The Alternative Investor
  • Home
  • TRADING BLOG
  • Current Positions
  • Alternative Investor Strategy
  • ETFs
  • About Alternative Investor
  • Contact

Trading Blog         Wednesday,  December 6,  2017

12/6/2017

 
MARKETS  UPDATE  (2:00 pm EST)

The precious metals market is currently proving itself to be quite challenging to trade. There are still both bullish and bearish factors influencing gold and silver.

Silver has broken below its low from Oct. 6 and gold is testing its Oct. 6 low now (bullish divergence). This suggests that both metals are now falling into the end and bottom of an older medium-term cycle (i.e they did not start new cycles on Oct. 6). Because we are now in a reversal zone for these metals, and we have a bullish divergence signal (until gold falls below its Oct. 6 low of $1262), and it is late in these cycles and a bottom is due, we entered a long position in gold on Monday.

Despite the bullish factors just mentioned, there are some new bearish developments to consider now. Directional momentum in gold just turned 100% bearish (it had been mixed bullish and bearish). This makes both gold and silver 100% bearish for now. While it wouldn't be unusual to see strong bearish momentum at the bottom of a cycle just before it turns up, this could also indicate that a further breakdown in prices is imminent. Gold and silver mining company stocks are also looking quite bearish over the last day or two. Finally, a review of recent COT (Commitment of Traders) charts for gold and silver shows them still strongly bearish.

Is it possible for these metals to rally from here?  Yes, but since today is the last day of this reversal zone (it might extend into tomorrow), it is also possible for prices to break down and fall further into the next reversal zone in the last week of December (with gold possibly reaching the $1200 area). Key support for gold right now is at $1260. We don't want to see prices close below there, especially after Thursday. Silver now has support down to $15.50 so we don't want to see that level breached either. Traders who are alarmed by the bearish factors just mentioned may wish to sell their gold long positions now with little loss, but I am going to maintain my long position in gold with an automatic stop loss to be triggered on a move below $1255.

The U.S. Dollar Index
may have made a significant bottom on Dec. 1 (in the current reversal zone) at 92.60 and is now rallying. This is, of course, supporting the bearish view of gold and silver discussed above, but directional momentum in the dollar is nearly 100% bearish, and the overall chart for the dollar is not looking very good so this rally may not get very far before turning down again. A dollar rally into the end of December might correspond to a new bottom in the precious metals around the same time as I discussed above.

It looks like we may have called the top of the rally in the broad stock market on Monday, but this correction still has to follow through some more to make our short position worthwhile. Since today is the last day of the current reversal zone for equities, there is a good chance the top is in and prices could continue to fall at least into late next week. We can now set a stop loss for our short position based on all three market indices (DOW, S&P 500, NASDAQ) making new highs. Holding my short position in the broad stock market.

It looks like crude oil is not going to give us a new high in the current reversal zone (which ends today) as prices have been dropping sharply this week. Unless crude turns on a dime here and rallies back up, it is likely that the Nov. 27 high at $58.99 was the cycle high and prices will now correct down to the cycle bottom over the next several weeks. Because we did not get a secondary high to sell short, we will probably just wait to buy the cycle bottom somewhere below $55. Out of crude oil for now.





Comments are closed.

    RSS Feed

    Archives

    June 2025
    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

                                                                                                                                                            LEGAL and DISCLAIMER

All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

The Alternative Investor is an independent researcher and analyst and receives no compensation of any kind from any individuals, groups, companies or institutions discussed on this website.