MARKETS UPDATE (9:00 pm EST)
After re-analyzing this month's reversal zones, it has become obvious to me that there is a lot of overlapping with several potential pivot points for reversals, so I am going to go with the idea that the entire period from Jan. 9 - Jan. 27 is a potential window for one or more significant market reversals with potential pivot points around Jan.10, Jan. 12 -13, Jan. 18, and Jan. 20. These would apply to the broad stock market as well as to all other markets. With this in mind, let's examine the cycles of the individual markets.
We can now confirm that the broad stock market made a significant sub-cycle bottom on Dec. 22 in the DOW and S&P 500, and on Dec. 28 in the NASDAQ. Those sub-cycle lows were about halfway through the medium-term cycles of these indices as they now rally from those lows to new sub-cycle highs. If the cycles are still bullish, all three indices will now rise to exceed their recent highs from Dec. 13 (that would be 34,712 in the DOW, 4,101 in the S&P 500, and 11,567 in the NASDAQ). But if the cycles are turning bearish, that won't happen (at least not for all three indices - maybe just the DOW), and this market and these indices will soon turn down again to make their final cycle bottoms at or below the Oct. 13 lows that began their cycles. All three indices are making new weekly highs this week, and all three have now broken through their 45-day moving averages, so this cycle looks bullish (so far). But we still need to see a break through those Dec. 13 highs to confirm this. That might be difficult with a potential "pivot point" for a reversal coming up Thursday-Friday and two more next week (Jan. 18 and 20). We will be on the lookout this week and next for a bearish divergence signal where one or two, but not all three, indices exceed their highs from Dec. 13. If that happens, it may be a good place to sell short. If all three exceed their Dec. 13 highs, it would be a bullish sign, and we may just wait for a corrective low to buy. For now, let's remain on the sidelines of this market.
We are still waiting for gold to take a significant sub-cycle correction. A potential deep correction is due this week or next down to a target range around $1660 - $1770, but we could also get a milder correction due next week through Feb. 4 with a target price between the 15-day and 45-day moving averages (right now that's between $1839 and $1797). The correction could start soon as we have several potential "pivot point" reversals this week and next that could give us a top AND bottom. Any sub-cycle low could be a good spot to buy. Let's stay on the sidelines until we see one.
Unlike gold, silver has not make a new weekly high this week and its price price has been falling. This gives us a bearish divergence signal between the two metals and supports the idea of a correction in both. With silver, we are expecting a correction to the final bottom of its current medium-term cycle due next week or the week after. Ideally, this could be near Jan. 18 or Jan. 20 with a target price around $20 - $22. We will watch for that as a potential buy spot. We remain on the sidelines of silver for now.
The medium-term cycle in crude oil is still unclear, and there several possibilities for an old or new cycle. Nevertheless, we are in a reversal zone with several possible pivot points that could be relevant to significant reversals in crude prices. Crude has been rising sharply this week and prices are now approaching the 45-day moving average. Any close above there, and then a close above $81.50 (the high of Jan. 30) would be a bullish sign and would suggest the low of Dec. 9 at $70.31 was a significant cycle or sub-cycle bottom. If that happens, it could be a signal to buy. An alternative (and not unlikely) scenario would see prices turning back down and breaking below that $70.31 low. That would be my preferred scenario with a price target for a cycle bottom around $61 - $65 which would also be a good spot to buy - especially if it happens this week or next - as it would likely be the final bottom of a medium-term cycle as well as a longer-term 3 year cycle. Let's stay on the sidelines of crude for now.
After re-analyzing this month's reversal zones, it has become obvious to me that there is a lot of overlapping with several potential pivot points for reversals, so I am going to go with the idea that the entire period from Jan. 9 - Jan. 27 is a potential window for one or more significant market reversals with potential pivot points around Jan.10, Jan. 12 -13, Jan. 18, and Jan. 20. These would apply to the broad stock market as well as to all other markets. With this in mind, let's examine the cycles of the individual markets.
We can now confirm that the broad stock market made a significant sub-cycle bottom on Dec. 22 in the DOW and S&P 500, and on Dec. 28 in the NASDAQ. Those sub-cycle lows were about halfway through the medium-term cycles of these indices as they now rally from those lows to new sub-cycle highs. If the cycles are still bullish, all three indices will now rise to exceed their recent highs from Dec. 13 (that would be 34,712 in the DOW, 4,101 in the S&P 500, and 11,567 in the NASDAQ). But if the cycles are turning bearish, that won't happen (at least not for all three indices - maybe just the DOW), and this market and these indices will soon turn down again to make their final cycle bottoms at or below the Oct. 13 lows that began their cycles. All three indices are making new weekly highs this week, and all three have now broken through their 45-day moving averages, so this cycle looks bullish (so far). But we still need to see a break through those Dec. 13 highs to confirm this. That might be difficult with a potential "pivot point" for a reversal coming up Thursday-Friday and two more next week (Jan. 18 and 20). We will be on the lookout this week and next for a bearish divergence signal where one or two, but not all three, indices exceed their highs from Dec. 13. If that happens, it may be a good place to sell short. If all three exceed their Dec. 13 highs, it would be a bullish sign, and we may just wait for a corrective low to buy. For now, let's remain on the sidelines of this market.
We are still waiting for gold to take a significant sub-cycle correction. A potential deep correction is due this week or next down to a target range around $1660 - $1770, but we could also get a milder correction due next week through Feb. 4 with a target price between the 15-day and 45-day moving averages (right now that's between $1839 and $1797). The correction could start soon as we have several potential "pivot point" reversals this week and next that could give us a top AND bottom. Any sub-cycle low could be a good spot to buy. Let's stay on the sidelines until we see one.
Unlike gold, silver has not make a new weekly high this week and its price price has been falling. This gives us a bearish divergence signal between the two metals and supports the idea of a correction in both. With silver, we are expecting a correction to the final bottom of its current medium-term cycle due next week or the week after. Ideally, this could be near Jan. 18 or Jan. 20 with a target price around $20 - $22. We will watch for that as a potential buy spot. We remain on the sidelines of silver for now.
The medium-term cycle in crude oil is still unclear, and there several possibilities for an old or new cycle. Nevertheless, we are in a reversal zone with several possible pivot points that could be relevant to significant reversals in crude prices. Crude has been rising sharply this week and prices are now approaching the 45-day moving average. Any close above there, and then a close above $81.50 (the high of Jan. 30) would be a bullish sign and would suggest the low of Dec. 9 at $70.31 was a significant cycle or sub-cycle bottom. If that happens, it could be a signal to buy. An alternative (and not unlikely) scenario would see prices turning back down and breaking below that $70.31 low. That would be my preferred scenario with a price target for a cycle bottom around $61 - $65 which would also be a good spot to buy - especially if it happens this week or next - as it would likely be the final bottom of a medium-term cycle as well as a longer-term 3 year cycle. Let's stay on the sidelines of crude for now.
RSS Feed