MARKETS UPDATE (8:00 pm EST)
The markets have been quiet recently which is why I have not posted any updates since last Thursday. This could be "the quiet before the storm", though, as we are in a time period (through July and early August) where major reversals in all markets can occur.
The broad stock market continues to show bullish momentum and therefore could rally some more before making a significant correction, but there are other technical, cycle, and timing signals suggesting that we are quite close to that correction. It is significant to note that while the NASDAQ is making new yearly highs, the DOW and S&P 500 have not yet exceeded their recent May 22 highs (they are close). This is called intermarket bearish divergence and may indicate a reversal is imminent. (This signal is negated, however, if the DOW and S&P 500 exceed those May 22 highs). As I mentioned in my previous blog, if the DOW corrects down a bit more and momentum remains bullish I will consider going long for a short-term trade into a final rally that would precede a more significant correction. The markets, however, have been relatively flat this week, and since we are moving into the center of a time zone for major reversals, it might be best to just stand aside (as we have been) and wait to sell this market short when the momentum trend reverses. Our position is therefore unchanged - still on the sidelines of this market.
Gold and especially silver are moving down a bit this week after mostly bullish rallying from last week. Momentum signals are still strongly bearish in both metals so we might see them correct down a little more before some sort of rally begins. I am not selling short here (despite the bearish momentum) because I think we are close to at least a temporary bottom (and maybe the long-term cycle bottom), and a short sell would not capture a significant profit. Note that gold and silver could move up and down in a narrow range in coming weeks, and we may try to take advantage of some short-term trades if they look promising; however, we need to keep in mind the more important long-term picture of gold (and silver) making a long-term cycle bottom, probably before the end of this year. In fact, these bottoms may already be in with gold around $1183 and silver around $18.25, but there are some cycle, technical and timing factors suggesting they could go lower (especially gold). We are, therefore, long-term bullish on the precious metals, and a good entrance point for long-term investors should be presenting itself soon. For now, momentum remains strongly bearish, and we are still on the sidelines.
Crude oil, like all the markets we are following now, is susceptible to a significant reversal over the next several weeks. The recent steep rise in crude oil prices seems to be leveling off and, while the price of crude could edge a bit higher, we should be watching now for a significant correction to sell short. We will therefore continue to stand on the sidelines here and wait for technical signals to short this market. News about Egypt's political turmoil and Syria's civil war has cooled down somewhat in recent weeks, but these conflicts are far from resolved, and we always need to keep in mind the "wild card" bullish effect any flaring of these conflicts can have on oil prices - especially when selling short. Hopefully, the correction I am expecting soon in crude prices is indicative of at least a temporary lull in the recent turmoil in these regions.
Early this month the U.S. Dollar Index flashed very bullish momentum signals and appeared to be recovering from its May/June "breakdown". It may be correcting again, however, as it gapped down dramatically on July 10 and today flashed a medium-term bearish signal in its chart. I think this correction could be temporary as long-term momentum is still bullish. Of course, when the dollar gappped down the Swiss Franc jumped up in value, but, curiously, at the moment it has the same momentum pattern as the U.S. Dollar : long-term bullish but medium-term bearish. This seeming conflict will probably resolve itself soon with one currency becoming more bullish (probably the dollar) and the other more bearish (probably the Swiss Franc). These markets are ambiguous right now, and it is probably best to avoid trading them until their directions are more clear. I trade currency very conservatively on this website (see Alternative Investor Strategy) and will only go long in the Swiss Franc when technical signals, cycles and timing indicate it is moving towards 100% bullish. This is not the case right now so I am still out of the Swiss Franc.
The markets have been quiet recently which is why I have not posted any updates since last Thursday. This could be "the quiet before the storm", though, as we are in a time period (through July and early August) where major reversals in all markets can occur.
The broad stock market continues to show bullish momentum and therefore could rally some more before making a significant correction, but there are other technical, cycle, and timing signals suggesting that we are quite close to that correction. It is significant to note that while the NASDAQ is making new yearly highs, the DOW and S&P 500 have not yet exceeded their recent May 22 highs (they are close). This is called intermarket bearish divergence and may indicate a reversal is imminent. (This signal is negated, however, if the DOW and S&P 500 exceed those May 22 highs). As I mentioned in my previous blog, if the DOW corrects down a bit more and momentum remains bullish I will consider going long for a short-term trade into a final rally that would precede a more significant correction. The markets, however, have been relatively flat this week, and since we are moving into the center of a time zone for major reversals, it might be best to just stand aside (as we have been) and wait to sell this market short when the momentum trend reverses. Our position is therefore unchanged - still on the sidelines of this market.
Gold and especially silver are moving down a bit this week after mostly bullish rallying from last week. Momentum signals are still strongly bearish in both metals so we might see them correct down a little more before some sort of rally begins. I am not selling short here (despite the bearish momentum) because I think we are close to at least a temporary bottom (and maybe the long-term cycle bottom), and a short sell would not capture a significant profit. Note that gold and silver could move up and down in a narrow range in coming weeks, and we may try to take advantage of some short-term trades if they look promising; however, we need to keep in mind the more important long-term picture of gold (and silver) making a long-term cycle bottom, probably before the end of this year. In fact, these bottoms may already be in with gold around $1183 and silver around $18.25, but there are some cycle, technical and timing factors suggesting they could go lower (especially gold). We are, therefore, long-term bullish on the precious metals, and a good entrance point for long-term investors should be presenting itself soon. For now, momentum remains strongly bearish, and we are still on the sidelines.
Crude oil, like all the markets we are following now, is susceptible to a significant reversal over the next several weeks. The recent steep rise in crude oil prices seems to be leveling off and, while the price of crude could edge a bit higher, we should be watching now for a significant correction to sell short. We will therefore continue to stand on the sidelines here and wait for technical signals to short this market. News about Egypt's political turmoil and Syria's civil war has cooled down somewhat in recent weeks, but these conflicts are far from resolved, and we always need to keep in mind the "wild card" bullish effect any flaring of these conflicts can have on oil prices - especially when selling short. Hopefully, the correction I am expecting soon in crude prices is indicative of at least a temporary lull in the recent turmoil in these regions.
Early this month the U.S. Dollar Index flashed very bullish momentum signals and appeared to be recovering from its May/June "breakdown". It may be correcting again, however, as it gapped down dramatically on July 10 and today flashed a medium-term bearish signal in its chart. I think this correction could be temporary as long-term momentum is still bullish. Of course, when the dollar gappped down the Swiss Franc jumped up in value, but, curiously, at the moment it has the same momentum pattern as the U.S. Dollar : long-term bullish but medium-term bearish. This seeming conflict will probably resolve itself soon with one currency becoming more bullish (probably the dollar) and the other more bearish (probably the Swiss Franc). These markets are ambiguous right now, and it is probably best to avoid trading them until their directions are more clear. I trade currency very conservatively on this website (see Alternative Investor Strategy) and will only go long in the Swiss Franc when technical signals, cycles and timing indicate it is moving towards 100% bullish. This is not the case right now so I am still out of the Swiss Franc.
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