10:50 a.m. Just got back from a week long trip. Looks like the market has followed gold and silver into selling off. But we are within our cycle low turndate period. We expect some bottoming action here around 8375-8400 dow. We would be a scalp buyer here with a stop around 8200 dow. Our target is back to the old highs near 9000.
3.00 P.M Opened long at 83.65 DIA.
5.00 P.M Absolutely no respite in the selling. And that means we are nicely under water in our long position. We have to start rallying tomorrow and SPX 890 must hold, otherwise the cycle has inverted again and (it is high time) we have to go back to the drawing table on our cycles model. On the bullish side, we have some positive divergence on some small stochastics and they are oversold, very oversold. That is no reason for a rally if the trend is bearish. For the bulls, 903 is a key level if taken out, 927 is the next target.
Gold and silver must be shorted on any rise. It is a pity we got out a week earlier before our trip. SSRI has sold off more than 30% since we first shorted at ~25 and only captured about 10% of the move. The precious metals have indeed been leading the commodity complex. Natural gas is still stuck in no man's land according to us. We continue to wait for july seasonal low or a break of the 20W MA.
Bonds and the dollar continue to rally. We are looking for a 4 handle on the 30 yr
yield.
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