MARKETS UPDATE (2:15 pm EST)
Yesterday the NASDAQ made a new all-time high while the DOW and S&P 500 did not (bearish divergence), and today the DOW and S&P 500 are making new highs as the NASDAQ falls. If this is the turning point for a reversal then all three indices must start falling now as we are moving out of the current reversal zone on Friday. If they don't, we could see more rallying at least into the end of next week and possibly into the last week of December. Still on the sidelines of the broad stock market.
In Monday's blog on precious metals I wrote:
"Last Thursday both gold and silver made new lows and are now rallying. That could have been the bottom, but prices could still fall lower this week. Ideally, we would like to see either gold or silver make a new weekly low this week (but not both) for a case of intermarket bullish divergence."
Today gold prices broke slightly below that low from last Thursday ($1,171) while silver is staying well above its low from last week ($16.17). Thus we are seeing intermarket bullish divergence in the current reversal zone, and we should see the market turn up shortly. Our stop loss for our gold long position will now be based on both silver and gold breaking below these lows. Holding my long position in gold for now.
Today OPEC announced that it would cut daily oil production to offset an oversupplied market. This news caused crude oil prices to soar, and at the time of this writing crude is up nearly 9% ! In Monday's blog I wrote:
"I am not sure if crude started a new medium-term cycle with its recent low on Nov. 14 ($42.95 - Jan. contract chart) or if the old cycle is still in the process of bottoming and will go back down to that low or even lower for a final bottom either in this week's reversal zone or in the next one at the end of December. If this is a new cycle then this market is probably bullish and prices will likely hold above $45 as the market rallies to challenge the recent high at $49.20."
Today prices touched $49.52 so it is looking like this could be a new cycle that started on Nov. 14. If so, this market is turning bullish. We need to see this rally follow though, however, as today's surge could just be a knee-jerk reaction to the OPEC news. On the sidelines of this market for now.
Yesterday the NASDAQ made a new all-time high while the DOW and S&P 500 did not (bearish divergence), and today the DOW and S&P 500 are making new highs as the NASDAQ falls. If this is the turning point for a reversal then all three indices must start falling now as we are moving out of the current reversal zone on Friday. If they don't, we could see more rallying at least into the end of next week and possibly into the last week of December. Still on the sidelines of the broad stock market.
In Monday's blog on precious metals I wrote:
"Last Thursday both gold and silver made new lows and are now rallying. That could have been the bottom, but prices could still fall lower this week. Ideally, we would like to see either gold or silver make a new weekly low this week (but not both) for a case of intermarket bullish divergence."
Today gold prices broke slightly below that low from last Thursday ($1,171) while silver is staying well above its low from last week ($16.17). Thus we are seeing intermarket bullish divergence in the current reversal zone, and we should see the market turn up shortly. Our stop loss for our gold long position will now be based on both silver and gold breaking below these lows. Holding my long position in gold for now.
Today OPEC announced that it would cut daily oil production to offset an oversupplied market. This news caused crude oil prices to soar, and at the time of this writing crude is up nearly 9% ! In Monday's blog I wrote:
"I am not sure if crude started a new medium-term cycle with its recent low on Nov. 14 ($42.95 - Jan. contract chart) or if the old cycle is still in the process of bottoming and will go back down to that low or even lower for a final bottom either in this week's reversal zone or in the next one at the end of December. If this is a new cycle then this market is probably bullish and prices will likely hold above $45 as the market rallies to challenge the recent high at $49.20."
Today prices touched $49.52 so it is looking like this could be a new cycle that started on Nov. 14. If so, this market is turning bullish. We need to see this rally follow though, however, as today's surge could just be a knee-jerk reaction to the OPEC news. On the sidelines of this market for now.
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