MARKETS UPDATE (6:00 pm EDST)
In my last blog (last Thursday, Aug. 15), I suggested the possibility of a bottom forming then in equities that could rally into our next reversal zone (Aug. 21 - 29). It looks like that has happened as the broad stock market has rallied from there into today - the first day of the reversal zone. This market still has time, of course, to back down again for a new low in this reversal period, but I suspect it will rally some more, maybe into early next week, and give us a top to sell short.
Last week's lows in all three market indices (DOW, S&P 500, NASDAQ) were double bottoms to their lows from early August, and this qualifies as a valid sub-cycle bottom. We need to watch the rally from this bottom carefully now. My preference is to see a brief rally where all three of these indices do not exceed their all-time highs from late July. That may give us a good shorting opportunity. That could happen over the next six trading days, or the rally could push higher into another reversal zone coming up in the first two weeks of September. Good targets for a top would be around 26,950 in the DOW and around 3,000 in the S&P 500. We will watch for those, however, if all three indices make new all-time highs (i.e. exceed their late July highs), that would suggest this market is resuming its bullish trend, and we would not sell short..The deep correction of last week is more suggestive of the market turning bearish with deeper lows to come. If one or two, but not all three indices make new all-time highs, that would give us a bearish divergence signal and also support the bearish view. We will remain out of this market for now as we watch how these indices move into our new reversal zone this week and next. Still on the sidelines of the broad stock market.
The precious metals seem reluctant to rally or fall so far this week. We are still expecting a sharp correction, especially in silver. A good target for silver's correction now could be as low as $16. Gold may not drop as dramatically so we will watch for silver to give us a trading signal to buy. The overall trend in both metals is still quite bullish Still on the sidelines of both metals.
Crude oil seems to be taking its cues from the volatile broad stock market. It is still not clear if the Aug. 7 sub-cycle low of $52.17 (Oct. contract chart) is going to be a springboard for a major, longer-term rally or if this current rally will be short-lived with prices reversing back down and making new lows soon. I suspect the latter, but we will stay on the sidelines of this market until we can be more certain of an upward or downward trend.
In my last blog (last Thursday, Aug. 15), I suggested the possibility of a bottom forming then in equities that could rally into our next reversal zone (Aug. 21 - 29). It looks like that has happened as the broad stock market has rallied from there into today - the first day of the reversal zone. This market still has time, of course, to back down again for a new low in this reversal period, but I suspect it will rally some more, maybe into early next week, and give us a top to sell short.
Last week's lows in all three market indices (DOW, S&P 500, NASDAQ) were double bottoms to their lows from early August, and this qualifies as a valid sub-cycle bottom. We need to watch the rally from this bottom carefully now. My preference is to see a brief rally where all three of these indices do not exceed their all-time highs from late July. That may give us a good shorting opportunity. That could happen over the next six trading days, or the rally could push higher into another reversal zone coming up in the first two weeks of September. Good targets for a top would be around 26,950 in the DOW and around 3,000 in the S&P 500. We will watch for those, however, if all three indices make new all-time highs (i.e. exceed their late July highs), that would suggest this market is resuming its bullish trend, and we would not sell short..The deep correction of last week is more suggestive of the market turning bearish with deeper lows to come. If one or two, but not all three indices make new all-time highs, that would give us a bearish divergence signal and also support the bearish view. We will remain out of this market for now as we watch how these indices move into our new reversal zone this week and next. Still on the sidelines of the broad stock market.
The precious metals seem reluctant to rally or fall so far this week. We are still expecting a sharp correction, especially in silver. A good target for silver's correction now could be as low as $16. Gold may not drop as dramatically so we will watch for silver to give us a trading signal to buy. The overall trend in both metals is still quite bullish Still on the sidelines of both metals.
Crude oil seems to be taking its cues from the volatile broad stock market. It is still not clear if the Aug. 7 sub-cycle low of $52.17 (Oct. contract chart) is going to be a springboard for a major, longer-term rally or if this current rally will be short-lived with prices reversing back down and making new lows soon. I suspect the latter, but we will stay on the sidelines of this market until we can be more certain of an upward or downward trend.
RSS Feed