prices to get closer to the $1180 area before any significant rallying (last week's low was $1208). Directional momentum is still strongly bearish in all gold and silver market indices so this price rise over the last two days may not get very far before turning down again. I am going to maintain my short position in gold until I see stronger evidence of a bottom and more bullish signals. A good stop loss for our short position in gold right now would be a clear break and close above resistance in the $1240 area. At the moment silver seems to have a little more room to rally than gold and could make it to the $18.50 area before encountering strong resistance and potentially turning back down. Holding my short position in gold and out of silver for now.
Crude oil prices have been falling since last Wednesday and appear to be headed to the final bottom of the current crude cycle which is ideally due this week. We will therefore watch for a double bottom to the Sept.11 low of $90.43 or a new low over the next few days. If this turns out to be the cycle bottom (and the start of a new cycle), that would be bullish and we may get a good opportunity to go long, On the sidelines of this market and possibly looking to go long.
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