MARKETS UPDATE (1:45pm EST)
As I've stated in several recent blogs, I am not going to underestimate the ability of market manipulators (including the Federal Reserve) to keep the broad stock market going strong even when cycle, timing, and other technical indicators point to major corrections that are overdue. My observations of this kind of interference with the natural flow of economic cycles over the last four or five years (especially in the DOW) show a tendency for corrections to be truncated and rallies to be exaggerated. This pattern may be manifesting in the markets this week with a sudden bullish surge in the DOW, S&P 500, and NASDAQ after a minor corrective dip last Friday. We had been planning to go long on that dip if it had been deeper, but that opportunity did not present itself and we are still out of this market. I am reluctant to jump in right now because prices are rising steeply, and we are in the middle of a time window where major reversals can still occur, so we will wait and watch for a better entry point to go long (as long as the market remains bullish). For traders who are (understandably) frustrated watching the DOW rise and not being in it (yet), I would suggest trading crude oil right now as its price seems to be less manipulated (at least at the moment). Also note that because we are bullish on crude right now (see below), any "wild card" influence from possible tensions in the Middle East would not be a risk factor as it would tend to push prices higher.
Unlike the broad stock market, crude oil is taking the significant correction we were expecting and is still looking bullish, so we are watching carefully now to reenter this market and resume our long position. We may do this over the next several days. On the sidelines here and waiting to go long soon.
Unfortunately, we are not out of the woods yet for the risk of gold and silver breaking their major supports ($1500-1530 in gold and $26-27 in silver). Current momentum is generally bearish with gold seeming reluctant to clear $1600 and silver shy of $28. This bearishness is the reason we sold our silver long positions last week. There is still the possibility of a strong rally from here, but there is also a chance of further downside before the rally can really take off. If gold can close above $1620 and silver above $31 by the end of the week, things will be looking bullish. Otherwise, we may have to consider selling our gold longs and waiting for a better entry point for the rally. I know this is very frustrating as we've been waiting a long time to make a profit here, but when markets are indecisive there is not much we can do except keep a close eye on their "mood" (bullish or bearish) and take action when the signals are pointing strongly in one direction. As I've mentioned before, despite this short-term volatility, the medium and long-term picture for gold and silver continues to be very good. I have some of my assets in bullion gold coins and have no intention of selling them any time soon. (Please note that this does not apply to gold ETFs which we buy and sell more frequently.) We are still holding our gold long positions and standing aside silver for now.
As I've stated in several recent blogs, I am not going to underestimate the ability of market manipulators (including the Federal Reserve) to keep the broad stock market going strong even when cycle, timing, and other technical indicators point to major corrections that are overdue. My observations of this kind of interference with the natural flow of economic cycles over the last four or five years (especially in the DOW) show a tendency for corrections to be truncated and rallies to be exaggerated. This pattern may be manifesting in the markets this week with a sudden bullish surge in the DOW, S&P 500, and NASDAQ after a minor corrective dip last Friday. We had been planning to go long on that dip if it had been deeper, but that opportunity did not present itself and we are still out of this market. I am reluctant to jump in right now because prices are rising steeply, and we are in the middle of a time window where major reversals can still occur, so we will wait and watch for a better entry point to go long (as long as the market remains bullish). For traders who are (understandably) frustrated watching the DOW rise and not being in it (yet), I would suggest trading crude oil right now as its price seems to be less manipulated (at least at the moment). Also note that because we are bullish on crude right now (see below), any "wild card" influence from possible tensions in the Middle East would not be a risk factor as it would tend to push prices higher.
Unlike the broad stock market, crude oil is taking the significant correction we were expecting and is still looking bullish, so we are watching carefully now to reenter this market and resume our long position. We may do this over the next several days. On the sidelines here and waiting to go long soon.
Unfortunately, we are not out of the woods yet for the risk of gold and silver breaking their major supports ($1500-1530 in gold and $26-27 in silver). Current momentum is generally bearish with gold seeming reluctant to clear $1600 and silver shy of $28. This bearishness is the reason we sold our silver long positions last week. There is still the possibility of a strong rally from here, but there is also a chance of further downside before the rally can really take off. If gold can close above $1620 and silver above $31 by the end of the week, things will be looking bullish. Otherwise, we may have to consider selling our gold longs and waiting for a better entry point for the rally. I know this is very frustrating as we've been waiting a long time to make a profit here, but when markets are indecisive there is not much we can do except keep a close eye on their "mood" (bullish or bearish) and take action when the signals are pointing strongly in one direction. As I've mentioned before, despite this short-term volatility, the medium and long-term picture for gold and silver continues to be very good. I have some of my assets in bullion gold coins and have no intention of selling them any time soon. (Please note that this does not apply to gold ETFs which we buy and sell more frequently.) We are still holding our gold long positions and standing aside silver for now.
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