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

Trading Blog       Wednesday,  January 3,  2018

1/3/2018

 
MARKETS  UPDATE  (3:00 pm EST)

The broad stock market continues to rally like gangbusters, and so far this week we have not seen any New Year's "hangover" selloff. The optimistic spirit of the the holidays is lingering, and President Trump's early signing of the tax reform bill before Christmas seems to be keeping "Trumphoria" alive. This controversial bill will almost certainly benefit businesses and corporations so Wall Street is pleased. Despite this bullish euphoria, however, it is very late in the medium-term cycle of the DOW and S&P 500 which means that a top is due (overdue) and a final significant correction down to the bottom of the cycle is imminent. (The NASDAQ may have started a new cycle with its low of 6,734 on Dec. 6, but even if it did, it could turn bearish early and fall with the other two indices.)  A strong reversal zone for equities ends today, and all three market indices are making new all-time highs. This could be the top, and a correction could start now, but we have no bearish divergence signal so these markets could push higher. I should mention here that because I did not have access last month to January's reversal zone data, I did not notice that there is another (slightly weaker) reversal zone (Jan. 3 - 11) adjacent to the one we are now ending. This means we could see intermarket bearish divergence (one or two, but not all three, market indices making new highs) next week and still be within a reversal zone. If we don't get a top this week, we will look for that next week. The correction we are waiting for will not necessarily be dramatic, but it should be substantial enough to be worth selling short (if we can pick the high). Whatever the correction turns out to be, we will be looking to buy at its bottom (start of a new cycle) because right now it looks like this market's next medium-term cycle could easily make new all-time highs. The correction from the top of that next cycle (later this year) might be very serious, and we will most likely want to sell short then. But I am getting way ahead of myself. For now, we are looking for a top to sell short this week or next and then a subsequent bottom to buy.  Still on the sidelines of the broad stock market.

In last Friday's blog on the precious metals I wrote:

"
Gold and silver prices are rallying strongly and supporting the idea of a new medium-term cycle beginning on Dec. 12. We are, however, right in the center of a strong reversal zone specifically for these metals so I'm still reluctant to go long as a turning point could be imminent at the top of this steep rally."

That reversal zone for precious metals ends today, but it could merge with the new reversal zone mentioned above (Jan. 3 - 11) and allow for a top to form as late as next week. Gold has now broken above its plateau of highs from November while silver has yet to breach its Nov. 20 high of $17.36 so we also have a case of intermarket bearish divergence to support a reversal now. Silver edged up a bit and made a new high today while gold backed off a bit from yesterday's $13.21 high (more bearish divergence). Let's see if these metals can edge lower before we consider long positions (say, gold closer to the $1300 level and silver closer to $16.70). Still on the sidelines of gold and silver but looking to go long soon as it appears new medium-term cycles started on Dec.12.

Crude oil
prices are also rising into our next reversal zone (Jan. 3 -11) so a top could be forming in this market as well. A new medium-term cycle in crude could have started with the Dec. 7 low of $55.88 (Feb. contract chart), but it is still possible that this is an older cycle that is topping and will soon take a final corrective plunge to the cycle bottom. If this is a new cycle (my preferred scenario), then a correction from a top (forming any time through the end of next week) would likely go down to the $58 area. A correction in an older cycle would break below $55.88. We will look to buy crude if prices get back to $58 with a stop loss on a close below $55.88. Out of crude oil for now.



​

Comments are closed.

    RSS Feed

    Archives

    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.