SILVER TRADE ALERT and BROAD STOCK MARKET UPDATE (3:05 pm EDT)
The precious metals markets have been very tricky to play recently as gold and silver charts have been giving mixed signals while prices have traded in a narrow range over the last week or two. Today gold prices broke significantly lower, and a strong bearish momentum signal appeared in gold charts which makes directional momentum in gold now 100% bearish. (Silver has been mostly bearish for the last two weeks). This supports the short-term bearish outlook on these metals that I have had for some time (which I was questioning in last Friday's blog). The recent high in gold on Sept.1 ($1147) and in silver on Sept. 3 ($14.96) were within a strong reversal zone suggesting that these metals are now headed significantly lower. Gold is falling strongly today, but silver is still trading fairly close to its Sept. 3 high. For this reason I am going to enter a short position in silver today and hold off on shorting gold for now. We can place a stop loss on the silver trade just above $15.
The broad stock market continues to seesaw up and down but still seems reluctant to close above a strong resistance area around 16,500 - 16,600 in the DOW and 1980 - 2000 in the S&P 500. The current rally continues to look like a "dead cat bounce", but since one should never underestimate the potential bullishness of the broad stock market (particularly when one knows it can -and has- been manipulated), I have studied the charts for any bullish possibilities in the current cycle pattern. First let me say that the overall picture for equities continues to be extremely bearish until at least the end of October so, barring a dramatic reversal in directional momentum, we should not expect the current correction to bottom until then. That said, these markets could see some short-term rallies before that bottom is in. If the DOW moves higher into the end of this week, we might see a rally continue into the third week of this month (the next strong reversal period). If that happens, we will use our original stop loss points of 17,000 in the DOW and 2040 in the S&P 500 to preserve some profit and minimize any losses in our short positions. Continuing to hold my short position in the broad stock market.
The precious metals markets have been very tricky to play recently as gold and silver charts have been giving mixed signals while prices have traded in a narrow range over the last week or two. Today gold prices broke significantly lower, and a strong bearish momentum signal appeared in gold charts which makes directional momentum in gold now 100% bearish. (Silver has been mostly bearish for the last two weeks). This supports the short-term bearish outlook on these metals that I have had for some time (which I was questioning in last Friday's blog). The recent high in gold on Sept.1 ($1147) and in silver on Sept. 3 ($14.96) were within a strong reversal zone suggesting that these metals are now headed significantly lower. Gold is falling strongly today, but silver is still trading fairly close to its Sept. 3 high. For this reason I am going to enter a short position in silver today and hold off on shorting gold for now. We can place a stop loss on the silver trade just above $15.
The broad stock market continues to seesaw up and down but still seems reluctant to close above a strong resistance area around 16,500 - 16,600 in the DOW and 1980 - 2000 in the S&P 500. The current rally continues to look like a "dead cat bounce", but since one should never underestimate the potential bullishness of the broad stock market (particularly when one knows it can -and has- been manipulated), I have studied the charts for any bullish possibilities in the current cycle pattern. First let me say that the overall picture for equities continues to be extremely bearish until at least the end of October so, barring a dramatic reversal in directional momentum, we should not expect the current correction to bottom until then. That said, these markets could see some short-term rallies before that bottom is in. If the DOW moves higher into the end of this week, we might see a rally continue into the third week of this month (the next strong reversal period). If that happens, we will use our original stop loss points of 17,000 in the DOW and 2040 in the S&P 500 to preserve some profit and minimize any losses in our short positions. Continuing to hold my short position in the broad stock market.
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