Gold Update for October 17
The dollar looks to have completed a daily cycle low and gold a daily cycle top. Gold is failing to hold the critical $1,300 level and I suspect will not conclude an intermediate degree cycle low until sometime in early December.
There is zero chance of a significant pull back in the stock markets until the semi conductor index ($SOX) reaches its all-time 2000 high of 1350. The index closed this week some 11% lower than 1350 at around 1220. I expect we will now see a runaway move that slowly grinds higher, forcing shorts who are trying to pick a top to cover, and keeping longs on edge
Buying breakouts during the middle phase of a bull market will, most of the time, cause the trader to experience a draw down. This is because this market phase tends to stair step higher with numerous set backs. The preferred strategy is to try and catch the intermediate cycle low and ride that until the intermediate cycle tops.
The Value Line Geometric Index ($XVG) is an equal weighting of all the stocks on the NYSE. It has been consolidating sideways for almost 20 years. In the last several months it has broken out to the upside. This suggests a powerful and sustained move higher in the stock markets is likely to take place, and soon.