MARKETS UPDATE (6:00 pm EDT)
We are now in the dead center of our new general reversal zone (Oct. 5 - 16), and the broad stock market has been rising sharply into it. The DOW has been rising from last Friday's low (also in the reversal zone), and the S&P 500 has been rising from a low from last Tuesday. (We are going to ignore the NASDAQ for now as it's cycle may be taking a different path.)
Both the DOW and S&P 500 likely started new medium-term cycles in August (the DOW on Aug.25 at 34,029 and the S&P 500 on Aug. 18 at 4,336). Both indices have now dropped below those starting points and are therefore technically bearish and pointed down. Last week's lows look like the first sub-cycle corrections. If so, we could see a 3 - 8 day rally to a sub-cycle top and then a reversal back down and resumption of the bearish trend. So far the DOW has rallied two days and the S&P 500 has rallied five days. Today is the center of our reversal zone and both indices did not make new highs, so they may be getting ready to roll over. Let's get ready to sell short the S&P 500 tomorrow or Friday. (The S&P 500 is a better short play than the DOW right now as it has more room to fall in the current bearish trend.) What we don't want to see now are these indices rallying beyond next Tuesday as that is the end of the reversal zone and it would question the bearish trend. For today we remain on the sidelines of this market.
Gold and silver both rallied to new weekly highs today, and as with the stock market, they are doing this in the center of a general reversal zone. Today through Friday is also a potentially strong "pivot point" for both metals, especially gold. A short-term top could therefore be imminent any day now, and prices could turn back down. We have been waiting to buy at the final medium-term cycle bottoms in silver and gold. Those bottoms could have already happened last week with silver down to $20.70 on Tuesday and gold down to $1812 on Friday. Our current reversal zones could, however, turn prices back down to lower levels or at least give us a better entry point to buy near the start of new cycles. An ideal scenario now would be for gold or silver (but not both) to make a new weekly low (without the other) for a case of bullish divergence. That would be a good signal to buy, especially if it happens by next Tuesday. For now, we remain on the sidelines of both metals.
Yesterday and today the U.S. Dollar Index broke below a support line at 106. Nevertheless, it is now making new weekly lows in the center of our current reversal zone which means it could turn back up any day now. If it does, it will put some downward pressure on precious metal prices (but it will also be facing resistance at that 106 line).
After "gapping up" from last Friday's low of $81.50 (Nov. contract chart) to $87.24 on Monday, crude oil prices are falling again and seem to be closing that gap. This is supporting our idea that we are at the end of an older medium-term cycle in crude that is moving to its final cycle bottom. This is the second week of the final correction (from the $95.03 top on Sept. 28). Final corrections usually last 2-5 weeks, so we should be looking for a bottom to buy soon. It could be in this week's reversal zone, but there is another reversal zone coming up Oct. 25 - Nov. 1 and also a reversal zone specifically for crude coming up Oct. 26 - Nov. 3, so it's possible the final low could be then. To maintain a bullish trend, we would like to see the final bottom stay above $78. Let's stay on the sidelines of crude for now.
We are now in the dead center of our new general reversal zone (Oct. 5 - 16), and the broad stock market has been rising sharply into it. The DOW has been rising from last Friday's low (also in the reversal zone), and the S&P 500 has been rising from a low from last Tuesday. (We are going to ignore the NASDAQ for now as it's cycle may be taking a different path.)
Both the DOW and S&P 500 likely started new medium-term cycles in August (the DOW on Aug.25 at 34,029 and the S&P 500 on Aug. 18 at 4,336). Both indices have now dropped below those starting points and are therefore technically bearish and pointed down. Last week's lows look like the first sub-cycle corrections. If so, we could see a 3 - 8 day rally to a sub-cycle top and then a reversal back down and resumption of the bearish trend. So far the DOW has rallied two days and the S&P 500 has rallied five days. Today is the center of our reversal zone and both indices did not make new highs, so they may be getting ready to roll over. Let's get ready to sell short the S&P 500 tomorrow or Friday. (The S&P 500 is a better short play than the DOW right now as it has more room to fall in the current bearish trend.) What we don't want to see now are these indices rallying beyond next Tuesday as that is the end of the reversal zone and it would question the bearish trend. For today we remain on the sidelines of this market.
Gold and silver both rallied to new weekly highs today, and as with the stock market, they are doing this in the center of a general reversal zone. Today through Friday is also a potentially strong "pivot point" for both metals, especially gold. A short-term top could therefore be imminent any day now, and prices could turn back down. We have been waiting to buy at the final medium-term cycle bottoms in silver and gold. Those bottoms could have already happened last week with silver down to $20.70 on Tuesday and gold down to $1812 on Friday. Our current reversal zones could, however, turn prices back down to lower levels or at least give us a better entry point to buy near the start of new cycles. An ideal scenario now would be for gold or silver (but not both) to make a new weekly low (without the other) for a case of bullish divergence. That would be a good signal to buy, especially if it happens by next Tuesday. For now, we remain on the sidelines of both metals.
Yesterday and today the U.S. Dollar Index broke below a support line at 106. Nevertheless, it is now making new weekly lows in the center of our current reversal zone which means it could turn back up any day now. If it does, it will put some downward pressure on precious metal prices (but it will also be facing resistance at that 106 line).
After "gapping up" from last Friday's low of $81.50 (Nov. contract chart) to $87.24 on Monday, crude oil prices are falling again and seem to be closing that gap. This is supporting our idea that we are at the end of an older medium-term cycle in crude that is moving to its final cycle bottom. This is the second week of the final correction (from the $95.03 top on Sept. 28). Final corrections usually last 2-5 weeks, so we should be looking for a bottom to buy soon. It could be in this week's reversal zone, but there is another reversal zone coming up Oct. 25 - Nov. 1 and also a reversal zone specifically for crude coming up Oct. 26 - Nov. 3, so it's possible the final low could be then. To maintain a bullish trend, we would like to see the final bottom stay above $78. Let's stay on the sidelines of crude for now.
RSS Feed