MARKETS UPDATE (3:30 pm EST)
The broad stock market has been falling steeply (so far) this week, and it is now testing its deep low point from January. The DOW broke easily through support at 34,000 and is now testing 33,500. A double-bottom with January's low (33,150) COULD be forming here, but if the DOW breaks and closes below 33,150, it will probably be heading significantly lower. The S&P 500 is now testing support at 4,300, but it too could plunge lower if it breaks and closes below its January low of 4,222. It seems like the NASDAQ has broken definitively below strong support at 13,500 and will now test its January low at 13,097. This is not looking good for bulls, especially since there are no major reversal zones this week to halt any plunge. We do have one coming up next week, however (March 1 - 10). If this market can stabilize near these January lows for another week, we could see a significant double-bottom low forming here for another rally upwards. But that's asking a lot of Wall Street right now, especially in the midst of the current Russia/Ukraine/U.S. conflict. We currently have a 15% profit on our short position in the NASDAQ (entered on 12/31/21). If the market stabilizes here, I will consider covering (unloading) this position and taking that profit. For now, however, let's continue to hold that short position.
Gold and silver prices continue to rally this week. Gold has already soared beyond its January highs, but silver has not (but it is getting close). We may have a low level reversal zone for the precious metals from now through Friday. If silver stays below its January high ($24.76) over the next few days, we will have a case of bearish divergence between the two metals in a possible reversal zone. In other words, a correction down could be imminent. We may look to buy the low of any significant correction now, but we need to keep in mind what I wrote last week concerning gold's long-term (23 year) cycle:
"I should mention here that it is very late in gold's 23 year long-term cycle (it started around 2001), so unless gold can overcome resistance around $1900 - $1960 soon, it will not challenge or exceed the all-time high of $2070, and prices should be headed down for a steep correction over the next several years - possibly down to $1000 or even lower (see my GOLD Update on the Home page). We are looking to buy any significant short-term corrections now to possibly take advantage of a potential "blow-off" rally if gold can challenge and even make a new all-time high. But we obviously need to be careful here. If that resistance around $1900 - $1960 holds, we will want to switch to bearish trading strategies (i.e. looking to sell short)."
The U.S. Dollar Index seems to be stabilizing above its 15-day and 45-day moving averages with some other technical indicators suggesting some short-term bullish momentum. If the greenback can rally now, it could put downward pressure on gold and silver prices, which would support the idea of an imminent correction in these metals.
Crude oil prices dipped sharply lower last week to $87.46 (April contract chart) but found support at the 15-day moving average, and prices rebounded significantly up yesterday to almost touch $95. The correction could be over, and it was not deep enough to entice me to buy. As I stated in last week's blog on crude:
"As with gold, I would prefer to buy at a lower price, but with U.S./Russia tensions so high, we may not get that. But then again, with the "wildcard" factor of geopolitical instability influencing and creating potential volatility (both up and down) in crude prices now, it may be best to stay on the sidelines . "
So we didn't get our low price to buy, and we remain on the sidelines as the Russia/Ukraine crisis rages on.
The broad stock market has been falling steeply (so far) this week, and it is now testing its deep low point from January. The DOW broke easily through support at 34,000 and is now testing 33,500. A double-bottom with January's low (33,150) COULD be forming here, but if the DOW breaks and closes below 33,150, it will probably be heading significantly lower. The S&P 500 is now testing support at 4,300, but it too could plunge lower if it breaks and closes below its January low of 4,222. It seems like the NASDAQ has broken definitively below strong support at 13,500 and will now test its January low at 13,097. This is not looking good for bulls, especially since there are no major reversal zones this week to halt any plunge. We do have one coming up next week, however (March 1 - 10). If this market can stabilize near these January lows for another week, we could see a significant double-bottom low forming here for another rally upwards. But that's asking a lot of Wall Street right now, especially in the midst of the current Russia/Ukraine/U.S. conflict. We currently have a 15% profit on our short position in the NASDAQ (entered on 12/31/21). If the market stabilizes here, I will consider covering (unloading) this position and taking that profit. For now, however, let's continue to hold that short position.
Gold and silver prices continue to rally this week. Gold has already soared beyond its January highs, but silver has not (but it is getting close). We may have a low level reversal zone for the precious metals from now through Friday. If silver stays below its January high ($24.76) over the next few days, we will have a case of bearish divergence between the two metals in a possible reversal zone. In other words, a correction down could be imminent. We may look to buy the low of any significant correction now, but we need to keep in mind what I wrote last week concerning gold's long-term (23 year) cycle:
"I should mention here that it is very late in gold's 23 year long-term cycle (it started around 2001), so unless gold can overcome resistance around $1900 - $1960 soon, it will not challenge or exceed the all-time high of $2070, and prices should be headed down for a steep correction over the next several years - possibly down to $1000 or even lower (see my GOLD Update on the Home page). We are looking to buy any significant short-term corrections now to possibly take advantage of a potential "blow-off" rally if gold can challenge and even make a new all-time high. But we obviously need to be careful here. If that resistance around $1900 - $1960 holds, we will want to switch to bearish trading strategies (i.e. looking to sell short)."
The U.S. Dollar Index seems to be stabilizing above its 15-day and 45-day moving averages with some other technical indicators suggesting some short-term bullish momentum. If the greenback can rally now, it could put downward pressure on gold and silver prices, which would support the idea of an imminent correction in these metals.
Crude oil prices dipped sharply lower last week to $87.46 (April contract chart) but found support at the 15-day moving average, and prices rebounded significantly up yesterday to almost touch $95. The correction could be over, and it was not deep enough to entice me to buy. As I stated in last week's blog on crude:
"As with gold, I would prefer to buy at a lower price, but with U.S./Russia tensions so high, we may not get that. But then again, with the "wildcard" factor of geopolitical instability influencing and creating potential volatility (both up and down) in crude prices now, it may be best to stay on the sidelines . "
So we didn't get our low price to buy, and we remain on the sidelines as the Russia/Ukraine crisis rages on.
RSS Feed