MARKETS UPDATE (4:00 pm EDST)
We are now at the center of our current reversal zone for equities (July 19 - 30) and it is still not clear if this market wants to make a top or bottom. Today, however, we are seeing intermarket bearish divergence as the NASDAQ and S&P 500 make new weekly (and all-time) highs while the DOW remains below its high from last week. The DOW, however, is not far from a new high so if it pushes a bit higher our bearish divergence signal will be negated. That could happen as all three indices seem to be closing in the upper part of today's range, and directional momentum is still 100% bullish in all three. For these reasons, I am not ready to sell short today. If the bearish divergence persists into the end of the week or even into early next week, I may consider a short position. Even if we miss short selling a corrective drop, we will be ready to buy the bottom of any short-term correction (as long as it doesn't go too deep) as we still anticipate more rallying into the summer. Still on the sidelines of the broad stock market.
This week's reversal zone could also influence the precious metals (i.e. correlate with a strong turning point). Today silver prices are soaring to a new yearly high ($16.63) while gold remains rather sluggish and is staying well below its July 1 high of $1494. This give us a strong intermarket bearish divergence signal that will likely persist into the end of the week (unless gold prices can close a gap of $70 in two days - not likely). Thus we could see both metals take a significant correction down soon. As with the broad stock market, we will be looking to buy the bottom of any significant sub-cycle correction as both metals continue to look very bullish longer-term. Out of both gold and silver for now.
Crude oil prices are taking a strong dip down today. This week's reversal zone (July 19 - 30) is very relevant to crude. Last week's low on July 19 at $55.12 (Sept. contract chart) could have been a sub-cycle bottom as it was within our reversal zone, but it could also go lower over the next four trading days and still be within the reversal zone. The sub-cycle bottom is due by next week so, yes, there is still time for a new low, but we would expect it to be in by next Tuesday. We went long in this market on Monday with a stop loss on a close below $54. Today's low got to $55.33 so we are still long. Let's stay long for now as our cycle timing is anticipating the final bottom by next Tuesday (if it didn't already happen Monday). As long as prices stay above $52, we are still on track for more rallying into the summer.
We are now at the center of our current reversal zone for equities (July 19 - 30) and it is still not clear if this market wants to make a top or bottom. Today, however, we are seeing intermarket bearish divergence as the NASDAQ and S&P 500 make new weekly (and all-time) highs while the DOW remains below its high from last week. The DOW, however, is not far from a new high so if it pushes a bit higher our bearish divergence signal will be negated. That could happen as all three indices seem to be closing in the upper part of today's range, and directional momentum is still 100% bullish in all three. For these reasons, I am not ready to sell short today. If the bearish divergence persists into the end of the week or even into early next week, I may consider a short position. Even if we miss short selling a corrective drop, we will be ready to buy the bottom of any short-term correction (as long as it doesn't go too deep) as we still anticipate more rallying into the summer. Still on the sidelines of the broad stock market.
This week's reversal zone could also influence the precious metals (i.e. correlate with a strong turning point). Today silver prices are soaring to a new yearly high ($16.63) while gold remains rather sluggish and is staying well below its July 1 high of $1494. This give us a strong intermarket bearish divergence signal that will likely persist into the end of the week (unless gold prices can close a gap of $70 in two days - not likely). Thus we could see both metals take a significant correction down soon. As with the broad stock market, we will be looking to buy the bottom of any significant sub-cycle correction as both metals continue to look very bullish longer-term. Out of both gold and silver for now.
Crude oil prices are taking a strong dip down today. This week's reversal zone (July 19 - 30) is very relevant to crude. Last week's low on July 19 at $55.12 (Sept. contract chart) could have been a sub-cycle bottom as it was within our reversal zone, but it could also go lower over the next four trading days and still be within the reversal zone. The sub-cycle bottom is due by next week so, yes, there is still time for a new low, but we would expect it to be in by next Tuesday. We went long in this market on Monday with a stop loss on a close below $54. Today's low got to $55.33 so we are still long. Let's stay long for now as our cycle timing is anticipating the final bottom by next Tuesday (if it didn't already happen Monday). As long as prices stay above $52, we are still on track for more rallying into the summer.
RSS Feed