MARKETS UPDATE (8:30 pm EDT)
We are now entering another reversal zone for several markets (now through Sept. 1) and it is still not clear if equity markets want to make a bottom or top. There has been a lot of speculation recently about the Federal Reserve's plans for raising interest rates. Most analysts agree that a rate hike will come sooner or later, but will it be sooner or later? Recent inside information points to some Fed members being hawkish while others are dovish. This kind of uncertainty makes equity markets nervous and indecisive.
On Monday the DOW made a new weekly low then surged back up on Tuesday but backed down again today. If the DOW and/or the S&P 500 can exceed their highs from last week (the S&P 500 almost did that yesterday) in this new reversal zone, we should expect a top before the end of next week and a reversal down. If that doesn't happen and markets continue down this week, we will look for a bottom and the start of another rally. In the first instance we might consider stepping aside our long position in this market and reentering at the bottom of any correction. In the second case we could add on to any long positions we are holding at the correction's bottom. Our overall strategy is still to stay long into the November U.S. presidential election. Still holding my long position in the broad stock market.
In last Thursday's blog on gold and silver I wrote:
" We could still see prices move lower into next week's reversal zone, especially silver because its medium-term cycle bottom is now due (overdue) and should go at least to the $19 level (or lower)."
This is happening now with both gold and silver making new monthly lows today as we enter this week's reversal zone. Silver is already approaching the $18.50 level and could go lower. Gold prices closed today near $1,324. Good targets now for these metals would be around $1,300 for gold and $18.50 for silver. Silver is already there, but gold has some more room to drop. This reversal zone extends into next Thursday so there is plenty of time for both metals to make a bottom between now and then. We will watch carefully over the next several days for a good buy spot in both silver and gold as long as prices don't go too low. Still on the sidelines of the precious metals.
I also wrote in last Thursday's blog:
"The U.S. Dollar Index is now approaching a strong support zone around 93 - 94. If this support holds, we could see a bounce which might help push gold and silver prices down."
This too seems to be happening as the U.S. Dollar Index has been rallying from that 94.21 low on Thursday. There is resistance now in the 95 - 96 area so this rally may not get very far before turning down again, probably at the same time silver makes its final medium-term cycle bottom and turns back up.
Crude oil prices topped out at $49.36 (October contract chart) last Friday and are now falling into the center of a strong reversal zone specifically relevant to crude (Aug. 22 - 30). Crude has support in the $45 - $46 area so if prices get there we may look to buy over the next few days. Crude oil started a new medium-term cycle on Aug. 3 and technically still looks bullish; however, prices need to exceed the previous cycle high of $53 for the trend to remain bullish. On the sidelines of crude oil for now.
We are now entering another reversal zone for several markets (now through Sept. 1) and it is still not clear if equity markets want to make a bottom or top. There has been a lot of speculation recently about the Federal Reserve's plans for raising interest rates. Most analysts agree that a rate hike will come sooner or later, but will it be sooner or later? Recent inside information points to some Fed members being hawkish while others are dovish. This kind of uncertainty makes equity markets nervous and indecisive.
On Monday the DOW made a new weekly low then surged back up on Tuesday but backed down again today. If the DOW and/or the S&P 500 can exceed their highs from last week (the S&P 500 almost did that yesterday) in this new reversal zone, we should expect a top before the end of next week and a reversal down. If that doesn't happen and markets continue down this week, we will look for a bottom and the start of another rally. In the first instance we might consider stepping aside our long position in this market and reentering at the bottom of any correction. In the second case we could add on to any long positions we are holding at the correction's bottom. Our overall strategy is still to stay long into the November U.S. presidential election. Still holding my long position in the broad stock market.
In last Thursday's blog on gold and silver I wrote:
" We could still see prices move lower into next week's reversal zone, especially silver because its medium-term cycle bottom is now due (overdue) and should go at least to the $19 level (or lower)."
This is happening now with both gold and silver making new monthly lows today as we enter this week's reversal zone. Silver is already approaching the $18.50 level and could go lower. Gold prices closed today near $1,324. Good targets now for these metals would be around $1,300 for gold and $18.50 for silver. Silver is already there, but gold has some more room to drop. This reversal zone extends into next Thursday so there is plenty of time for both metals to make a bottom between now and then. We will watch carefully over the next several days for a good buy spot in both silver and gold as long as prices don't go too low. Still on the sidelines of the precious metals.
I also wrote in last Thursday's blog:
"The U.S. Dollar Index is now approaching a strong support zone around 93 - 94. If this support holds, we could see a bounce which might help push gold and silver prices down."
This too seems to be happening as the U.S. Dollar Index has been rallying from that 94.21 low on Thursday. There is resistance now in the 95 - 96 area so this rally may not get very far before turning down again, probably at the same time silver makes its final medium-term cycle bottom and turns back up.
Crude oil prices topped out at $49.36 (October contract chart) last Friday and are now falling into the center of a strong reversal zone specifically relevant to crude (Aug. 22 - 30). Crude has support in the $45 - $46 area so if prices get there we may look to buy over the next few days. Crude oil started a new medium-term cycle on Aug. 3 and technically still looks bullish; however, prices need to exceed the previous cycle high of $53 for the trend to remain bullish. On the sidelines of crude oil for now.
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