MARKETS UPDATE (11:00 pm EST)
Last week the S&P 500 and NASDAQ snapped back up from their sub-cycle corrective lows on Jan. 5 and the DOW rose up a bit from the bottom of its sub-cycle "dip" from Jan. 8, but this week all three indices are falling again. We may be starting a 2 - 5 week decline to the final bottoms of the current medium-term cycles, but there's still time for this market to push a little higher before that happens. We want to focus now on the next strong general reversal zone which is coming up next week (Jan. 23 - Feb. 1). This could coincide with the final tops in the current medium-term cycles, but if the market continues falling from here, it could instead coincide with a bottom (probably another sub-cycle bottom, but if the fall is steep, possibly a final cycle bottom, although that would be a bit early). Because the general trend of this market is still bullish, we are waiting to buy at the final bottom of this current medium-term cycle. A good target for the DOW would be around 35,600 - 36,000. The S&P 500 could get back down to 4,600. We will wait for these levels before thinking about going long. For now we remain on the sidelines of the broad stock market.
As with the broad stock market, we are also waiting to buy the final medium-term cycle bottoms in gold and silver.
It is late in both of these cycles, so a final bottom is due soon. Prices are falling sharply today, and both metals are below their 15-day and 45-day moving averages. The descent to the final cycle bottoms could be underway. Nevertheless, there's still time for gold to rally back up and challenge its Dec. 28 high around $2070 (but probably not its all-time high of $2123 from Dec. 4) before hitting its final cycle bottom. (Today gold made a new weekly low without silver - a bullish divergence signal that could indicate an imminent reversal back up.) Silver looks a bit more bearish than gold at the moment. If silver rallies now, it might get back up to $24, but then it should fall again towards its final cycle bottom due anytime now over the next six weeks.
There's a possibility that gold's final medium-term cycle bottom could go quite low, i.e. back to the $1900 area. If that happens, it would be a good buying opportunity. A good buy spot in silver could be between $21 and $21.70. We will stay on the sidelines until prices approach these levels.
After falling from a high of 103.10 (Feb. contract chart) on Jan. 5 (which was right in the middle of our reversal zone for currencies), the U.S. Dollar Index is rising again and today made a new weekly and monthly high at 103.69. This is putting downward pressure on gold and silver prices, but we note that next week we enter another reversal zone for currencies (Jan. 24 - Feb. 1). If the greenback pushes higher into that time frame, another turn down could follow which could lift precious metal prices. We will watch this carefully as we move into next week.
Crude oil prices continue to stagnate between support at $70 (Feb. contract chart) and the falling 15-day and 45-day moving averages (now at $72.42 and $73.62, respectively). We are still not sure if crude started a new medium-term cycle with the low of $76.43 on Aug. 23 or if a new cycle started with the Oct. 6 low of $77.86. If the former, the medium-term cycle could be ending and bottoming now, or it may have already ended with the Dec. 13 low ($67.98). If the cycle started on Oct. 6, it is very bearish and prices should be headed lower for at least 3 or 4 more weeks to a price below $67.98. We will be better able to tell which medium-term cycle labeling is correct once crude prices break out of their congestion zone ($70 - $73.62) one way or the other. Until then we will remain on the sidelines of this market.
It is also not clear if a longer-term 4-year cycle ended on May 4 at $65.24 or if that cycle will go lower over the next six months (it is due anytime now before August). We are very interested in going long at the bottom of the 4-year cycle as a strong rally should follow that could see prices rise 100% by the end of the year. If crude prices break upside soon and are able to close above $76.18, it would support the idea of a new medium-term cycle starting on Dec. 13 and also the idea that a new 4-year cycle began on May 4 at $65.24. In the bearish alternative view, prices could soon break below $67.98 as crude heads to the end of an older 4-year cycle below $65.24 and possibly below $62 anytime before August.
Last week the S&P 500 and NASDAQ snapped back up from their sub-cycle corrective lows on Jan. 5 and the DOW rose up a bit from the bottom of its sub-cycle "dip" from Jan. 8, but this week all three indices are falling again. We may be starting a 2 - 5 week decline to the final bottoms of the current medium-term cycles, but there's still time for this market to push a little higher before that happens. We want to focus now on the next strong general reversal zone which is coming up next week (Jan. 23 - Feb. 1). This could coincide with the final tops in the current medium-term cycles, but if the market continues falling from here, it could instead coincide with a bottom (probably another sub-cycle bottom, but if the fall is steep, possibly a final cycle bottom, although that would be a bit early). Because the general trend of this market is still bullish, we are waiting to buy at the final bottom of this current medium-term cycle. A good target for the DOW would be around 35,600 - 36,000. The S&P 500 could get back down to 4,600. We will wait for these levels before thinking about going long. For now we remain on the sidelines of the broad stock market.
As with the broad stock market, we are also waiting to buy the final medium-term cycle bottoms in gold and silver.
It is late in both of these cycles, so a final bottom is due soon. Prices are falling sharply today, and both metals are below their 15-day and 45-day moving averages. The descent to the final cycle bottoms could be underway. Nevertheless, there's still time for gold to rally back up and challenge its Dec. 28 high around $2070 (but probably not its all-time high of $2123 from Dec. 4) before hitting its final cycle bottom. (Today gold made a new weekly low without silver - a bullish divergence signal that could indicate an imminent reversal back up.) Silver looks a bit more bearish than gold at the moment. If silver rallies now, it might get back up to $24, but then it should fall again towards its final cycle bottom due anytime now over the next six weeks.
There's a possibility that gold's final medium-term cycle bottom could go quite low, i.e. back to the $1900 area. If that happens, it would be a good buying opportunity. A good buy spot in silver could be between $21 and $21.70. We will stay on the sidelines until prices approach these levels.
After falling from a high of 103.10 (Feb. contract chart) on Jan. 5 (which was right in the middle of our reversal zone for currencies), the U.S. Dollar Index is rising again and today made a new weekly and monthly high at 103.69. This is putting downward pressure on gold and silver prices, but we note that next week we enter another reversal zone for currencies (Jan. 24 - Feb. 1). If the greenback pushes higher into that time frame, another turn down could follow which could lift precious metal prices. We will watch this carefully as we move into next week.
Crude oil prices continue to stagnate between support at $70 (Feb. contract chart) and the falling 15-day and 45-day moving averages (now at $72.42 and $73.62, respectively). We are still not sure if crude started a new medium-term cycle with the low of $76.43 on Aug. 23 or if a new cycle started with the Oct. 6 low of $77.86. If the former, the medium-term cycle could be ending and bottoming now, or it may have already ended with the Dec. 13 low ($67.98). If the cycle started on Oct. 6, it is very bearish and prices should be headed lower for at least 3 or 4 more weeks to a price below $67.98. We will be better able to tell which medium-term cycle labeling is correct once crude prices break out of their congestion zone ($70 - $73.62) one way or the other. Until then we will remain on the sidelines of this market.
It is also not clear if a longer-term 4-year cycle ended on May 4 at $65.24 or if that cycle will go lower over the next six months (it is due anytime now before August). We are very interested in going long at the bottom of the 4-year cycle as a strong rally should follow that could see prices rise 100% by the end of the year. If crude prices break upside soon and are able to close above $76.18, it would support the idea of a new medium-term cycle starting on Dec. 13 and also the idea that a new 4-year cycle began on May 4 at $65.24. In the bearish alternative view, prices could soon break below $67.98 as crude heads to the end of an older 4-year cycle below $65.24 and possibly below $62 anytime before August.
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