MARKETS UPDATE (6:45 pm EST)
Due to the crisis over Syria, the threat of war in the news is becoming a "wild card" factor affecting most major financial markets right now. This creates instability and potential volatility in the markets and makes it more difficult for traders to correctly time buying and selling points. Technical and cycle analysis still works under these circumstances, but cycles and technical signals can become distorted and more difficult to see. Another news event that could have an affect on financial markets this week will be the U.S. Labor Department unemployment report. This comes out on Friday which is close to the time the U.S. Congress will be making decisions on Syria. We will therefore be cautious in our trading in coming weeks with a sharp eye on the unfolding political and economic events in the news.
It appears that President Obama will seek the approval of Congress before taking military action against Syria so there is likely to be some delay (perhaps a week or more) before Congress votes and a possible strike occurs. Because the broad stock market dislikes uncertainty, it may continue downward this week before the war decision is made. It is difficult to predict how the market will react if an actual strike occurs as war is sometimes seen as profitable in the eyes of the DOW. We will have to wait and see how these events unfold. Short-term and medium-term technical and cycle factors are still mixed between bullish and bearish, but are slightly more bearish. I still feel this correction in the broad stock market will go deeper before the year is over. Any rally now would have to break clearly through the 15,200-15,300 area in the DOW for me to change my view and go bullish. I am still holding my short positions in the broad stock market for now.
The precious metals appear to be bouncing up from lows achieved in Sunday's markets around $1380 in gold and $23.25 in silver. This market is difficult to call at the moment. There are several strongly bullish signals in the price charts right now (especially for silver), but there are still some short-term technical and cycle factors that point to a correction deeper than the one we got on Sunday. Prices are currently approaching resistance areas around
$1420 - $1425 in gold and $24.50 in silver, so they may turn down again here. Ideally, I would like to see a deeper correction into the middle or end of next week to buy, but we may not get that. I am going to stay on the sidelines for now and wait to see if these resistance zones hold. As with the broad stock market, there is a possibility of one final deep correction in the precious metals before the year is over, and we need to be on guard for that. Still on the sidelines here and waiting to buy.
Crude oil prices also made a bottom on Sunday (around $104) and are now rallying strongly but also approaching a wide band of resistance at $108 - $112. If this resistance holds the rally, oil could correct back down steeply to a final cycle bottom, but it is also possible that a new cycle has already started and this market is bullish. Momentum signals support this bullish view, and, of course, the possibility of military strikes on Syria can be bullish for oil prices (at least initially). Nevertheless, technical and cycle factors are mixed right now and we can't rule out a deeper correction.
I am going to stay on the sidelines of this market for now.
Due to the crisis over Syria, the threat of war in the news is becoming a "wild card" factor affecting most major financial markets right now. This creates instability and potential volatility in the markets and makes it more difficult for traders to correctly time buying and selling points. Technical and cycle analysis still works under these circumstances, but cycles and technical signals can become distorted and more difficult to see. Another news event that could have an affect on financial markets this week will be the U.S. Labor Department unemployment report. This comes out on Friday which is close to the time the U.S. Congress will be making decisions on Syria. We will therefore be cautious in our trading in coming weeks with a sharp eye on the unfolding political and economic events in the news.
It appears that President Obama will seek the approval of Congress before taking military action against Syria so there is likely to be some delay (perhaps a week or more) before Congress votes and a possible strike occurs. Because the broad stock market dislikes uncertainty, it may continue downward this week before the war decision is made. It is difficult to predict how the market will react if an actual strike occurs as war is sometimes seen as profitable in the eyes of the DOW. We will have to wait and see how these events unfold. Short-term and medium-term technical and cycle factors are still mixed between bullish and bearish, but are slightly more bearish. I still feel this correction in the broad stock market will go deeper before the year is over. Any rally now would have to break clearly through the 15,200-15,300 area in the DOW for me to change my view and go bullish. I am still holding my short positions in the broad stock market for now.
The precious metals appear to be bouncing up from lows achieved in Sunday's markets around $1380 in gold and $23.25 in silver. This market is difficult to call at the moment. There are several strongly bullish signals in the price charts right now (especially for silver), but there are still some short-term technical and cycle factors that point to a correction deeper than the one we got on Sunday. Prices are currently approaching resistance areas around
$1420 - $1425 in gold and $24.50 in silver, so they may turn down again here. Ideally, I would like to see a deeper correction into the middle or end of next week to buy, but we may not get that. I am going to stay on the sidelines for now and wait to see if these resistance zones hold. As with the broad stock market, there is a possibility of one final deep correction in the precious metals before the year is over, and we need to be on guard for that. Still on the sidelines here and waiting to buy.
Crude oil prices also made a bottom on Sunday (around $104) and are now rallying strongly but also approaching a wide band of resistance at $108 - $112. If this resistance holds the rally, oil could correct back down steeply to a final cycle bottom, but it is also possible that a new cycle has already started and this market is bullish. Momentum signals support this bullish view, and, of course, the possibility of military strikes on Syria can be bullish for oil prices (at least initially). Nevertheless, technical and cycle factors are mixed right now and we can't rule out a deeper correction.
I am going to stay on the sidelines of this market for now.
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